Lee Watkins has turned a struggling, two-truck towing business into an industry powerhouse by securing lucrative government contracts throughout the East Valley.
Along the way, his company, Cactus Towing of Mesa, has fended off allegations of political favoritism, critical audits and numerous customer and insurance company complaints. He now faces a Maricopa County Sheriff’s Office criminal investigation.
But Cactus Towing presses on undaunted, enjoying the support of some of the region’s most politically connected individuals. The company continues to aggressively pursue city contracts and lobby for legislation that could further enhance its business.
And even with the current sheriff’s office investigation hanging over its head, Cactus Towing has continued to succeed. It was awarded Scottsdale’s towing contract last week, and on Monday enters the Mesa City Council meeting as the staff favorite for a new threeyear contract to handle the city’s towing needs. It has had some or all of the Mesa contract since 1993 and the exclusive contract for 10 years.
Watkins said the criticism and allegations about his company come from those upset about his past political activities or from envious towing companies looking for a bigger share of the business.
"No one has been audited as much or looked up as much or demanded as much as my towing company," Watkins said. "I would put my company up against any in the state."
While the Mesa and Scottsdale contracts are significant, Cactus has enjoyed a huge chunk of the East Valley towing business elsewhere.
The company has held the Chandler contract since 1998 and the exclusive East Valley contract for the Arizona Department of Public Safety until last month, when the state agency switched to a rotation system in the area over the objections of Cactus Towing and state Rep. Russell Pearce, R-Mesa. Cactus Towing was removed from the sheriff’s and Gilbert rotations after the sheriff’s investigation began this year.
In 2001, a Chandler evaluation committee recommended that Customer One Towing replace Cactus and be awarded the contract. After a protest by Cactus, the City Council voted 6-1 to override the staff recommendation.
At DPS, Cactus’ contract for the East Valley freeways was reinstated in June 2003 after Cactus successfully sued. At that time, Cactus agreed to a two-year contract that ended last month. In January, Cactus general manager Todd DeMasseo asked DPS for another two-year extension, but DPS claimed the settlement did not allow for an extension.
DPS did not respond to interview requests.
On March 31, the Maricopa County Sheriff’s Office raided the Cactus office near Mesa Drive and Southern Avenue. More than 200 boxes of records, computers and about $25,000 in cash were taken.
Cactus Towing, which denies any wrongdoing, has said from the start that Sheriff Joe Arpaio’s investigation is politically motivated and retaliatory for Watkins’ support of Arpaio opponent, W. Steven Martin, in last year’s sheriff’s election. Martin’s campaign manager was former Rep. Matt Salmon, a paid lobbyist for Cactus.
Arpaio said politics are not involved. He said he has no timeline to complete the investigation and said more than 10 assigned deputies are working on it with the Arizona Attorney General’s Office.
"I am not going to get into the details of the investigation," Arpaio said. "I am not going to try this investigation in public."
The attorney general already was investigating Mesa and Cactus Towing for the handling of a Mesa towing bid last year. Cactus finished third in a non-emergency towing contract bid. Its lawyer, David Udall, complained to Mesa city staff and the staff rejected the bids. On the rebid, Cactus was the staff’s recommended winner but the City Council decided against awarding the contract and sent out the latest proposal. No charges have been filed against any Cactus or city officials.
This led to a lawsuit filed by Daryl’s Towing against the city and Cactus Towing, which was dismissed last month because Daryl’s had not filed a notice of claim and its statute of limitations had expired. Dismissal of the lawsuit that alleged collusion and favoritism allowed Mesa to move forward with the award of the new contract, a decision set for Monday. The company is considering an appeal.
"We still have a mess in Mesa," said Daryl Raab, owner of Daryl’s Towing. "This will not go away by a simple vote on Monday."
The search warrant affidavits citing two former employees states that Cactus ripped off body shops, insurance companies and towing customers. The affidavits also state that Cactus would use stalling tactics to charge extra storage fees and stole stereo equipment from cars towed to its lot.
Complaints released by Mesa and DPS reviewed by the Tribune reveal similar allegations over the years. There are reports that Cactus would tow vehicles to its lot over the objections of their owners, enabling it to charge a "re-hook" fee, a major revenue generator for towing companies.
There were complaints of stolen property from the Cactus lot, a difficulty in removing personal property from vehicles and Cactus’ unwillingness to release vehicles from its lot. One complaint said Cactus gave bad directions to the lot so it would be closed when the person arrived, enabling the company to charge additional storage fees.
A 1998 memo from a police sergeant to then assistant police chief and current Mesa Councilman Mike Whalen stated: "Mr. Watkins routinely takes problems and issues to other people in the Police Department and Mayor’s office when I am working on them."
A 2001 e-mail from the Mesa Police Department to former materials management director Sharon Seekins expressed a concern that Cactus was charging three different fees for the re-hooks. A sergeant wrote that he met with the Arizona Insurance Fraud Investigation Unit because of the numerous complaints from insurance companies about Cactus Towing. In October 2002, the city requested a meeting with Cactus.
Between 1993 and 2002, Mesa received 113 complaints about Cactus, a number that has dropped to eight since then, police Lt. Ben Kulina said.
Cactus Towing is a company with powerful, well-connected friends on city councils, in the Legislature and in the lobbying and legal worlds.
Pearce wrote letters to DPS in the past year demanding the state agency award a contract to the lowest responsible bidder — a process that could pay huge dividends for Cactus Towing.
Pearce, whose son works as a dispatcher for Cactus Towing, introduced legislation to change the law. It was designed to force DPS to use a competitive bid contract, which would allow for a singlevendor provider rather than the rotational system. Pearce said he pulled the legislation when DPS agreed to follow what he proposed. Pearce has since recused himself from the issue.
"I don’t care who wins the bid but the law requires a competitive bid," Pearce said. "Lee is a friend but I never, ever asked for Lee to be treated differently."
Earlier this year, Cactus hired Salmon as a lobbyist. The former congressman, gubernatorial candidate and current chairman of the Arizona Republican Party was present in the council chambers when Scottsdale awarded its contract to Cactus Towing last week, and spoke on the company’s behalf to the Mesa City Council in December. Salmon said he lobbied for Cactus on the legislation pushed by Pearce.
Both Salmon and Pearce said they are looking out for the best possible rate for the taxpayer. Salmon said he also worked for Cactus for a few months at the time Chandler renewed its contract in 2001.
"I have never seen anything in my experience to lead me to believe that everything being done is not on the up and up," Salmon said.
Sheriff candidate Martin wrote a letter to the Chandler City Council in 2001, recommending Cactus for the contract. Martin also spoke on behalf of Cactus Towing at the Chandler meeting and did so again last week in Scottsdale.
Martin, a longtime country music disc jockey and director of a popular police toy drive, said his marketing company helped out Cactus by running radio commercials between June 27 and July 1 to celebrate the 18th anniversary of Cactus Towing and promote a free tow offer.
In Chandler, Councilman and former police officer Lowell Huggins says he’s known general manager DeMasseo since he was a boy, and the service provided by Cactus has been exceptional.
"We’ve had a good relationship with them, no problem," Huggins said. "Hopefully this investigation is just another Joe Arpaio hoopla."
And Udall, a former Mesa councilman and the 2004 Mesa Man of the Year, has strong ties at Mesa City Hall. Udall also worked on behalf of the developers of the Riverview at Dobson project recently approved by Mesa voters.
In Mesa, Watkins and DeMasseo have made campaign contributions to Mesa Mayor Keno Hawker and Councilmen Kyle Jones and Whalen, ranging from $200 to $670. Watkins supported Hawker during both his mayoral campaigns. Udall has given money to all current council members with the exception of Councilwoman Janie Thom.
In Gilbert, Watkins and Udall each gave $200 to Gilbert Mayor Steve Berman in August 2001 — five months after he was elected mayor for the first time — with the hope of securing an exclusive city contract, Berman said.
But Gilbert remained on a rotation system and Berman said they never asked again.
In Chandler, Watkins gave $340 to Bob Caccamo during his first run for City Council in 2002. On the same day, W. Steven Martin gave $100.
Watkins said he’s also helped raise money for Presidents Richard Nixon and Ronald Reagan, former California Gov. Pete Wilson and Sen. John McCain, R-Ariz.
"I really do try to get people money that I think will be really good people to work for the city," Watkins said. "I’ve never asked a politician for a favor, just that you give me a level playing field."
Watkins is no stranger to politics himself.
He filled two posts in Gov. Evan Mecham’s administration. He stepped down as the state’s first "drug czar" after it was publicized that he robbed a post office in El Centro, Calif., in 1959 at the age of 19. He was later appointed director of prison construction.
Watkins, 64, was accused of making death threats against former gubernatorial aide Donna Carlson. The alleged threats were presented to a grand jury, but Watkins never was indicted. Mecham’s impeachment made reference to the governor’s supposed hampering of the investigation. Watkins said the situation was "one of the tools used to force out Mecham."
In 1989, Watkins agreed to leave the insurance business in return for the Arizona Department of Insurance tostop investigating charges that he submitted false information on license applications. At that time, he was forced to say that in 1966 he pleaded guilty to a misdemeanor charge of assaulting a woman in Phoenix.
He also worked for the Orange County, Calif., Republican Party and made an unsuccessful bid for the Mesa City Council in 1986.
Watkins said he’s not the same person he was as a teenager.
"I wish it weren’t an open book because people look at you funny, but that’s life," Watkins said. "I’ve made mistakes and will probably pay dearly for the rest of my life."
• Holds exclusive contracts with Mesa, Scottsdale and Chandler; on rotation system with Arizona Department of Public Safety for East Valley freeways
• Estimated 50,000 tows per year
• Owned by Lee Watkins, a Mesa native who served in Gov. Evan Mecham’s administration
• Based in Mesa
• Founded in 1988
Awarding of towing contract
What: Mesa City Council meeting
When: 5:45 p.m. Monday
Where: 57 E. First St.
Information: (480) 644-3333