California, SF Settle with Auto Wrecking Yard

Under terms of the settlement, Pick Your Part denied liability for the lawsuit's allegations, but agreed to pay a total of $5,705,964 to the government plaintiffs. Pick Your Part will receive a credit for $355,964 it has already remitted to the city and state, and the remaining $5.35 million, to be paid out over the next ten months, will be divided evenly between the two parties. The settlement is subject to ultimate approval by the Board of Directors of the San Francisco Municipal Transportation Agency and the San Francisco Superior Court.

Herrera and Lockyer filed their complaint on October 29, 2002, charging City Tow with defrauding San Francisco and the state of California of hundreds of thousands of dollars in an auction-rigging scheme that company officials operated for more than a decade.

As the sole contractor for towing abandoned and illegally parked cars from San Francisco streets between 1987 and 2004, City Tow's operation involved towing hundreds of vehicles a day.

Unclaimed vehicles were allowed to be auctioned under state law to enable City Tow to recover towing and storage costs. Once those costs were recovered, however, the company was required to report the sale of unclaimed vehicles and pay the City to cover outstanding parking tickets, and then pay the rest to the State of California.

In an investigation involving the review of tens of thousands of documents and dozens of witnesses, the City Attorney and Attorney General uncovered hundreds of thousands of dollars in funds wrongfully withheld from San Francisco and the State of California as a result of City Tow's false reporting of auction revenues.

Throughout the 1990s, City Tow took thousands of vehicles that should have been offered to the public at auction, and instead shipped the vehicles out the "back door" to be parted out and sold for scrap by the defendant Pick Your Part's wrecking yards.