Monday, Feb. 4, 2008 | There’s little doubt that Leopoldo Villanueva, a former contracting officer with the Drug Enforcement Agency, was hired by Vista-based Redline Towing to help the company win towing and maintenance contracts with the federal government. Redline’s attorney freely admits that the company hired Villanueva because he’s of Filipino descent and the U.S. General Services Administration, the agency tasked with procuring services and contracts for the federal government is “dominated by Filipinos.”

“If you don’t have a Filipino on staff, you won’t get a contract. We bid on a contract for three years and we never got it because we never had a Filipino working for us,” said Michael Duff, corporate vice president and corporate counsel for Redline.

The Cut-Throat World of Towing

  • The Issue: Redline Towing, a Vista-based tow truck company, hired an employee in 2004 who was also working for the Drug Enforcement Agency. At the time, the employee oversaw and managed contracts for the DEA, including one with Redline, and in 2006 he was indicted for corruptly profiting from his position as a federal employee. In 2007, he pleaded guilty. Two months later, Redline won a large contract with another Federal agency, the U.S. Marshals Service.
  • What It Means: A competitor of Redline has cried foul, asking whether a company that he says paid kickbacks to a federal employee should be allowed to bid on federal contracts. The competitor has the backing of his local congressman, who wrote to the Department of Justice on his behalf. The DOJ responded that Redline is not on a list of excluded companies that the government cannot contract with.
  • The Bigger Picture: A spokesman for the DOJ said his office receives complaints all the time from companies who have lost out on government bids, complaining their competitors should not have won the contract. It can’t investigate every one of them, he said, and the federal system of checks and balances works well.

Towing industry insiders said there’s nothing unusual about Redline’s hiring of Villanueva, and that the towing industry is dominated by ex-law enforcement and government employees who are hired more for who they know than what they know.

Exactly what Villanueva was doing at Redline isn’t clear. Duff said Villanueva spent most of his time out of the office, making sales calls, while Villanueva’s attorney said his client “might as well have been hired to sweep floors.”

But when federal investigators found out Villanueva was actually still working for the DEA while he was employed by Redline, and that he was overseeing DEA contracts, including one with Redline, they put an end to his employment and charged him with corruptly profiting from his position. Last year, Villanueva pleaded guilty to two charges and was sentenced to two years probation and ordered to pay a fine of $13,517.55 — the estimated amount he earned moonlighting at Redline while he was at the DEA.

Then, last September, three years after the DEA discontinued use of Redline Towing as a contractor and a month after Villanueva’s sentencing, Redline was chosen as the towing company for a lucrative contract at another federal agency, the U.S. Marshals Service. As part of its contract, Redline will be providing towing services to the DEA, in addition to the FBI, the Bureau of Alcohol, Tobacco and Firearms, and the U.S. Postal Inspection Service.

In the cut-throat world of the local towing business, Redline’s competitors aren’t happy.

Just after losing out on the Marshals Service contract to Redline, Rudy Mercado, president of American Towing in Chula Vista, wrote to his local congressman, Bob Filner, D-Chula Vista. Mercado attached a portfolio of documents he had compiled on Redline and asked why a company that, he said, had been caught giving kickbacks to a government employee was being awarded new contracts with the government. Filner, in turn, wrote to the Department of Justice and demanded an explanation:

“[T]he Drug Enforcement Administration’s Contracting Officer was found guilty on August 6, 2007 for accepting a bribe from RLT,” Filner’s letter states, in reference to Redline Towing. “Mr. Mercado cannot understand why RLT was awarded another contract on September 4, 2007. He requests an immediate investigation to ensure the integrity and transparency of the Federal procurement process — and I strongly support his request.”

The congressman got a reply a few weeks later from John McNulty III, chief of congressional and public affairs for the U.S. Marshals Service.

McNulty wrote that though the local district of the USMS was aware of Villanueva’s “conviction for accepting kickbacks from Red Line Towing,” the company was not on the federal government’s Excluded Parties List, which meant there was no reason why they shouldn’t be awarded a contract. Redline was selected because of its satisfactory service and its low bid, McNulty’s letter stated.

McNulty said in an interview that the USMS gets complaints all the time from competitors who have missed out on a lucrative government contract. It’s not within his agency’s purview to investigate each and every one of those complaints, McNulty said. Instead, the USMS relies on the Excluded Parties List, compiled by another branch of the federal government, to warn them away from unscrupulous businesses.

Redline’s Duff said his company has never been investigated and has certainly never been charged by federal prosecutors for anything either related to Villanueva’s case or otherwise. He said the Villanueva case only came to light after documents were stolen from Redline’s tow yard in Vista.

The U.S. Attorney’s Office said it could not comment on whether Redline has ever been investigated.

Eileen Zeidler, a spokeswoman for the DEA, said the agency discontinued use of Redline in February 2004. She could not comment on whether the company’s contract was terminated or whether it simply expired.

Duff said Redline didn’t bid on the DEA contract when it came up for renewal because it wasn’t profitable for his business. He said his company runs a squeaky clean operation, and that Redline is known among law enforcement agencies in San Diego as a trustworthy guardian of impounded goods. And he said Redline had no idea Villanueva was working for the DEA when it hired him, and that Villanueva never helped Redline secure contracts or work orders from the DEA.

But Michael Lusby, who defended Villanueva against the federal corruption charges, said having someone like Villanueva on the payroll while he was working for the DEA would certainly have been a valuable asset for Redline.

And Lusby said though no charges have ever been filed against Redline, the company was “investigated up the ying yang” in connection to his client’s case.

“I’m sure that federal agents have talked to them,” he said.

According to its new contract with the USMS, Redline will be responsible for towing automobiles, all-terrain vehicles, motorcycles, trailers and boats to a USMS yard in Otay Mesa. Unlike its previous contract with the DEA, Redline won’t be responsible for performing maintenance or repairs on government vehicles.

The contract says Redline will only be allowed to charge the government for the miles it drives actually towing the vehicles, and not for the miles tow trucks drive en route to each pickup.

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