A week after their company was reinstated to work the Mobile Police Department (MPD), the owners of SOS Towing were arrested by investigators on allegations of insurance fraud.
According to an MPD spokesperson, officers executed a seizure warrant at SOS Towing Tuesday based on information the company was charging fees “above those regulated by municipal ordinance.” Owners Gary Lamar Smith Sr. and Gary Lamar Smith Jr. are now facing eight counts of first-degree insurance fraud and two counts of second-degree insurance fraud. In Alabama, first-degree insurance fraud means the loss or potential loss exceeds $1,000. Police also seized four wreckers from the scene.
The new development comes as city officials are beginning the process of tweaking an “ancient” municipal ordinance that brought some local companies to the brink of closing and has now led to arrests.
While MPD doesn’t regulate private business, it is tasked with enforcing rules set by city ordinances for companies that tow vehicles from wrecks officers respond to. If a motorist doesn’t request a specific wrecker service, officers call one from a rotating list of more than four dozen local tow companies.
Police began aggressively investigating five of those companies in July, and at the discretion of Chief Lawrence Battiste, suspended them from MPD’s rotation list for allegedly collecting charges that aren’t allowed under the ordinance. In all, it was a two-month loss of a revenue stream some of the companies said easily accounts for more than 60 percent of their business.
Last week, though, MPD announced it would not be seeking to extend those companies’ suspensions into a third month. Assistant Chief Roy Hodge has since said that’s because there was growing push among some members of the Mobile City Council to reinstate the companies. Councilors had upheld two of MPD’s suspensions on appeal, but there was concern some wouldn’t support a third.
“We felt they wouldn’t uphold the suspension if it were extended a third time,” Hodge said. “Based on the communication we were getting from them, their position was that we shouldn’t go back and suspend the companies again. Really, they didn’t really want to go along with the second suspension.”
For now, the MPD’s administrative investigation seems to be over, at least as far as those five initial companies are concerned. However, Hodge said investigators are still conducting a criminal probe into multiple local towing companies — an effort has only led to charges against SOS Towing so far.
Even with their suspensions lifted, some of the five towing companies removed from the rotation list are raising concerns about how MPD’s investigation has been handled. They believe most private towing companies are operating in violation of some part of the city’s ordinance, yet only five were removed.
They’ve presented invoices from other companies that seem to show some of the same violations, including itemized charges for fees not permitted under the ordinance. So far, none of those companies have been suspended, which has led to allegations of “selective enforcement” against MPD.
At the same time, MPD also acknowledged its own impound yard improperly charged motorists for at least the past four years and most likely longer than that. Investigators are now in the process of auditing their own records dating back to 2015 so they can reimburse citizens for any overcharges.
After reviewing just three months of charges, which have added up to more than $5,000, and Hodge said the process of going through the 41 remaining months will be time-consuming for the department.
“It’s going to take a while,” Hodge said. “When you look at the number of vehicles that were released, it’s generally a couple hundred every month, and we have to look at the file for each one of those.”
He also confirmed reports the supervisor over the impound lot has since been transferred, but said that decision was made because of other factors and has nothing to do with MPD’s internal investigation.
But even as the investigations seem to be settling down, the City Council is just getting started with the task of rewriting the ordinance that has led to these issues. Councilwoman Bess Rich, who chairs the public safety committee, said in a meeting last week the “ancient” ordinance needs to be rewritten.
“We are going to probably wind up writing an entirely new ordinance as opposed continuing to amend this,” Rich said. “I think that would be in everyone’s best interest — not just for [the towing] industry, but also for [the city] to oversee it and make sure it’s enforced and operational.”
Several representatives from the industry spoke at the same meeting to voice concerns with the ordinance.
Chad Fountain of A+ Towing said rules currently force companies like his to choose between violating state law, violating city law or losing money. That’s because state law requires them to register an unclaimed vehicle after 48 hours, which can take a lot of time, paperwork and title research.
MPD has to do the same thing, but has administrative employees on staff. Most private companies contract that work out in order to move forward with selling or disposing of vehicles that get left on their lots. That typically costs $150 a car, but as it stands today, passing that on to a motorist or insurance company is a violation of a 30-year-old ordinance that doesn’t permit “administrative fees.”
Instead of adjusting several of the individual items towing company’s brought up during the meeting, Rich and other committee members seemed to favor addressing those issues by raising the flat fees for each tow to help make up the difference. It appears MPD was already planning to do that as well.
Currently, the rules put a $125 cap on charges for towing an average-sized vehicle from an accident and only allows a $15 charge to be added for every 90 minutes workers spend after the first hour. Under the new proposal, the base rate would increase to $150 for the first hour and $75 every hour after that.
For wrecks that require larger equipment, the base fee would move up to $350.
In all, the response from the industry representatives seemed to be positive, though there are clearly some others issues that will need to be ironed before a draft is released for public comment. Garry Smith Jr., one of the owners of SOS Towing arrested by MPD this week, previously said one of the things he’d definitely like to see addressed is the power that the current ordinance gives the chief of police.
“I’d like for that to be put in the City Council’s hands, because I don’t think one person should have the keys to 50-plus businesses and be able to lock those doors at any time,” Smith said. “The biggest thing about this whole issue was that we were not given due process. One person can shut all of our businesses down, and I don’t think someone who can’t be fair across the board should have that right.”
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