textfiles/law/fbijun03.law

June 1990                               
                                                                  
                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.''