Mesa-based Cactus Towing overcharged customers and insurance companies more than $220,000 in the late 1990s and early 2000s through a series of exclusive tow contracts with law enforcement agencies in the East Valley, a Maricopa County Sheriff’s Office investigation has found.
The overcharges stemmed from various service fees that were specifically restricted in the contracts that Cactus held with the Arizona Department of Public Safety and Mesa and Chandler, according to the investigation.
The contracts called for Cactus to tow vehicles that were involved in crashes or arrests within the jurisdictions of the agencies. Unauthorized fees were listed on invoices that Cactus kept hidden inside the company’s computers, which were seized in a March 2005 raid.
Investigators found that customers were often handed a bill that concealed the source of many of the charges, including administrative, winching, license-plate removal and window taping.
Cactus Towing drivers were told to cover car windows that were down with plastic wrap to protect a vehicle from rain and dust. But the drivers also used protective wrapping on vehicles that didn’t need it, former Cactus associate Mark Brammer told investigators.
Brammer operated Arizona Collision Repair and Salvage from the Cactus tow yard for nearly a decade and stopped working there in 2004.
“You say you’re saving the interior. That never happened. It was just a good story,” he told investigators. “Plus, you’re taping cars that had rolled over nine times and the person was killed in it. There’s no salvage, there’s no protective value, there’s nothing.”
The Cactus overcharges were the focus of an 18-month investigation by the sheriff’s office, which has provided more than 10 binders of investigative material to the Tribune.
“The heart of this investigation is about the fraudulent activity from these law enforcement contracts,” said Lt. Paul Chagolla, spokesman for the sheriff’s office. “Habitual overcharging of fees not allowed by the contracts led to customers, vehicle owners and insurance companies being defrauded.”
The white-collar fraud investigation has been handed over to the Arizona Attorney General’s Office, but has not resulted in any indictments against former Cactus owner Lee Watkins or general manager Todd DeMasseo.
The Cactus business was sold to Phoenix-based Rush Auto Recyclers in June. Cactus attorney Kent Nicholas said Cactus didn’t lose any towing contracts with local law enforcement agencies, despite past scrutiny of the company.
Watkins and DeMasseo did not return phone calls.
The investigation shows that the systematic overcharges of Cactus’ customers often led to them losing the ownership of their vehicles. Some customers would sign away the titles to their vehicles instead of paying a high tow bill.
Other customers lost their vehicles because Cactus was able to claim title to the vehicle through Arizona Motor Vehicle Department before they could pick it up.