This is a follow up on a poorly phrased question. Assume a car is the only asset anyone has in this scenario.
Person B steals a car from person A by forging the registration in a fraudulent manner.
Then Person C steals the car.
What happens to the car once everyone is caught? Does person A get the car back, or are they only able to collect damages from person B, who is broke? Does person C keep ownership of the car since they didn't steal from the legitimate owner, or do they give it back to A?
The fraudster (B) in this scenario does not have good title in the car and so the thief (C) doesn't either: 1) because they are a thief and 2) because the person they stole it from didn't own it. If C had paid B for the car then C would still not own it because while they are no longer a thief, B still doesn't have good title. This is the case even if C didn't know that B didn't own the car. A is entitled to recover the car from whoever has it.
There are 3 exceptions to this rule:
Voidable title: If B acquires title through a contract that is voidable (e.g. A is a minor) and then sells it to C. C as an owner in good faith owns the goods even if A voids the contract with B.
Entrustment: If B has been entrusted the goods by A and sells them (perhaps by mistake) to C in the ordinary course of B's business. C as a good-faith buyer owns the goods. A can seek recompense from B but cannot get the goods from C. This probably needs an example, I take antique jewellery to an antique jeweller for cleaning, the jeweller's assistant mistakenly sells them, I lose the goods and the jeweller must compensate me.
Negotiable instruments: Certain things, notably cash, cheques, shares and bearer bonds are subject to different rules. If B steals, say cash, from A and then uses that cash to buy something from C, A cannot demand the return of the cash from C unless they can prove that C knew that B had stolen it. Negotiable interests belong to anyone who acquired them in good faith.
In all cases, a good-faith actor who is out of pocket is owed compensation from the bad faith actor - whether it’s possible to collect this is a practical rather than a legal issue.
Everything may theoretically vary by jurisdiction, which you haven't specified.
Stolen property remains the property of the lawful owner.
Assuming that Person A can demonstrate their lawful ownership, person A gets the car back.
If the car has been damaged or destroyed, person A may sue persons B and (possibly) C for restitution to cover the loss. In this case, person C is responsible for any damages that occurred while the car was in his/her possession, while person B is responsible for all damages that C does not or cannot pay. The fact that person B is broke may make it difficult to recoup such damages.
If person B's forgery is effective enough to convince the court system that person A actually sold the car to person B, then person B would get the car. But I'm assuming from your phrasing "everyone gets caught" that this is not the case.
There is no scenario in which person C retains possession, as person C has been caught with a stolen vehicle.
I'll consider the legal situation in Germany:
In German civil law, there is a distinction between ownership (Eigentum) und posession (Besitz). While the Besitz can change, Eigentum never changes by theft itself (at best if the stolen item is inseparably tied to another). Regardless of this, according to § 935 Abs. 1 S. 1 BGB (civil code of Germany) acquisition of ownership of stolen items in good faith is explicitly impossible.
This means, Person A remains legal owner all the time and is entitled to restitution of the car by whoever is in posession of it according to § 985 BGB.
In Germany, theft is punishable according to § 242 Abs. 1 StGB. There, theft is defined as seizure of a third-party chattel. Seizure is defined as breaching the keeping of somebody else and establishing new (not necessarily own) keeping of the item. NB: Keeping in criminal law is different from posession in civil law.
Since the purpose of the norm is to protect the keeping itself to discourage any kind of unauthorized seizures, even the unlawful keeping is protected. In other words, that a unlawful seizure occured can not justify another seizure. Furthermore, for the owner it becomes harder to get his keeping back if the item is stolen again once he has to trace multiple thefts.
For these reasons, it's possible to render oneself liable to prosecution by stealing an already stolen item out of the keeping of its theft.
By taking away the car from A, Person B commited a theft.
By taking away the car from B, also Person C commited a theft and is liable to prosecution.
