Private contractors responsible for towing, storing and auctioning off cars seized from impaired drivers and people accused of fleeing police cannot account for 234 vehicles, valued at nearly $634,000, according to a state audit report released this week.
Under a state program, vehicles operated by drivers who were arrested for repeat driving-while-impaired offenses or speeding to elude arrest were to be seized, maintained, stored and sold by two contractors.
Martin Edwards & Associates of Linden was responsible for the east region. Eastway Wrecker Service was responsible for the west region.
An attorney for Martin Edwards disputed the audit after it became public Thursday, saying that it appears the vehicles identified in the audit for both companies have been accounted for.
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The contractors receive portions of revenue from the towing and storing of vehicles, as well as a fee when vehicles are sold. Public schools also get a share of the revenue.
According to numbers provided by the state Department of Public Instruction, from October 2013 through September 2014, the two contractors retained nearly $1.1 million combined through their contracts, while school districts across the state received a combined $746,000 and state government’s general fund received about $19,000.
From October 2012 through September 2013, the contractors brought in more than $1 million, while $684,000 went to the schools and $19,000 to the general fund.
The objective of the audit, according to the report released this week, was to determine whether the private contractors were operating the program according to the contract terms and state regulations. The auditors reviewed five years of records between July 1, 2011, and June 30, 2016.
Martin Edwards, according to the audit, is responsible for most of the missing cars. The firm said it was unable to turn over all the records auditors requested, according to the report.
Of the 4,772 vehicles seized by Martin Edwards over the years auditors reviewed, the company couldn’t document what happened to 221 of them, according to the report.
Eastway Wrecker Service could not provide documents for what happened to 13 of the 4,018 vehicles seized in the western part of the state.
For all but four months reviewed by auditors, the state Department of Public Instruction was responsible for oversight. Control of the program was shifted in March 2016 to the state Department of Administration.
The education department, according to the audit, “never allocated the proper amount of time and resources.”
The auditors highlighted the mysterious disappearance of a 2007 Mercedes SLK 350, which was listed on a Martin Edwards inventory report in October 2015 but not on the company’s inventory report for the next month. There also was not a sales record for the car.
Martin Edwards, the auditors found, was responsible for $594,800 in the missing property, and Eastway Wrecker was responsible for $39,150.
“Because contractors were unable to provide documentation supporting the status or location of these vehicles, there is a risk that contractors inappropriately benefited from the contract,” the audit states. “And because of the lack of documentation, it would be difficult to detect if contractors inappropriately benefited from the program. For example, they could have kept the vehicles for themselves or auctioned them off and retained all the proceeds.”
Auditors said they turned the matter over to the state Division of Motor Vehicles’ License and Theft Bureau for a more thorough investigation into the status and location of the vehicles.
“Martin Edwards is disappointed that we were not given an opportunity to either review or respond to the state’s audit prior to its release to the media,” Sandy Sands, counsel for the company, said in a statement released Thursday afternoon. “The report currently indicates that the paperwork for 221 vehicles was not provided. Martin Edwards, in fact, complied with requests for document production on four different occasions, sending more than 3,500 pages of documents to the state auditor’s office.”
In the statement, Sands said Martin Edwards learned of the list of files reported to be incomplete from the audit report.
“(W)e believe that the appropriate records do exist, and they can and will be provided,” Sands said. “We also believe that in most cases, the records already have been produced, in some instances at least nine months ago.”
Sands, a lobbyist and former state senator, said it appears that the vehicles listed in the audit “were either returned to owners, auctioned, released prior to pick-up by Martin Edwards, or are still on the lot pending auction.”
Sands said Eastway Wrecker Service also was surprised that the state auditor did not provide the opportunity to review or respond to the audit before it was released to the press.
“After reviewing all allegations, Eastway has accounted for all 13 of the records in question,” Sands said. “Most of the vehicles were never in Eastway’s possession, but were released directly to the owner by the original towing company.”
The audit came several years after Rep. David Lewis, a Republican from Dunn, went to great lengths to protect the state’s contract with Martin Edwards & Associates.
There was disagreement at the time about whether private contractors or a state agency were a better fit to operate the seized vehicle program and which would generate more money for public schools.
Martin Edwards, whose president is Rickie Day, had held the contract for years, when Lewis tucked language into a technical corrections bill that became law in the final minutes of a 2015 session. The change ensured that contracts for those services would continue to be bid out to the private sector after they were due to expire last year.
Day donated $5,000 to Lewis’ campaign before the Harnett County Republican took the legislative steps, according to reports filed with the N.C. State Board of Elections.
Lewis, who was chairman of the powerful House Rules committee, told the N.C. Insider in November 2015 that his actions had nothing to do with Day’s contribution. He said he believed private contractors could do the work more effectively than the State Surplus Property Agency, which is part of the Department of Administration.
“I am very suspect whenever anybody tells me that the government can perform services of this nature more efficiently than the private sector,” Lewis said in the interview.
Efforts to reach Lewis on Thursday were not immediately successful.