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Sunday, April 3, 2011

FBI Seizes Documents in Police Tow Scam

FBI seizes documents in towing case
The Baltimore Sun by Peter Hermann - April 3, 2011

Federal agents seized documents related to insurance claims during a search earlier this year of a Rosedale auto body shop, possibly indicating that a corruption probe into a towing scheme that has ensnared 30 city police officers may now be broadened to include insurance fraud. According to court documents that were recently made public, boxes of documents and other items were seized during searches conducted at Majestic Auto Repair Shop and the Rosedale home of one of the shop's owners, who has been charged with paying kickbacks to city police officers for steering business his way. Prosecutors say that officers who responded to car accidents got $300 for each damaged car they sent to Majestic. The complaint alleges the officers told motorists that if they went to that shop, bypassing shops contracted with the city, they would not have to pay towing costs or insurance deductibles. Court documents filed in February allege numerous attempts to defraud insurance companies, including allegations that Majestic workers inflicted more damage on vehicles than they sustained in accidents. No charges related to insurance fraud have been filed, though federal prosecutors told reporters at a news conference two months ago that their investigation had not concluded.

The new court documents reveal items seized at the car shop on Philadelphia Road and at a home on Wilhelm Avenue. The applications for the search warrants — in which agents describe in detail why a search warrant should be granted — remain sealed. But one court document written by FBI Special Agent Robert E. Guynn shows what authorities were seeking from Majestic. It lists cash, logs, accounting ledgers, real estate records balance sheets, bank account statements, safe-deposit keys and receipts "related to the purchase of parts or other items used to repair automobiles." In addition, Guynn wrote that agents were seeking "any and all documents related to insurance claims, including but not limited to tow receipts, parts receipts, estimates, supplemental estimates, notes, correspondence, invoices and pictures." The agent also wrote that among items sought were "records of bribe payments." Court papers say the accused officers called themselves the "untouchables group" and bragged about taking advantage of unsuspecting victims. By skirting the city's medallion towing system, the victims initially saved money on towing and repair costs, but some later complained that the work was shoddy and that it cost more to have the repairs redone. The officers reportedly pocketed thousands of dollars; authorities say one pulled in $14,500 in a single year.

Federal prosecutors filed criminal complaints against 17 of the officers in February, sparking one of the biggest roundups of police officers in years. More than a dozen other officers were suspended. In March, a grand jury indicted 10 of the officers, along with the Majestic workers, on conspiracy charges. The remaining seven officers are still charged by criminal complaint, a signal that they are cooperating with investigators and may plead guilty in exchange for testifying as government witnesses. The Baltimore Sun reached attorneys for three of those seven officers on Monday. "There is nothing I can tell you," said Michael Scotland Morris, who represents Officer Jaime Luis Lugo Rivera of Aberdeen. Asked about plea negotiations, the lawyer for Officer Kelvin Quade Manrich of Gwynn Oak said, "We're not that far along yet." Attorneys for the owner and employees of Majestic did not return calls. An FBI agent listed 27 items seized from Majestic, including a "box of insurance documents and invoices," an "envelope containing estimates" and numerous customer files, towing receipts and logbooks, along with financial records of customers. The agent also listed seizing a computer, a cellphone and an iPhone. From the house on Wilhelm Avenue, the FBI reported seizing a "manila folder with documents from Majestic," along with two computers, a box of receipts and business cards, and a list of cash deposits and email confirmations of cashier's checks from the "City of Baltimore."

Because the search warrant applications have not been made public, it could not be ascertained why agents wanted to seize those items. A spokeswoman for Maryland U.S. Attorney Rod J. Rosenstein declined to comment on the pending case. In an interview in February, City Councilman Robert W. Curran, who has closely followed the towing issue and supports towing regulation, described the alleged scheme this way: "It's an insurance scam." Prosecutors charged that officers told accident victims to hold off calling their insurance companies and to let the officials at Majestic act as intermediaries. The court documents describe how one officer, talking with the repair shop owner, recommended doing "more damage to the vehicle" in order to submit a higher insurance claim. The practice even had a name, the complaint said: "souping it up." And a woman who was involved in an accident 16 months ago described in an interview how an officer convinced her to let Majestic take her damaged Volkswagen Golf by saying he "could have a tow out here real quick." Mario's Towing Services towed her car to Majestic and charged her insurance company, Geico, $350 for the ride, an additional $120 for storage and a $75 administrative fee, according to a receipt the woman provided to The Sun. A city contractor would have charged her $130.

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