Towing Corruption Investigation Expands

… City suspends tow operator …

By Peter Hermann and Julie Scharper, The Baltimore Sun

12:02 AM EST, February 26, 2011

A federal corruption probe that has already led to more than 30 Baltimore police officers suspended or charged with receiving kickbacks in an alleged towing scheme has expanded to include at least one former officer from a state law enforcement agency.

Meanwhile, the criminal investigation is prompting renewed scrutiny of the city’s lucrative towing industry, which led to quick action Friday when police suspended the license of one of the 10 companies with exclusive rights to the $4 million-a-year business.

That move came after a Baltimore Sun reporter told officials that Aaron’s Towing on Kirk Avenue had been barred by the state from doing business for the past two years, which had gone unnoticed by city officials.

Authorities are now involved in separate reviews; one that focuses on police officers accused of receiving money for persuading motorists to bypass the city’s authorized towing companies; and the other into the city’s towing system itself.

The revelation that a police officer outside the city might be involved could indicate a wider problem than officials had previously disclosed. A Maryland Transportation Authority Police spokesman confirmed Friday that an officer who resigned two weeks ago in an unrelated misconduct case is now part of the federal investigation.

“We’re going back and looking at everything he did,” said the transportation authority spokesman, Sgt. Jonathan Green. The MdTA Police hired the former officer, Herberto Esteves, after he resigned from the Baltimore police force in 2008.

In a brief interview, Esteves denied having anything to do with the alleged scam and said he first heard about it through the media. “I have nothing to do with that,” he said Friday.

Green said his agency wants to know “what he did and whether there are any parallels to what happened in the city. At this point, there is no indication that any of our current officers are involved in this investigation.”

But The Baltimore Sun has interviewed two motorists who said transportation authority officers steered them to the Rosedale repair shop named in the federal case, Majestic, after crashes on the Interstate-395 spur and the Harbor Tunnel Thruway in 2009.

A spokeswoman for the Maryland U.S. attorney’s office, which brought extortion charges against 17 city officers, declined to comment beyond what is contained in the 41-page criminal complaint. But she did describe the investigation as continuing. The owners of Majestic — brothers who were charged by federal authorities with extortion — could not be reached for comment Friday.

The allegations have focused attention on the city’s 10 tow truck firms known as “medallion” companies because of the police-issued stickers that adorn their trucks. They do not have to compete for their exclusive rights to the city’s towing business. The small circle of companies — at least three of which are owned by one family — has had a lock on the city’s towing business for decades.

Problems with Aaron’s Towing surfaced Friday. Robert Young, deputy director of the Maryland Department of Assessments and Taxation, said the company forfeited its state business certification in October 2008 after failing to file paperwork.

The company has a lien against it because it owes employment insurance tax, according to a September 2009 letter from the state Department of Labor, Licensing and Regulation. “When you’re forfeited, you’re supposed to stop doing business in the state,” said Young. Continuing to operate without a state license is a misdemeanor that carries a $500 fine, he said.

It is the responsibility of a licensing body — in this case, the city — to ascertain whether a company has the proper certification, Young said, adding that the department’s records are easily accessible.

Anthony Guglielmi, a spokesman for the Baltimore Police Department, which supervises the city’s medallion towing program, said that Aaron’s would be barred from city work until its state certification is reinstated.

Edith Scott, the owner of Aaron’s, said that she was unaware that her state certification had been revoked. She said that she planned to take a second mortgage on her home to pay the $30,000 she believes she owes in back unemployment taxes.

She blamed her financial problems in part on the city taking too long to remit payment for her towing services. “They take their own time in paying you,” she said. A spokeswoman for the city transportation department declined to comment.

It was unclear how city officials approved a lucrative towing contract with Aaron’s without noticing that it lacked state certification. The five-member Board of Estimates, which includes the mayor, City Council president and comptroller, signed a two-year agreement with the towing companies, including Aaron’s, in 2009.

“At the end of the day, it’s incumbent on us to check [the company’s certification], and it’s clear we didn’t do that,” Guglielmi said.

It is companies like Aaron’s that the Baltimore police officers charged in the alleged scheme were telling accident victims to avoid.

According to the criminal complaint, the officers called themselves the “untouchables group” and bragged about taking advantage of unsuspecting victims they were supposed to have been helping. By skirting the medallion system, the victims saved money on towing and other costs, and authorities said the officers pocketed $300 for each referral. One officer pulled in $14,500 in a single year, prosecutors said.

The pitch to helpless motorists resonated with people who had just been in a crash. Theresa Sherman, 40, said she emerged unhurt but shaken after she slammed her Volkswagen Golf into the back of an Acura Legend 14 months ago, a crash so violent it caused her airbags to burst open and split her car’s engine in two.

She stood by the wreckage on I-395, near Camden Yards, and briefly thought about calling her insurance company for advice. But in the hazy aftermath, she said she quickly agreed with the police officer who told her he “could have a tow out here real quick.”

A police officer had the Volkswagen towed to Majestic; she couldn’t recall whether the officer called or whether the officer gave the number to her friend, who called. Her car was totaled, and she then had it towed to an auto salvage yard.

Sherman said she didn’t think much about the encounter until she saw news stories on the arrests this week. Now, she said, “I feel I was taken advantage of in a vulnerable situation.”

She said she paid her deductible but got towed for free.

But it wasn’t free for her insurance company, Geico, which shelled out more money to Majestic than it would have had the officer followed the rules and contacted an authorized tow company, which would have charged $130. Sherman would have had to pay that, but could have tried later to get reimbursed from her insurance.

Majestic sent Mario’s Towing Services, which is no longer in business, which billed Geico $350, according to a receipt provided to The Sun by Sherman. Majestic billed the insurance company an additional $120 in storage fees and a $75 administrative fee.

Prosecutors said the officers tried to hide that they had steered motorists to Majestic on accident reports by either leaving the box listing the tow company blank or by writing that the victim used a company of their choice. The report on Sherman’s accident wrongly says that AAA towed her vehicle.

The name on the report is Herberto Esteves, then with the Maryland Transportation Authority Police. He was not among the 17 city officers arrested on extortion charges or the additional 14 officers from the city who were suspended in the probe.

Green said that his department suspended Esteves Nov. 23 and planned to fire him, but would not say why. He said the officer quit before the firing became official. Esteves did not say Friday why he quit. Green also confirmed that an internal police investigator from his agency called Sherman on Thursday.

Robert Parent, a 28-year-old Patterson Park resident, said he became distracted while changing radio stations when he rear-ended a car on I-895 in August 2009 near the Harbor Tunnel. After he pulled off to the side, a transportation authority officer told him an authorized tow could cost up to $150, he said.

“He told me he could call his buddies who could tow it for free,” said Parent, who did not recall the officer’s name and did not have a copy of the accident report. “Of course I’m going to let someone tow it for free. I’d never been in an accident that required my car to be towed before. I don’t know a body shop. He knew a body shop.”

Parent said the insurance company paid $10,000 for repairs on his Acura sedan. It was after he got his car home that he said the air conditioner went out, along with other engine failures. He said he ended up paying $600 out of his own pocket. He then tried to sell it, he said, but ran into problems because the replacement parts didn’t have a vehicle identification number on them.

He finally sold it, he said, but for half the $12,000 blue-book value. “I thought the officer was just being friendly,” Parent said. “And I thought the car problems were just bad luck. Now I think everyone was in cahoots. It’s obviously eye-opening.”

Copyright © 2011, The Baltimore Sun

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