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TOWING COMPANIES: FRIENDS OR FOES?
By
Michael C. Gillo
Investigator
Broward County State Attorney's Office
Ft. Lauderdale, Florida
Law enforcement uses towing companies extensively. Usually,
these companies are under contract awarded through a bidding
process. This gives the company exclusive rights to do all
towing for individual agencies. In metropolitan areas, a company
could be responsible for towing up to 100 vehicles a day. The
fee for each tow, plus storage charges, generates large amounts
of revenue.
Unfortunately, once a towing company has temporary legal
possession of a vehicle, many law enforcement agencies believe
their responsibility ceases, except for the prosecution of the
offender. When a towing company removes a vehicle at the
direction of a law enforcement agency, it acts as an instrument
of that agency. It gains lawful, though temporary, possession of
the vehicle. However, if left unchecked, an unscrupulous towing
company might use this temporary possession to gain permanent
title to the vehicle illegally. Once this happens, the company
can sell it and realize a bigger profit apart from tow/storage
fees.
Even when State statutes regulate and procedurally establish
guidelines for towing companies when disposing of vehicles, there
is opportunity for abuse and criminal activity. This became
evident during an investigation of one towing company in Broward
County, Florida. Based on an informant's tip, the Florida
Department of Law Enforcement (FDLE) initiated an investigation
that subsequently identified schemes enabling this company to
circumvent the law. This towing company obtained new titles and
sold the vehicles while hiding behind the very laws that granted
it the right to recoup service fees.
BACKGROUND
The State of Florida enacted legislation enabling towing
companies to recoup losses when there was little hope of
recovering from owners the towing and storage fees incurred.
When passed, the Towing and Recovery Association of America
(TRAA) hailed the statute as ``...one of the best in the
Nation.'' The law clearly defines the mandates to which towing
and storage companies should adhere when disposing of vehicles.
Strictly regulatory in nature, the law specifically outlines a
set procedure to follow for the legal disposition of motor
vehicles that fall under its purview. However, since the
responsibility for monitoring these statutory procedures does not
fall within a specific agency, there is no checks-and-balance
system to ensure compliance to the statute.
SCHEMES AND PLOYS
The intricate schemes and ploys detected during this
investigation served as the basis by which to gain illegal
financial profits on a large scale. Such schemes revolve around
obtaining vehicles legally and then disposing of them through
unscrupulous and illegal methods.
During its investigation, the Department of Law Enforcement
identified several ways by which the unscrupulous towing operator
gains possession of towed vehicles. For example, after being
towed to the storage compound, the towing operator routinely
searches the vehicle for a title, bill of sale, or other
documentation that would allow the company to identify the
owner/lien holder. If a lien cannot be satisfied or eliminated,
the towing operator simply sells the vehicle at auction as a
``parts car.''
If the identity of the owner cannot be determined or the
owner cannot be found, the towing company initiates a lien
process in order to sell the vehicle at public auction for costs
incurred. Usually, little or no effort is made to find or
notify the owner. Then, if left unclaimed, the vehicle can be
retitled as ``unknown'' and later sold privately.
Under the provisions of the Florida statute, a towing
operator must sell a vehicle at public auction. The statute also
stipulates that the selling agent may keep only enough money from
the sale of the vehicle to pay for the tow/storage charges
incurred. The remainder of the amount collected is to be
forwarded to the clerk of the court's registry to be held in
escrow. However, a towing operator can record a lesser dollar
amount than the actual sale price of the vehicle. By
misrepresenting the sale price, the towing company retains more
of the money collected.
Further, a towing company also may falsify documentation
intentionally to the Florida Department of Highway Safety and
Motor Vehicles (DHSMV) regarding the actual sale price of a
vehicle. The company falsifies documentation so that it does
not have to pay the proper sales tax. Or, a bill of sale, which
is necessary to gain legal possession, can be falsified. One
method is to contact the last registered owner--but not the
current owner--to sign a bill of sale. Or more simply, the
operator forges the signature of the registered owner or lien
holder. In any case, with a bill of sale, the unscrupulous
towing company processes a vehicle through the State's motor
vehicle system without question.
Another technique is to submit records showing that a
vehicle offered at auction did not sell. This allows the towing
company to claim the vehicle for towing and storage fees. The
vehicle can then be retitled and sold privately. Many times, the
vehicle does not reach the auction block. Instead, the operator
sells the vehicle before the auction date.
A towing company also may purposefully falsify the extent of
damage incurred by a vehicle or the charges for towing and
storage to insurance companies and lien holders. This gives the
appearance that the vehicle has little value. This way, the
towing company obtains clear title to the vehicle and can sell it
at its discretion.
On some vehicles, where a clear title cannot be obtained,
the vehicle identification number (VIN) of another vehicle of the
same make and model is used to gain title. Also, towed vehicles
that do not have a VIN identifier may be given a VIN from a
wrecked vehicle of the same make and model, thereby laying the
groundwork to claim the vehicle.
THE FINDINGS
The investigation referenced in the beginning of this
article was conducted jointly by the FDLE, a city police
department, a local State Attorney's Office, the Florida DHSMV,
the Department of Revenue, and the Florida Attorney General's
Office. It revealed that no safeguards are directly in place to
oversee the disposition of towed vehicles.
This particular investigation resulted in the arrest of
owners of a towing company and eight current or former employees
on approximately 250 felony charges ranging from Racketeer
Influenced and Corrupt Organizations Statute (RICO) violations,
dealing in stolen property, grand theft, falsifying title
applications, and sales tax violations. The Department of
Revenue levied $789,000 in assessments and fines. The Attorney
General's Office filed civil RICO actions on several parcels of
property used by the towing company, and the city police
department seized nine wreckers valued at approximately $20,000
each. Seven defendants pled guilty; three went to trial. Of
these three, one defendant was acquitted, another had the charges
dismissed during the trial, and the third was convicted of 10
felonies.
CONCLUSION
As a result of the investigation, the FDLE met with members
of the Towing and Recovery Association of America and the
Professional Wrecker Operations of Florida to rectify loopholes
and encourage cooperation between law enforcement and the towing
industry. Discussions have also been held to propose better
legislation regarding a checks-and-balance system regulating
towing operations.
However, the best safeguard against unscrupulous operators
is the police agency that enters into a contract with a towing
company. Police departments should not develop a false sense of
security with the towing company. Agencies should evaluate the
type of relationship they have with their towing companies, or a
review of the towing company's operations may be in order. In
any regard, departments should consider whether the towing
company they employ or enter into a contract with is ``a friend
or foe.''