The City of Chicago paid more than $100,000 in the last four years to a dozen people whose cars were towed and wrongly sold for scrap metal before the owners could rescue them from the pound.
It’s 100 times more than the city got when it sold the cars to Environmental Auto Removal, a politically connected firm with an exclusive contract to tow cars for the Daley administration.
EAR resold the cars, reaping thousands of dollars in profits. But EAR has decided to stop revealing how much money the company makes reselling cars it bought from the city at scrap-metal prices.
Among the dozen cars was a two-year-old Mercedes convertible with 6,000 miles that Chicago Police seized from Joseph Portillo, whose father owns Portillo’s Hot Dogs, during a Christmas Day drug bust four years ago.
The city sold the 1998 Mercedes to EAR for $53.21 while Portillo and his lawyers were fighting the drug charges along with the towing and storage fees.
By the time the Portillos found out, the convertible was being driven by a couple in Santa Barbara, Calif.
The Portillos sued. The two-year legal battle ended in April when the city paid them $24,000 for a car the city sold for $53.21.
This $24,000 mistake was uncovered during a Chicago Sun-Times examination of court cases the city settled in the last four years involving cars sold to EAR for scrap prices.
Tab likely higher
Chicago taxpayers spent $101,287 compensating a dozen people whose vehicles were sold to EAR for scrap prices, but the tab is likely higher.
The city says it paid $196,335 to settle 34 cases — including the dozen cases examined by the Sun-Times. But not all of those 34 cases involved vehicles that the city sold to EAR. Some were impounded as part of a criminal investigation and later auctioned off by Chicago Police, sometimes without the owners’ knowledge.
At the same time, 37 people lost their cases claiming the city wrongfully disposed of their cars, said Jennifer Hoyle, a city Law Department spokeswoman.
In the dozen cases examined by the Sun-Times, most of the cars were disposed of without giving the owners sufficient notification. One owner got $1,000 because the city decided to stop battling over a 16-year-old Lincoln Continental sold to EAR for $132, Hoyle said.
“These cases represent a very small fraction of the total cars that move through the city pounds every year,” Hoyle said, referring to the 140,000 cars the city tows annually.
Company keeps proceeds
Mayor Daley’s towing program has been under fire for weeks after the Sun-Times exposed how the city sells about 70,000 cars each year to EAR for no more than the going scrap-metal price, regardless of the car’s age or condition. The owners get nothing for the car, while they still owe the city money for fines and towing fees.
EAR’s parent company, United Road Services Inc., resells the cars through private auctions held at the city’s auto pounds, keeping all of the proceeds, a big part of its lucrative contract with the city.
Over the last few weeks, EAR willingly told the Sun-Times how much money it got for reselling specific cars. But the company wasn’t willing to do that for most of these dozen cars, including Portillo’s Mercedes, saying the records were “not readily available.”
The Portillo family and their attorneys refused to discuss the case that began on Christmas Day 2000 when Joseph Portillo, 42, of Hinsdale, was caught with crack cocaine on Chicago’s West Side.
Portillo, who has a long arrest record for burglary, shoplifting and drugs, was driving the 1998 Mercedes convertible. He had bought it three months earlier for $36,000.
Portillo was arrested. His car was impounded, a routine procedure for people arrested for drugs in Chicago. His car should have remained in the pound as his lawyers fought the charges, but it didn’t.
On March 27, 2001, a city auto pound supervisor, Steve Sorfleet, signed papers selling Portillo’s Mercedes to EAR for $53.21.
Within weeks, EAR apparently resold the car to J&K Auto Sales in Hebron, Ind., a used car dealership owned by Joseph Gadas.
A California couple driving from a vacation home in Michigan to visit family in Chicago found the car advertised in a newspaper.
“They told us it was confiscated from a drug dealer in Chicago,” said the Santa Barbara woman, who asked not to be identified.
Since it had been confiscated, the car had a salvage title, lowering its value, the woman said. But it was in perfect condition.
The couple bought the car in the summer of 2001 for $22,000. They drove it for 18 months, selling it last December for $19,500.
Meanwhile, the Portillos were still fighting the city over the car.
Should have stayed in pound
Joseph Portillo pleaded guilty to the drug charges in May 2001 — two months after the city sold his car — and went back to prison.
Portillo’s family and lawyers continued fighting the towing and storage fees before the city’s Department of Administrative Hearings. On June 5, 2001, the city ordered Portillo to pay $1,705 for the impoundment, towing and storage fees, but under the law, he had 35 days to appeal. City rules say his car should have stayed in the pound until his appeal ended.
The Portillos went to claim the car at the pound but were told the city had sold it months earlier. They sued, demanding $24,000, what they said was the car’s fair market value.
Portillo got the money in April, nearly three years after the city sold his luxury sports car for $53.21.