A Mesa towing company was shut down Thursday by the Maricopa County Sheriff’s Office as it searched an office and two homes in a probe of fraudulent business practices.
More than 200 boxes of receipts, business documents and hundreds of computer files were taken from the Cactus Towing office, northwest of Mesa Drive and Southern Avenue, and the homes of company owner Lee Watkins and general manager Todd DeMasseo.
Cactus is the tow provider for Mesa and Chandler and for the Arizona Department of Public Safety in the East Valley. The company is also looking to renew its longtime contract with Mesa, a process tainted by allegations of corruption and favoritism.
"Our investigation will determine whether literally thousands of Valley citizens and numerable insurance companies have been defrauded of an, as yet, undetermined amount of money by Cactus Towing Company," Sheriff Joe Arpaio said in a prepared statement.
Watkins and DeMasseo were not arrested and no charges have been filed. By 5 p.m., the business was in full operation, Mesa police Sgt. Chuck Trapani said.
Kent Nicholas, an attorney for Cactus, denied the accusations of fraudulent schemes, illegal control of an enterprise and insurance fraud, and said the search warrants were "unconstitutionally broad."
Nicholas said he suspects the warrant was based on testimony from disgruntled former employees.
"We have serious concerns about the basis and veracity of those affidavits," Nicholas said.
Sgt. Kip Rustenburg, a sheriff’s office spokeswoman, would not release the sources of information. She said to her knowledge the sheriff’s office is the only investigating agency.
Chad Gammage, general manager of competitor Daryl’s Towing, said during a public Mesa City Council meeting in December that Mesa and Cactus Towing were guilty of corruption, collusion, racketeering and bid rigging. On Feb. 1, Cactus filed a defamation lawsuit against Daryl’s in Maricopa County Superior Court.
Gammage said the Arizona Attorney General’s Office is investigating, but an agency spokeswoman said she could neither confirm nor deny that claim. However, an agency representative was present at a December Mesa City Council study session during a discussion on the towing contract.
When Mesa tried to renew its nonemergency towing contract, Cactus finished third in the scoring. But David Udall, a Mesa attorney who represents Cactus, complained to the city that information was incomplete in the request for bids. Mesa threw out the bids without alerting the council and tried again. This time, Cactus was the recommended winner, but the council held off on awarding the contract.
In December, a new bid combining emergency and nonemergency contracts was released. Four companies responded by the deadline, including Cactus.