‘The city stole my car’: Politically connected towing co. auctioning towed cars

Adrienne Leonard was traveling overseas last year on a missionary trip when she got a frantic phone call from her mother: The city had taken Leonard’s car.

Booted and towed from in front of her South Side bungalow, her green 2001 Kia Sephia was gone.

Gone for good, it turned out.

The city demanded more than $1,000 for three parking tickets, and towing and storage fees.

Leonard was $300 short.

The city gave her 15 days to get the money, but she ran out of time.

The car became the city’s — an “involuntary surrender,” the city calls it.

In January, the city sold the Kia to a politically connected towing firm that has an exclusive contract on city business.

How much money did the city get for the car?

Just $125.54.

That’s right. The city sold a 3-year-old car for $125.54.

Leonard, 47, didn’t get a dime from the sale and lost all the equity in her car.

She didn’t even get a dime’s credit toward those tickets, towing and storage fees. She’s still on the hook for those.

And she still owes $13,800 for the Kia — a car she no longer owns.

“The city stole my car,” Leonard said, tears building in her eyes, as she learned from reporters what happened to her Kia. “I was robbed.”

“They sold my car for $125? I offered them more money than that. I had the money to pay the tickets and towing fees, but I didn’t have the money for the storage fees,” Leonard said.

“It’s a racket. It has to be.”

Leonard lost her car to a system set up early on in the Daley administration that seizes vehicles from people who owe money for tickets or other infractions. It turns out that tens of thousands of people, particularly the poor and elderly, cannot afford the city’s escalating fees to get their cars back, the Sun-Times found in an investigation of the program.

Al Sanchez, the head of the city’s Department of Streets and Sanitation, which oversees the city’s towing program, praises the system in a statement.

“The primary purpose of the towing contract is to keep the city streets navigable and free from abandoned or wrecked vehicles and vehicles with parking violations,” Sanchez said in a statement.

“The owner of the vehicle is still liable for all fines and fees even if the city disposes of the vehicle,” Sanchez said.

You don’t even need to have a parking ticket to be a victim of the city’s towing system.

Suburban businessman Igor Pashin had his yellow pickup truck stolen just before Christmas. Chicago cops recovered it. But Pashin never saw it again. The city sold his 2-year-old truck in January to a politically connected towing firm with the exclusive contract for city towing — for $125.54.

The city sold a 2002 Chevy Silverado — with a Blue Book value of at least $13,000 — for $125.54 to the towing firm, Environmental Auto Removal.

EAR then sold that same truck to a Wheeling car dealer for $4,000, the company says, well below the book value because the vehicle had been stolen and damaged.

Who owns the truck now? A recently retired city of Chicago tow-truck driver. He says he paid $12,000 for it.

Pashin, who runs a gutter-cleaning business, is still paying on an $18,000 loan for the pickup truck, which now sits miles away in front of the Northwest Side home of Thomas B. Smith. Smith drove a tow truck for the city’s Department of Streets and Sanitation for more than 25 years.

Smith bought the pickup from a Wheeling car dealer on April Fools Day, 30 days before he retired from the city.

Asked about the deal, Smith changed his story several times on whether he knew the truck had been stolen.

“I didn’t steal the truck,” Smith said. “I bought it, legit.”

Smith, 55, said he felt sorry for Pashin.

“I’d be mighty pissed off too,” Smith said.

“This is just a coincidence,” Smith said about the purchase.

While city policy forbids employees from buying vehicles from its towing firm, employees are not prohibited from purchasing them from third parties, like dealers, who get them from the towing firm.

That’s what Smith did. Smith said he did not tow the truck he later bought.

The city itself has a car towed once every three minutes — more than 170,000 in all last year alone. About 70,000 of those cars went unclaimed, and City Hall turned them over to its towing contractor for $4.3 million. That’s about two-thirds of the $6.5 million the city made from vehicles towed by the contractor last year.

Thousands of those vehicles go unclaimed each year. Last year, those unclaimed cars and trucks included 10,011 that were booted, 4,552 that were stolen but later recovered and 26 that were towed around Wrigley Field during Cubs games.

The city treats all the cars like junk, whether the car is a burned-out hulk or a luxury vehicle. The city sells those cars to the towing contractor at scrap prices. The towing company pays the city up to $130 for each car, except abandoned cars, which go for $15 apiece.

The towing company, in turn, auctions them to the highest bidder, taking in millions of dollars — money the city doesn’t share in.

Another company, Triangle Towing and Recycling Network Inc., wanted to give the city a piece of the profits from all the car sales — a cut of about 70 percent. The city rejected that offer last year, saying Triangle wanted to charge it more money for towing cars, resulting in a bad deal for the city and car owners.

“In general, most vehicles left unclaimed at city pounds have no resale value, and therefore, are more valuable as scrap,” Sanchez said in the statement.

City officials gave the contract to EAR’s parent company, United Road Services Inc. EAR has been doing the job since Daley took office in 1989. United won the towing contract in January despite EAR being under FBI investigation for allegedly dealing in stolen cars.

United’s contract is worth up to $60 million, plus whatever it gets from the cars. The agreement is a three-year deal with three one-year renewals. If the city cancels before six years, United gets a $500,000 payment.

United hires other companies to help tow cars for the city. Some of those tow-business owners have criminal backgrounds, from drug dealing to car theft.

The city’s towing system is all perfectly legal. The city has made it that way.

But it feels terribly unfair to Adrienne Leonard, the missionary. She fought desperately to get her car back after the city grabbed it. Two of her parking tickets were issued while her car was parked on the bungalow-lined street where she lives. One was for a street-sweeping violation.

Leonard went to ministers, who helped her raise $700, more than enough to pay $400 in tickets. But the towing and storage fees were the killers, bringing her bill to more than $1,000.

Leonard had 15 days to pay up, or the city would own her car.

The city grabbed it and sold it for $125.54, leaving Leonard dumbfounded.

“They don’t get the ticket money, I don’t get my car, so what’s the point?” Leonard asked. “It’s just not right. It’s just not right.”

Chicago taxpayers made next to nothing on the deal. The city made $125.54 on the car, but it had already paid EAR $97 to tow it from in front of Leonard’s home. So, in the end, taxpayers got $28.54 from Leonard’s car. EAR says it sold the Kia to a dealer for $900, well below the book value of $4,500, in part because the car was damaged.

Leonard’s Kia was among more than 5,000 cars the city sold to Environmental Auto Removal in January, records show. EAR paid the city $125.54 for each car — among them more than 200 late-model vehicles, including a 2002 Chevy pickup truck and a 2001 Nissan Altima.

Where does the $125.54 figure come from? It’s from a formula laid out in the contract between the city and the company, based on monthly scrap-metal prices.

The city doesn’t even get all of the scrap price per car. It gets 42 percent.

How much money did the towing company make selling them? The city doesn’t know. And the towing company isn’t saying.

The towing company and related businesses go by a variety of names, but many of its key players have remained the same over the years.

E & R Towing and Garage was created in 1978 by businessman Edward Corcoran and attorney Martin McNally. McNally is a political contributor to Mayor Daley. McNally was also an owner of a duty free shop at O’Hare International Airport.

Corcoran and McNally incorporated a related business, Environmental Auto Removal, in 1989 — the same year Daley was elected and the company got its contract on city towing business.

The city routinely renewed EAR’s contract, even after it was bought out in 1998 by a national firm, United Road Services. Ed Corcoran still owns the land in Markham where EAR has its offices, while his brother Gerald J. Corcoran Jr., a 21-year Marine veteran, is head of United’s towing and recovery business. McNally did legal work for the towing company until 1998 but plays no role in the firm today, according to a statement from United.

Since 1989, the companies and their owners have contributed more than $20,000 to Daley.

Controversy hasn’t kept the city from renewing the towing contract.

In 1997, EAR was forced to repay the city $1 million after it was determined the city had overpaid the company.

Nor did an FBI investigation of EAR allegedly involving interstate auto theft.

While EAR’s parent company has the exclusive contract on city towing business, it doesn’t tow every car in the city. Businesses hire their own towing companies to haul cars off their private parking lots.

The city’s Department of Streets and Sanitation tows cars from downtown and from O’Hare. The vast majority of those vehicles are quickly reclaimed. If you’ve ever had to get your car back from the auto pound on Lower Wacker Drive, then you were towed by Streets and Sanitation, not EAR.

Under its contract with Streets and Sanitation, the towing firm removes cars from Humboldt Park to Hyde Park to Lincoln Park, whether it’s because they’re blocking snowplows or already have been booted.

Of the approximately 170,000 cars the city towed last year, Streets and Sanitation towed 41,667, and EAR the rest.

In all, about 71,958 vehicles went unclaimed. EAR paid the city $4.3 million for those vehicles.

The towing company has been an integral part of some major Daley initiatives to improve taxpayers’ quality of life, hauling away cars considered abandoned after they sat on the street for seven days or more without moving. The company also tows away the cars that police impound after the drivers were arrested for buying drugs or soliciting prostitutes.

Under the contract, EAR manages three city auto pounds where the towed cars are stowed. It also is allowed to rent city property tax-free and rent-free to run its car auctions, which are closed to the public. The auctions are opened to licensed dealers and other approved automotive businesses.

Even after selling a car, EAR keeps making money. A successful bidder on a car has to pay a fee plus use an E & R tow truck to remove the vehicle — even if the bidder has his own tow truck.

In the end, the loss of many of the cars towed and later sold not only hurts the owners financially but also upends their lives.

For Adrienne Leonard, the missionary, having no car has been quite a hardship, said her friend, the Rev. Calvin Bridges of the Chicago Praise Ministries.

“It’s really put her through hell this last year,” said Bridges, who criticized the city’s towing system.

“There’s spiritual wickedness in high places.”