The criminal case against the owners of a Mobile tow truck company — one that two local judges have already raised questions about — will be presented to a grand jury to determine whether the case the Mobile Police Department (MPD) is building merits a criminal indictment.
On Monday, Nov. 4, District Court Judge Joe Basenberg said there was sufficient evidence to support sending insurance fraud charges against the owners of SOS Towing to a grand jury, though he also said MPD has built a “very weak case” against owners Gary Smith Jr. and Gary Smith Sr. so far.
As Lagniappe has reported, the Smiths were arrested in September on five counts of insurance fraud and police seized all four of the company’s tow trucks.
The basis of the allegations were that SOS charged motorists for services that are prohibited when responding to accidents for MPD officers. At the time of the alleged violations, SOS Towing was one of dozens of local wrecker services on a rotating list called to accidents MPD responds to.
Because some of the charges SOS billed for fell outside what the city ordinance allows wrecker services on MPD’s rotation list to charge and were subsequently presented to an insurance company, Mobile County District Attorney Ashely Rich’s office has maintained the owners committed insurance fraud.
However, prosecutors have also conceded that there isn’t a precedent for bringing state fraud charges against a company because it violated a city ordinance that already has its own administrative penalties.
As Lagniappe has reported, the Smiths have also been fighting a civil forfeiture action filed by the state in an attempt to permanently seize their four tow trucks, which the state maintains were connected to the crime because they were used to perform some of the services that were improperly billed.
Their attorneys sought a temporary restraining order (TRO) in hopes of having the trucks returned because of the significant impact it’s having on their business, and while Circuit Judge Wesley Pipes said he has no doubt the seizure is threatening their business, he denied the TRO and instructed the Smiths to attempt to obtain a bond to recover the vehicles while the case is pending.
Last week, Pipes wrote that state law identifies that type of bond as one of the specific remedies in cases like this, and noted that the Smiths haven’t attempted to obtain one. They have argued that the law requires the bond to be two times the value of the contested property and they simply can’t afford it.
Pipes did leave some room for the Smiths to revisit the possibility of a TRO to get their trucks back if they can show “evidence of attempting to obtain a bond and the failure to do so” either because no bonding company is willing to issue one or because it’s too expensive for them to afford.
Like Basenberg did in the Smiths’ criminal case, Pipes ruled against them but raised questions about the charges, adding that there’s “a serious question” as to whether violating a city ordinance can be the basis for an insurance fraud charge in state court. He went on to question the basis of the charges themselves and noted that the Smiths have a reasonable chance of winning the cases against them.
“The court questions whether the act of sending an invoice to an insured vehicle owner, or to the company itself, can be described as presenting ‘false’ information to an insurance company in order to receive payment for a claim or pursuant to a policy,” Pipes wrote. “There is no allegation that the services were not rendered; there is no allegation that the invoices were padded; the sole allegation is that the rates for those services exceed those allowed by the city of Mobile for participants in the rotation list.”
It’s also worth noting that the city ordinance at the center has been confusing for a lot of companies and alleged violations led to five businesses, including SOS Towing, being suspended from MPD’s rotation list in July. The Mobile City Council is currently looking to rewrite the document from the ground up.
Some of the confusion can be traced back to a 2015 memo that MPD itself shared with companies instructing them on what fees and rates they could charge when participating on the rotation list. The trouble was, the rates on that memo were wrong. MPD conceded as much after acknowledging that its own impound yard had been overcharging some motorists with fees outside the city ordinance, too.
An internal investigation and audit of the charges the MPD impound yard has collected in recent years has already led to payouts to overcharged motorists and personnel changes within the division.
As Lagniappe has reported, the supervisor over the impound has since been transferred, but MPD has maintained that decision was unrelated to its internal investigation of the impound yard.
Another impound employee, officer Matthew Gargan, was suspended and eventually dismissed from his post in late September. A spokesperson confirmed the decision, but as a policy, MPD doesn’t release information about personnel decisions unless they’re appealed by the affected employee.
Gargan initially did just that and was scheduled to contest his suspension and termination in a hearing before the Mobile County Personnel Board Oct. 31. However, on the morning of the hearing, the appeal was withdrawn after MPD agreed to modify Gargan’s dismissal and list it as a resignation.
The agreement was reached between Gargan’s attorney and MPD attorney Wanda Rahman, both of whom declined to comment on what led to Gargan’s initial dismissal after the meeting adjourned.
This page is available to subscribers. Click here to sign in or get access.
It looks like you are opening this page from the Facebook App. This article needs to be opened in the browser.
iOS: Tap the three dots in the top right, then tap on "Open in Safari".
Android: Tap the Settings icon (it looks like three horizontal lines), then tap App Settings, then toggle the "Open links externally" setting to On (it should turn from gray to blue).