Undercover Investigation: Tracking Down Sandy-Damaged Cars for Sale

How a NJ used car dealership got caught selling a Superstorm Sandy-wrecked truck that was meant to be trashed.
8:53 | 08/26/14

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Transcript for Undercover Investigation: Tracking Down Sandy-Damaged Cars for Sale
And tonight, a "Nightline" investigation that will take whatever wrn concerns you have about questionable car dealers and put them on steroids. This goes beyond selling you tinted windows or high-priced speakers you may or may not need. This dealer is selling blatant and lethal lies. We've been following the story of flood cars for months now. And tonight, ABC's gio Benitez has the latest twist. You take cash? Some places don't take cash anymore. Reporter: That's $20,000 in the trembling hands of a "Nightline" producer named Erin. The guy in the ac/dc t-shirt, grinning while accepting that cash. That's a used car salesman named jack douek. He's clearly a confident guy. But if he only knew how this transaction could change his life after we catch him putting a potentially dangerous truck back on the road. Go. I have no idea what he told me. Reporter: We should probably start at the beginning. When superstorm sandy hit the northeast. Nearly 300 people lost their lives. Thousands more lost their homes. And then, there were the cars. An estimated 250,000 of them submerged for days in corrosive salt water. For months, following the storm, many were parked at this abandoned airport on long Island. Look at them all. And each one, a potential highway hazard. Salt water flood cars are a special kind of wreck. Flood cars rot from the inside-out. Days, weeks, months down the road, parts are going to fail. Reporter: That makes it a bit worrisome, when you see runways full of flood cars now vacant. The obvious question is, where did they all go? The answer has a lot to do with looks. That's probably atlantic ocean. Reporter: As the folks at the used car tracking service carfax showed, they look even better after a five-hour makeover. They estimate that over 100,000 sandy-battered cars ended up back on the road. Not just around Jersey. But across America. We see the Mercedes on-lot right there. Reporter: Here's one in Omaha. And another in St. Louis. Kind of an old-fashioned notion that they traded it in locally, right? Reporter: And even a land-locked lawman in Iowa is on the lookout for hurricane wreckage, passed off as pure. Even though hurricane sandy happened, what? 1,200 miles away, these cars are shipped all over the place. Reporter: To get a closer look, our producer, jerry, tracked down a flood car through a V.I.N. Number. And wearing hidden cameras, chased it down at d&d auto sales at old bridge, New Jersey. I spoke to somebody about a track. I'm jack. Reporter: That's jack. Remember the guy in the ac/dc t-shirt? It's a beautiful looking truck. It's so big. What can you tell me about this truck? The engine runs good. Reporter: What jack doesn't know is we know a lot more about this Ford f350 than he does. We know that it was owned by a guy named Mike Kennedy. Yeah. Reporter: We know that Mike's kids loved that truck so much, they named it spirit. When sandy hit, the kennedys watched sea water swallow their point pleasant, New Jersey, neighborhood. And with it, spirit. She was under water for two days. Reporter: Mike, submitted a claim to his insurance company, which declared spirit a total loss. And sent him a check for $32,000. It is the insurer's responsibility to brand the title forever. Marking it as a salvage vehicle, knocking serious money off its value. But somehow spirit made it through the auction and on to d&d's lot, with a price tag of nearly $20,000. But jack, he has nothing but praise for spirit. There's leather in here. Reporter: Until the truck won't start. The battery is dead. You don't run them every day, the batteries die out. Right. Can they take it to a mechanic? You can bring your mechanic here. We have a lift. But our insurance won't allow it to go anywhere. How about I bring the mechanic here. We take a look at it. Sure. You can do that. Reporter: The next day, jack doesn't seem so eager to sell spirit anymore, citing a red flag that comes up on carfax, the used car tracking service. Our carfax is showing that the vehicle has been in a flood. I told my boss. And I don't know if you want to keep it or you want to return it to the auction. You know what I mean? I want to be honest with you guy, and let you know. Oh. Yeah. Reporter: Now, jack is refusing to sell spirit to jerry because it's a known flood vehicle. Maybe he didn't like all that talk about a mechanic coming by. But the next day, what do you know? Spirit is still forsale at d&d. So, we need a new buyer. Someone with 20 large in cash and no tough questions. Someone with hidden cameras in her glasses and her water bottle. Someone like Erin, our producer with a shaky hand. Just to make things interesting. We send spirit's former owner along for the ride. There she is. How are you doing? I want to buy a truck. I want a big truck. Reporter: And even though jack refused to sell this potentially dangerous truck just a few days earlier, Erin is quickly behind the wheel of spirit. If I can walk away, giving you 20 for everything -- You want to take it now? I want to take it now. Okay. She's excited. Okay. Reporter: She hands over the 20 large and signs the printed agreement. And now that Erin owns the truck, jack finally brings up the vehicle history. Everything is clean on this one. Title is clean. The only thing on the carfax is weird. Reporter: Not just weird. It clearly states that spirit was in a flood and was declared a total loss. It was a flood or something. It's a glitch or mistake. I'm going to check it. You think that's a flood -- Yeah. It's not. Everything is clean on it. The title is clean. Okay. Reporter: As Erin signs the slew of documents that come with buying a car, notice how jack casually mentions the salvage agreement. Now, this is a document that says the buyer understands that the truck is a flood vehicle. But he makes it seem like it's just a formality. And it's a what? Sorry. They salvage agreement. Basically for vehicles, when they salvage or something, we just have it on file, in case it was. You know what I mean? Okay. You're all set. Hey. Thanks very much. Okay. Here we go. Reporter: Mike takes spirit home for a family reunion, where he notices a few obvious signs of watery history. I had tools in the glove box. And the tools are still here. They're no longer functional tools because they're rusted shut. That water was up to here. The front seats don't work. I can't imagine what else doesn't work in here. Reporter: These guys will. They are jerry shore mechanics. And they know a flood vehicle when they see one. That's water-driven. There's no doubt about that. That's, like, fine silt. Oh, my god. This thing might catch fire. If an air bag blows up on you, you could crash. Would you put your family in here? Not in a million years. I wouldn't drive this truck out of here. One frank. Sam, unicorn. Reporter: No one else will have to drive a flood car out of d&d auto, either. Since our investigation initially aired, the New Jersey motor vehicle commission and attorney general's office conducted their own investigation into d&d auto sales. This week, Jonathan Olin, the operator of d&d pled guilty to selling seven flood cars. And will face three years in state prison. Jack douek, that salesman who let Erin drive away in spirit, he faces three pending charges, including conspiracy to commit theft by deception. We reached out to jack for comment. But he hasn't called us back. And the New Jersey attorney general revealed a motor vehicle agency employee was creating the false clean titles for those flood cars. She pled guilty and faces up to a year in county jail. For "Nightline," I'm gio Benitez, in New York.

This transcript has been automatically generated and may not be 100% accurate.

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