Two state contractors cannot account for 234 Vehicles Worth $634,000

RALEIGH — State Auditor Beth Wood, CPA presented the results of an audit of two state contractors  responsible for towing, storing, processing ,maintaining, and selling vehicles seized by law enforcement under the State’s DWI/Felony Speeding to Elude Vehicle Seizure Program (Program). In this program vehicles operated by drivers arrested for repeat DWI offenses or Felony Speeding to Elude Arrest are seized, maintained, stored, and sold.

Two contactors operate the Program for the State. Martin Edwards & Associates, Inc. (MEA) operates the Program in the east region and Eastway Wrecker Service, Inc. (Eastway) operates the Program in the west region.

The Department of Public Instruction (DPI) was responsible for the administration and oversight of the Program from December 1, 1997 to February 29, 2016. The Program was moved to the Department of Administration’s State Surplus Property Agency as of March 1, 2016.

These two ontractors for the State’s DWI/Felony Speeding to Elude Vehicle Seizure Program (Program) cannot provide documentation2 to account for 234 vehicles. As a result, the state has no way of knowing what happened to approximately $634,0003 of seized vehicles,including whether or not contractors inappropriately kept or auctioned these vehicles for their
own profit.The vehicles were seized between July 1, 2013, and June 30, 2016.

Per terms of the Program contract, these vehicles should have (1) been auctioned, (2) been in contractor storage, or (3) been returned to the owner. However, contractors were unable to provide documentation supporting the status or location
of the vehicles.

One recommendation was to reconsider work with Martin Edwards and Associates, Inc. who actively hindered the Audit
In addition to its inability to produce documentation supporting the status or location of 221 seized vehicles, MEA was
uncooperative and actively presented scope limitations to auditors. For example, MEA:
• Tried to Refuse a State Auditor Subpoena
• Was Unwilling to Produce Documentation Requested by Auditors
• Had Poor Recordkeeping and Could Not Produce Over 440 Documents

Auditors served MEA with a subpoena. MEA tried to refuse the subpoena and threw it back to the serving auditor.

It’s unclear what happened to the unaccounted for vehicles. State Auditor Beth Wood’s office relied on paperwork – and the contractors’ lack of it – to make its report and forwarded the case to the state Division of Motor Vehicles’ License and Theft Bureau for more investigation and possible criminal charges. The contractors were supposed to split proceeds from auctioned seized vehicles with local school systems, and auditors concluded that “there is a risk that contractors inappropriately benefited from the contract.”

“There’s absolutely the potential for criminal activity here,” Wood said. “There’s absolutely a probability that money that should have gone to schools didn’t go to schools.”