Good question. Maybe it was taken to another state at some point, false bill of sales created and a claim of a lost title made. If it was kept out of California's system, it would not have been caught, until California checked the VIN when it was on its way out of the country.
Other possibility is that California is so incompetent that when someone applies for a replacement title on a VIN that CHP knows is stolen, DMV doesn't have a computer system that shows the VIN as stolen. Or at least, in 1983, didn't have such a system.
National Crime Information Center
From the article, it wasn't the state of California or CHP that caught this vehicle, it was U.S. Customs.
NCIC information that Customs most likely used is also available to all state DMVs.