By Steve Fawcett
Assistant Criminal District Attorney in Dallas County
Gas thieves, in Texas? Unfortunately, yes. It is a major problem nationwide that has steadily grown in Texas in recent years.
Some of you are already very familiar with these criminals, but for those unfamiliar, these thieves make a living breaking into gas pumps to install card skimming devices (aka “gas skimming”) and return later to collect the card data of hundreds of unsuspecting victims who happened to use their credit or debit cards to fill up their tanks. The thieves then re-encode the stolen data onto gift cards, which they use to purchase diesel fuel fraudulently. This stolen diesel is resold at truck stops and construction sites, typically for a dollar less than market price. Some of the criminals even own and operate their own trucking companies, saving substantial overhead. Recently, these groups have evolved and are now tampering with the pumps directly (i.e., cutting the pulser, which controls the dispenser’s electronic display of the volume and cost of the fuel that’s dispensed) to gain unfettered access to the fuel, costing gas stations millions.
Why should we care?
These thieves victimize hundreds of Texans each time they successfully place a skimming device on a pump. Some of you have been victims yourselves: Ever notice your card was used at a gas station you know you never visited? Worse, some victims may get their checking or savings account cleaned out if they used a debit card. In addition to the victims whose card data is stolen, the gas stations suffer too. Many of these stations are local family-owned businesses. Cutting the pulser takes that gas pump out of service, and the part needed to repair is not manufactured locally. This means the gas pumps can be broken for months.
There is also a serious safety concern on Texas roads. These criminals transport large quantities of diesel fuel with uninspected, “homemade” auxiliary tanks attached to their vehicles. In one case, an Irving officer observed diesel leaking onto the roadway during a traffic stop. Texans should not wait for a disastrous accident to take this threat seriously.
How are we tackling the problem?
Prosecutors have used various offenses in the Penal Code to successfully prosecute gas thieves, particularly in Smith County. Breaking into the pumps to install a skimming device is unlawful interference of an electronic communication, a second-degree felony. This is a precursor crime for engaging in organized criminal activity, a first degree, if you can connect three or more defendants together. Some agencies charge possession of the skimming devices or auxiliary tanks as criminal instruments. Law enforcement can extract the data from the skimming devices. Each name, card number, and ZIP code is an “item” under the Fraudulent Use or Possession of Identifying Information statute. Offenders often possess more than 50 items, which is a first-degree felony under §32.51. If caught with re-encoded cards, offenders can be charged with Fraudulent Use and Possession of Credit or Debit Cards. Further, defendants may also be charged with state jail Credit or Debit Card Abuse or Theft.
Or, prosecutors can use the Tax Code to see justice done against these perpetrators.
How can prosecutors use the Tax Code?
Motor fuel taxes are governed by Chapter 162 of the Texas Tax Code. There are 36 specified ways to commit a crime under this chapter, as outlined in Tex. Tax Code §162.403, including a “catch-all” provision that makes it a second-degree felony to “evade or attempt to evade in any manner a tax imposed on motor fuel by this chapter.” The punishment for the 36 listed offenses vary from Class C tickets to second-degree felonies, and prosecutors must prove the defendant acted intentionally or knowingly. Venue is any county where the tax violation took place or Travis County, and the statute of limitations for felonies under Chapter 162 of Tax Code is seven years. The most common tax violations that the Dallas County White Collar Crime Division has successfully indicted defendants for are transporting motor fuel without a cargo manifest or shipping document and the catch-all provision mentioned above, both of which are second-degree felonies. As with Penal Code §16.02, felony tax offenses are now precursors for Engaging in Organized Crime.
Let’s first address transporting motor fuel without a cargo manifest or shipping document. The Texas Comptroller’s Office uses cargo manifests and shipping documents to track motor fuel transportation for tax purposes, i.e., how much fuel is in transit, where it came from, and where it’s going. Legitimate motor fuel transporters obtain these documents from the fuel distributors, and both the Comptroller’s Office and Texas peace officers are allowed to stop vehicles transporting motor fuel to inspect these documents and ensure compliance. Anyone using a “transport vehicle” must obtain the documents. The Tax Code defines transport vehicles as “a vehicle designed or used to carry motor fuel over a public highway” (emphasis added). Three important carve-outs: A person does not need either a cargo manifest or shipping document if transporting:
1) your own motor fuel for personal consumption,
2) 10 gallons or less, or
3) on private property and not a public highway.
These exceptions are easy to overcome: Officers can describe the defendant driving off with the stolen motor fuel on a public highway. Gas station clerks provide a printout showing the card used and amount of motor fuel purchased by the defendant (hundreds of gallons is normal; I’ve never seen less than 10). Officers or detectives can confirm the card was fraudulent by contacting the true cardholder, proving the defendant did not own the motor fuel and was required to provide shipping documents or manifests. The Comptroller’s Office then confirms what we already know—that that office has no records that the defendant applied for proper paperwork—and we have a second-degree felony.
The catch-all tax evasion provision is not as clear cut, which is a strength, as it allows prosecutors to show the judge or jury the entire scope of the scheme with expert testimony from the Comptroller’s Office or the newly opened Financial Crimes Intelligence Center (FCIC). Texas tax on motor fuel is called a backup tax. Gas stations purchase fuel from refineries, or middlemen, and the 20 cents per gallon tax is paid up front. The gas station shall pass that tax onto the ultimate consumer and separate the sales price from the tax imposed. These gas thieves are committing, or attempting, tax evasion when they use re-encoded cards. The thief is not the ultimate consumer paying the tax. Instead, the unsuspecting victim of credit card abuse is paying that tax. Second, the thieves are reselling the fuel for below market price. Did they pass the backup tax onto the buyer and provide a receipt separating the sales price from the tax imposed? Of course not. Any of these methods—regardless of the amount of actual tax evaded or attempted to evade—equals a second-degree felony.
Why use the Tax Code?
In many ways, prosecuting defendants for motor fuel tax violations is easier than for offenses in the Penal Code. The defendant either has the proper paperwork for a tax offense or he does not, and prosecutors do not have to track down a bunch of victims of credit card abuse as we would for some Penal Code offenses.
Also, criminals are wising up. Dallas County cases from 2019 and 2020 often involved defendants caught with a whole stack of re-encoded cards, picking up second- and first-degree felonies under Penal Code §32.315. They also were brazen enough to carry ledgers, multiple cell phones, skimming devices, and other tools of the trade alongside them. Not so much anymore. They now diversify their duties. The offender putting skimming devices on pumps is leaving his computer and tools in his hotel room. A separate criminal creates the re-encoded cards, and he outsources the job of using the cards to purchase diesel to various other defendants who are colloquially known as “runners.” The runners are now clever enough to carry only the cards they intend to use that day, which is typically fewer than five cards.
Recently, Dallas police arrested a defendant after he was caught using a re-encoded card to purchase diesel and offloading the fuel into trucks at a nearby truck stop. His only Penal Code offenses were credit card abuse and credit card fraud (§32.315, under five items), both state jail felonies. But with the help of the Tax Code, the Comptroller’s Office charged him with two motor fuel tax violations under §§162.403(31) and (34)—transport without cargo manifest and shipping docs and tax evasion. He opted for an open plea. His attorney tried downplaying the offenses, but through expert testimony from the Comptroller’s Office and from hard-working Dallas police officers, the whole scope of the crime was revealed, and the judge sentenced him to 10 years in prison.
Similar success came from another defendant who purchased diesel with re-encoded cards. An eyewitness called 911, thinking the defendant was stealing fuel out of trucks. Grand Prairie police showed up, arrested him for suspected theft, and found re-encoded cards in his truck, along with a nearly full auxiliary tank. The defendant denied stealing fuel but admitted to fueling the trucks up. The defendant named the people he worked with, including another truck driver caught the same night; the people who provided him with the cards; and those who paid him for each delivery. Dallas County successfully indicted him with the second-degree tax evasion cases, as well as a first-degree engaging in organized tax evasion.
The problem of gas thieves is not going away, especially with the price of gas continuing to rise. Texas prosecutors have successfully gone after them through the Penal Code and should continue to do so. I hope this article will raise awareness that the Tax Code is another tool in the prosecutor’s toolbox. Texas prosecutors should consider it when making charging decisions, as it might allow us to indict defendants with second-degree tax offenses that could serve as a predicate for a first-degree engaging in organized crime.
 See, e.g., LouAnna Campbell, “Austin man sentenced to life in prison for involvement in gas pump skimmer operation,” Tyler Morning Telegraph, Feb. 6, 2019, https://tylerpaper.com/news/local/austin-man-sentenced-to-life-in-prison-for-involvement-in-gas-pump-skimmer-operation/article_fd57bae8-2a56-11e9-8e09-230aeca073ef.html (life in prison for engaging in organized crime, to wit: Unlawful Interception of Electronic Communication (Tex. Penal Code §16.02)); Sariah Bonds, “Man gets 65 years for gas-skimming operation in Tyler,” KLTV, Mar. 2, 2022, www.kltv.com/2022/03/02/man-found-guilty-gas-skimming-operation-tyler/ (65 years for Unlawful Interception of Electronic Communication (Tex. Penal Code §16.02)).
 Tex. Penal Code §16.02; note that many counties, such as the Smith County DA’s Office, will also charge defendants with §16.01 for mere possession of a skimming device, as the device itself has no other legitimate purpose.
 Tex. Penal Code §71.02(18).
 Tex. Penal Code §16.01.
 Tex. Penal Code §32.51.
 Tex. Penal Code §32.315.
 Tex. Penal Code §32.31.
 Tex. Penal Code §31.03.
 Tex. Tax Code §162.403(34).
 Tex. Tax Code §162.405.
 Tex. Tax Code §162.404(a).
 Tex. Tax Code §162.407.
 Tex. Code Crim. Proc. Art. 12.01(3)(C).
 Tex. Tax Code §162.001(42) (“Motor fuel” means gasoline, diesel fuel, gasoline blended fuel, compressed natural gas, liquefied natural gas, and other products that are offered for sale, sold, used, or capable of use as fuel for a gasoline-powered engine or a diesel-powered engine).
 Tex. Tax Code §162.403(31) (“transports motor fuel for which a cargo manifest or shipping document is required to be carried without possessing or exhibiting on demand by an officer authorized to make the demand a cargo manifest or shipping document containing the information required to be shown on the manifest or shipping document”).
 Tex. Penal Code §71.02(19).
 Tex. Tax Code §162.009.
 Tex. Tax Code §162.004(a).
 Tex. Tax Code §162.001(61).
 Tex. Tax Code §162.004(h) (“This section does not apply to motor fuel that is delivered into the fuel supply tank of a motor vehicle”); see also Tex. Tax Code §162.001(43) (“Motor fuel transporter” means a person who transports gasoline, diesel fuel … or any other motor fuel … outside the bulk transfer/terminal system by means of a transport vehicle. … The term does not include a person who: (B) exclusively transports gasoline, diesel fuel … or any other motor fuel to which the person retains ownership while the fuel is being transported by the person (emphasis added)).
 Tex. Tax Code §162.1025(d).
 See Tex. Tax Code §162.001(61).
 This is often an issue. The officers always get the printout but typically do not have time to get a signed and notarized business records affidavit. The front desk clerk may not stick around, so it is important to ask detectives and/or officers to get the name, date of birth, and contact information for the clerk so that you can find and subpoena him or her for trial if you cannot secure a business records affidavit.
 Adam Colby, Director and Chief Intelligence Coordinator, and Sr. Investigator Jeff Roberts are both potential expert witnesses in any gas skimming-related trial and work at the Texas Financial Crimes Intelligence Center (FCIC), located at 100 N. Broadway, #400, Tyler, TX 75702; www.tdlr.texas.gov/fcic. Email the center at [email protected], or contact Investigator Roberts directly at 903/590-4980.
 Tex. Tax Code §162.102 (gasoline); Tex. Tax Code §162.202 (diesel).
 For this reason, and unless a case involves dyed diesel (no tax paid upfront), these cases do not require restitution. Even so, tax evasion still occurs because the backup tax is specifically designed to be passed on and paid for by the ultimate consumer buying gas at the pump.
 Tex. Tax Code §162.1025(a) and (b).
 Texas v. Morenomuriel, Nos. F2082003 and F2082004 (204th Jud. Dist. Ct., Dallas County, Nov. 2, 2021).
 Texas v. Burgostorres, No. F2000537 (283rd Jud. Dist. Ct., Dallas County, July 9, 2021) (pled to J).