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Tens of thousands of flooded and abandoned cars were stolen in the months after Hurricane Katrina and either sold on the black market or dismantled for scrap, state officials say.

Many of the vehicles were disposed of at renegade car crushing operations in eastern New Orleans where state officials worry they were improperly dismantled.

Peter Ricca, a criminal investigator with the state Department of Environmental Quality, said a major concern is that many early car-crushing operations in eastern New Orleans may have been on unpermitted car storage sites and that the cars' toxic fluids were probably allowed to drain directly into the ground.

Other stolen vehicles were left whole, raising the possibility that they could be reconditioned and resold outside of the state.

"It's going to be a major problem that hasn't even begun to hit us, and it's going to hit us hard," said Jack Torrance, executive director of the Louisiana Recreational and Used Motor Vehicle Commission.

Ron Canaday, a special agent with the National Insurance Crime Bureau's Baton Rouge office, said his group has received reports of flooded New Orleans-area cars showing up in salvage lots and car dealerships in more than 20 states. He rattled off a list of states where the cars have been found, from Texas to North Dakota and Ohio to California.

One of the reasons so many vehicles were stolen is that it took insurance adjusters weeks to track down all the cars they received Katrina claims on. In many cases, the vehicles were gone by the time the adjusters arrived. And it wasn't until June that the city of New Orleans signed a $33 million contract with DRC Inc. of Alabama to collect vehicles left scattered about the area.

Under the current system, the State Police are tagging cars for towing and immediately alerting DRC.

But, "We have to rush to tow vehicles still today," said Mark Stafford, chief operating officer of DRC. "As soon as the State Police slap a sticker on a car to be towed and scraped, we often get there to find the car has been stolen."

Many missing vehicles

The state Department of Environmental Quality estimated in March that 350,000 uninsured and 200,000 insured cars were destroyed in the 33 parishes swamped by hurricanes Katrina and Rita. But those figures fell drastically as state officials got a better handle on the situation, and the figure was ultimately revised down to 100,000.

John Rogers, a scientist with DEQ, said as many as 35,000 of those vehicles are missing.

And Torrance, of the Louisiana Recreational and Used Motor Vehicle Commission, which regulates car crushing operations, said he thinks thousands of cars were stolen by towing and scrap dealers after the storm. It was "a big chunk, in the thousands" Torrance said of the cars illegally taken in the early months after the storm. He said most of the fly-by-night activity took place between September and December before reputable operators were able to crank up in earnest.

Sgt. Jimmy Hicks, of the Transportation and Environmental Safety Section of the Louisiana State Police, said his unit patrols the Almonaster area of eastern New Orleans daily and that investigators have just started working with the New Orleans Police Department to "match auto theft lists with the autos we have tagged (for towing) to see how many tagged are actually stolen in New Orleans."

Sgt. Rickie Guhman, of the Louisiana State Police fraud unit, agrees that the cars are "all over the United States."

That means thousands of consumers around the nation could become unsuspecting owners of flood-damaged vehicles. It also presents a problem for some of the former owners of the vehicles.

Consumers who had only liability insurance on their cars can get assistance from FEMA for flooded cars, but they must have the car to show Federal Emergency Management Agency inspectors. If it was stolen, they're out of luck, Guhman said.

Consumers whose vehicles were fully insured and declared a total loss as a result of the storm will still get an insurance payout on their vehicle, but without the cars, the insurance carriers themselves are out any salvage money from the car.

Illegal operations

In addition to the consumer ramifications, the state Department of Environmental Quality is concerned that areas in eastern New Orleans where many car crushing operations functioned in the wake of the storm could be contaminated with liquids from automobiles not properly disposed of per regulations.

Nancy Jones, who oversees the household hazardous waste collection point in the New Orleans Regional Business Park for the Environmental Protection Agency, said that in October when she arrived there was little activity by car towers and crushers. But in November and December, out-of-town towers were racing to the park to dump vehicles so that they could be crushed, reloaded and hauled to scrap yards out of the area.

The dumping and crushing sites were at both legal auto storage yards and at fresh dumping grounds on land just off some of the 26 miles of road in the business park, Jones said.

Jones said her crews have recovered 4,100 vehicle gasoline tanks since October from sites where crushers were operating. Guhman, the Louisiana State Police fraud investigator, said a legally operating auto yard would take responsibility for all the liquids in the vehicles and hold the gas tanks on site, not abandon them.

Jones said there is little the EPA can do about the problem, adding it is DEQ's responsibility to enforce federal and state environmental laws.

But Ricca said that when DEQ investigators go out, they rarely find violators.

Mike Algero, administrator of DEQ's surveillance division, said that the agency is focusing its attention on eastern New Orleans.

Part of the problem is that even though there are 29 licensed auto crushing operators in the state, these operators can easily and legally move their crushing machines to other sites, such as in the business park, said vehicle commission enforcement officer June Powell.

These crushers can only operate legally on permitted auto storage and dismantling facilities, not side-of-the road crushing operations. But the problem is, only the city knows which locations carry the appropriate permits.

"I can't tell you which is a legal or illegal salvage yard out there," Hicks said.

Terry Davis, a spokesman for Mayor Ray Nagin, said City Attorney Penya Moses-Fields is looking into the city's responsibility on the issue, laws regarding dumping and vehicle disposal, and whether the operators in that part of the city have occupational business licenses.

But New Orleans Police Department spokesman Sgt. Jeffrey Johnson pointed to the city's recent rash of murders and drive-by shootings and said that those crimes took priority over patrolling the park. He also doubted the National Guard would patrol for dumping in addition to protection of properties in devastated and mostly unpopulated areas.

"It's not that we can't assist with this," Johnson said, "but the priority basically falls with DEQ. If something is discovered and we initiate an investigation, we rely on DEQ's expertise" to begin with.

He added that NOPD's auto theft unit has been making periodic checks and coordinating with the State Police theft unit on the problem.

Mike Centineo, director of the Department of Safety and Permits, said enforcing illegal dumping and the abandonment of cars in eastern New Orleans is a difficult proposition.

He says that if auto yards aren't fenced in and following code, "they're probably unpermitted," though he added that some of the sites were grandfathered in before the salvage yards needed permits and became regulated by DEQ and the city. Safety and Permits has conducted citations sweeps in the past in conjunction with NOPD, but staffing cuts make that nearly impossible now.

He added that there is only one way to stop the problem: "have the sanitation officers and NOPD patrolling the area 24 hours a day."

One crushing operation that is operating legally in the business park is the huge DRC site near the Mississippi River-Gulf-Outlet.

At that facility, cars are parked in neat rows as they're prepared for shipment to crushing facilities. Workers secure the cars for shipment, draining fluids and disposing of them properly. DRC does not crush the vehicles on site, said Stafford, DRC's chief operating officer.

Just more of the same

The car crushing that has taken place in eastern New Orleans since Katrina exacerbates a decades-old problem of dumping within the confines of the New Orleans Business Park. Eugene Green, president of the park, worries that the district is becoming one giant dump.

As the one-year anniversary of Katrina's landfall nears, DEQ and the Army Corps of Engineers have each instigated one enforcement action related to illegal dumping in eastern New Orleans. One is a criminal charge, including conspiracy, levied against two brothers for dumping construction debris and other unknown materials on land they didn't own. The other charge was against a dump operator who expanded into wetlands. The corps has not determined if the second case will be handled as a criminal or administrative violation, but the operator could face stiff fines either way if he's found guilty.

The dumping problem in the New Orleans Business Park has become so bad that Green says he can no longer market the area bounded by Elaine Street to Interstate 510, and the Mississippi River -Gulf Outlet to Old Gentilly Road, nearly half of one of the nation's largest industrial and business districts.

"Do you think a Nissan (site-selection representative) is going to fly over this area and decide to build next to that?" he asked, pointing to a 15-foot-pile of construction debris, a school bus, overturned vehicles and other debris.

"They're going to Mississippi," Green said.

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Greg Thomas can be reached at gthomas@timespicayune.com or (504) 826-3399.