After FBI raids, Duggan vows overhaul of Detroit towing practices
Detroit — A day after towing operations in Detroit and allegations of bribery emerged as the focus of a federal investigation that prompted Wednesday raids at the homes of two council members, some of their staff and at City Hall, Mayor Mike Duggan vowed to overhaul the city's municipal towing system, which he contends is "fraught with potential for abuse."
The Detroit News reported on details of the probe Wednesday after raids involving FBI agents were conducted at several locations simultaneously earlier in the day. Duggan added his observations led him to believe that The News' report that the federal investigation centers on towing is "likely to be true."
"The amounts of money that are involved are just breeding potential for abuse," the mayor said at a press conference at Detroit's Public Safety Headquarters.
Duggan said he directed Detroit Police Chief James White to bring him a plan in two weeks to eliminate the city's towing company rotation practice "once and for good."
The police department had been working toward eliminating a preferential rotation and "get this problem behind us for good," said Duggan, adding plans to move to an open competitive bid were paused earlier this year after the Detroit Board of Police Commissioners voted to extend current permits.
Duggan said White is working on restarting that effort, and, in the meantime, "the feds are going to do what they're going to do."
Wednesday's raids were conducted at the homes of at-large Councilwoman Janeé Ayers and District 3 Councilman Scott Benson. Both did not respond to requests for comment Thursday. The two have not been charged with any crimes, and the full scope of the federal investigation is unclear.
Ayers, 39, is seeking a second four-year term as an at-large council member in the Nov. 2 general election and faces three other candidates for two at-large seats. Benson, 51, was unopposed in this month's primary and advanced to the general election. He is seeking a third term representing northeast Detroit in District 3.
The developments are the latest in a scandal that has led to charges against longtime Detroit Council member André Spivey. Federal agents also searched the homes of Ricardo Silva and Carol Banks, chiefs of staff for Ayers and Benson, respectively.
Duggan said Thursday the feds have not shared the focus of the investigation with him.
'Whole mess of corruption'
Detroit's police towing operation for years has been marred by controversy and scandal, much of it focusing on Gasper Fiore, former owner of Boulevard & Trumbull Towing in southwest Detroit. Fiore was sentenced to 21 months in federal prison in August 2018 after being convicted in a Macomb County public corruption scheme.
The raid at Ayers’ home came three years after her name emerged in a bribery investigation involving Fiore that included a sealed FBI wiretap affidavit, which was obtained by The News.
A series of wiretapped calls from 2016 included an exchange between Fiore and a man identified as Nicholas Primus about secretly funneling money to Ayers to pay for advertising billboards. Federal agents did not list Ayers as a target of the wiretap investigation, and she was not charged with wrongdoing in that case.
The city's business deals with Fiore were called into question as far back as 2005, when a series of audits found former police officials gave an inordinate amount of towing business to Fiore in violation of the towing rules. They also awarded Fiore no-bid leases and overpaid by more than $1 million for leasing his properties that were used for police operations.
The audits suggested the city retool its towing operation. But when the Detroit Board of Police Commissioners began restructuring the process in 2009, accusations of intimidation, stalking and corruption began to fly.
Ex-Commissioner Michael Reeves filed a police report in September 2010 claiming he was threatened to refrain from voting on the proposed rules. Ex-Commissioner Jerome Warfield said at the May 5, 2011, board meeting that he had been followed. Former Detroit cop Adela Rivera quit the police board after claiming a tower was trying to blackmail her.
The City Council's Public Health & Safety Committee for months has discussed proposed towing legislation that would tighten rules for all towing businesses in the city, including those that tow for police.
There is no towing ordinance regulating private towing in Detroit. There is an ordinance regulating police-authorized towing, but it covers the process of how companies should be selected.
The proposed ordinance being debated by the council would require tow companies to maintain reports, take pictures of vehicles they tow and have a police officer present before recovering certain vehicles.
Tow company representatives have lobbied against the proposed ordinance, which also would require tow companies to accept credit cards. Most tow firms accept cash only.
Benson chairs the committee considering the towing ordinance, and Ayers is vice chair.
Former Detroit police chief James Craig said he walked into a "whole mess of corruption" when he took the job in 2013.
"We didn't have anywhere near these kind of issues with towing when I was police chief in Cincinnati and Portland (Maine), and when I was a cop in Los Angeles," said Craig, who resigned in June and is expected to announce a run for governor.
Craig said he called the FBI after former Councilman Gabe Leland asked what the former chief considered "inappropriate questions about the towing rotation."
"I said, 'Are you trying to shake me down or what? This conversation's over.' He left my office, and by the time he hit the elevator, I was on the phone with the FBI," Craig said.
Leland in May pleaded guilty to misconduct in office and in June was sentenced to 2.5 years of probation in an unrelated matter. He agreed to accept $15,000 in cash and free car repairs from a Detroit businessman in exchange for his vote on a controversial land deal.
Leland initially was indicted on federal bribery charges. Those were later dismissed as part of his plea agreement in the state case.
'A preferential group'
Duggan said the current federal investigation is the third in four years that has arisen from towing operations.
"In 2017, we had a deputy police chief of his department (Celia Washington), who was convicted and served a year in prison for taking bribes to change the rotation among the towers," he said.
A 2011 report from Detroit's auditor general found that towing contracts were being approved without City Council approval. Instead of fixing the contract process, the city in 2011 began allowing towers to work under permits, which don't require as much documentation and scrutiny as contracts, and are not competitively bid.
The five-year towing permits were extended in 2016. In April, the board extended the contracts a third time, raising the ire of police officials who said they hadn't been notified about the extension.
Prior to the 2016 extension, Washington admitted to taking a $3,000 bribe from Fiore to help him get another permit and circumvent rules that prohibited tow company owners from having more than one firm in the towing rotation.
Duggan said the permit system caused other corruption problems.
"In 2017, we also had six police officers indicted for taking bribes for towing rotations. All six were convicted and this stems from a decision in 2011-2012 not to competitively bid the towing in this town, but to create a permit system with a preferential group of people in a rotation that people don't fully understand," the mayor said.
White, who was assistant chief at the time, was tasked with "cleaning it up," Duggan said.
The city implemented three elements of White's four-point plan, including terminating contracts of several towing companies based on "what we believe was inappropriate behavior and they all sued us but to my knowledge, we won and kept them all out," the mayor said.
The police department also changed the practice in which towing companies could find a stolen car and claim the tow work after uncovering evidence that some towing firms were in cahoots with car thieves.
"After we stopped that practice of allowing people to find stolen cars and get the tow fees, the car theft rate dropped significantly in the city and the following year," Duggan said.
During his review of the towing process, White suggested the police department take over part of the city's towing operations, a move Craig said he signed off on.
"One of the reasons why I was dead set on having police run the operation is that I thought it would reduce the opportunity for corruption," Craig said. "Obviously, what had been going on for years wasn't working. There was so much corruption ... it was crazy. I've never seen anything like it."
In September 2018, the police department purchased six trucks and took over part of its tow operations, while keeping 22 private companies in the rotation. After an outcry from towers, Craig agreed that the department would tow less than 25% of all vehicles, leaving the rest of the jobs for the private companies.
Since taking over part of the towing operations, six of the private firms have been removed from the rotation for various infractions, including three instances of fraud.
Police officials told the Board of Police Commissioners last month that Detroit police get about 95 tow requests per day, in addition to impounding about 30 cars daily.
Per rules set by the city's Towing Rate Commission, towers might charge between $150 and $300 for a tow and $15-$25 per day for storage, depending on the size of the vehicle.
Raids were 'completely unexpected'
The raids represent the broadest federal investigation into City Hall corruption in the eight years since former Detroit Mayor Kwame Kilpatrick was convicted of racketeering conspiracy and sentenced to 28 years in federal prison. President Donald Trump commuted the sentence in January.
It was unclear which offices in City Hall were raided Wednesday, but a source familiar with the investigation said it did not involve Duggan's office or executive suite.
Three weeks ago, Spivey was arraigned in federal court on one count of conspiracy to commit bribery over claims he accepted more than $35,000 to be "influenced and rewarded" for votes.
The council is on recess until after Labor Day, but Councilwoman Raquel Castañeda-López is calling for ethics training for elected officials. Duggan said it was a policy he would endorse, however, there's already a commission that does it.
In the Spivey case, federal authorities contend he and another unnamed official, identified in filings as "Public Official A," accepted bribes in exchange for votes on the Detroit City Council and in subcommittees from 2016 to 2020.
Spivey's Detroit-based attorney, Elliott Hall, has said Spivey has been "fully cooperating with the federal authorities for over a year."
Hall told The News on Thursday that while the investigation appears to be tied to towing, "nothing was ever done by Spivey to advance that cause."
Hall added he's concerned about the timing of the raids and contends they are designed to "politically interfere with the (November) election."
"It's obvious because most evidence in all of these cases are electronic. No raids of anybody's home or offices is needed because all you need is text messages, email, which you can get by a search warrant or electronic search warrant signed by a judge," he said.
Hall said he's unaware of whether Ayers or Benson have retained counsel. The raids, he added, "were completely unexpected."
Spivey was charged in late July in a criminal information, which means he waived his right to a grand jury indictment. The case was assigned to Judge Linda Parker, though no hearing date has been set.
If found guilty, he could serve up to five years in prison and pay a fine of up to $250,000.
The U.S. attorney alleges Spivey, 47, accepted a $1,000 cash bribe from an undercover law enforcement agent on Oct. 26, 2018.