California Charges 14 in $1.8M Luxury Car Tax Evasion Scheme

The state's crackdown on the 'Montana license plate loophole' leads to felony charges against individuals and dealers.

Published on Mar. 9, 2026

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The California Attorney General's office has filed a 56-count felony complaint against 14 individuals, alleging a conspiracy to evade $1.8 million in taxes on over $20 million in luxury vehicle purchases. The defendants are accused of using fake bills of lading and submitting false DMV and tax forms to claim the cars were shipped out of state, when they never actually left California. The investigation, led by the state's Tax Recovery in the Underground Economy Task Force, has identified close to 500 California dealers involved in over 2,500 similar sales since 2023, costing the state over $10 million in lost tax revenue annually.

Why it matters

California has been cracking down on the practice of wealthy individuals registering their exotic cars in Montana to avoid paying state sales tax and registration fees. This latest case highlights the scale of the problem, with the state alleging widespread fraud by both car buyers and dealers. The state is seeking to recover lost tax revenue and deter future abuse of the 'Montana license plate loophole'.

The details

The 56-count complaint charges the 14 defendants with conspiracy, money laundering, perjury, and filing false tax returns. The cars involved include high-end models from Lamborghini, Ferrari, Porsche, McLaren, BMW, Mercedes-AMG, and Aston Martin, with a total value of over $20 million. Investigators uncovered evidence of the defendants obtaining fake bills of lading and submitting false DMV and tax forms to claim the cars were shipped out of state, when they never actually left California.

  • The California Attorney General's office filed the 56-count felony complaint on March 9, 2026.
  • The state's Tax Recovery in the Underground Economy Task Force has been investigating these types of cases since 2023.

The players

California Attorney General Rob Bonta

The head of the California Department of Justice, which filed the 56-count felony complaint.

Tax Recovery in the Underground Economy Task Force (TRUE)

A multi-agency task force led by the California Department of Justice that is responsible for investigating and prosecuting financial crimes in the state's underground economy.

California Department of Tax and Fee Administration (CDTFA)

The state agency that works with the DOJ's TRUE Task Force to combat tax evasion and fraud.

California Department of Motor Vehicles (DMV)

The state agency that collaborates with the DOJ and CDTFA to identify cases of fraudulent vehicle registration.

Luxury and exotic car dealers

The state has identified close to 500 California dealers involved in over 2,500 sales since 2023 that involved the 'Montana license plate loophole'.

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What they’re saying

“We must not let individuals continue to damage our state's tax base through fraudulent schemes. This task force will continue to pursue those who try to cheat the system and ensure they are held accountable.”

— Rob Bonta, California Attorney General (California Department of Justice)

What’s next

The judge in the case will decide in the coming weeks whether to allow the 14 defendants to be released on bail.

The takeaway

This case highlights California's aggressive crackdown on the abuse of the 'Montana license plate loophole' by wealthy individuals and car dealers seeking to evade millions in state taxes. The state is determined to recover lost revenue and deter future fraud through coordinated enforcement efforts across multiple agencies.