By Eddie Cota

The City of Whittier has moved to terminate its towing contract with Hadley Tow following the arrest of the company's owner on felony insurance fraud charges, ending a relationship the city had repeatedly chosen to continue despite documented violations dating back more than a decade.

On March 16, the City Council held a special meeting where the city attorney read a statement on behalf of the council:

"Council accepted the Chief of Police recommendation to terminate the agreement with Hadley Tow at any time without cause upon 30 days written notice to the contractor, so staff will be issuing that notice as soon as possible."

Before the vote, Hadley Tow's attorney appeared during public comment and asked the city to reconsider. He said the charges are disputed and the company has the right to challenge them in court. He noted that Hadley Tow has operated in Whittier since 1952, and that terminating the contract would cause the company to cease to exist, putting hundreds of employees out of work.

The city terminated the contract anyway.

The Fraud Scheme

The termination followed the March 11 arrest of brothers Mark Hassan, 46, of Corona Del Mar, and Ahmed Hassan, 35, of Walnut.

According to the California Department of Insurance, the agency opened its investigation after receiving two fraud referrals from an insurance company alleging that Mark Hassan had underreported Hadley Tow's employee payroll. The investigation expanded after a third referral alleged that Ahmed Hassan, owner of California Heights Tow, filed a fraudulent employee injury claim against his insurance policy for a Hadley Tow employee.

Both brothers were arrested on multiple counts of felony insurance fraud.

Investigators found that Mark Hassan used Courtesy Tow, an uninsured shell company based in Sylmar, to conceal portions of Hadley Tow's employee payroll and defraud workers' compensation carriers out of premiums they were owed. Ahmed Hassan separately underreported employee wages at California Heights Tow to reduce his own workers' compensation insurance costs.

A forensic audit revealed the full scope of the scheme. For both companies combined, the brothers reported a payroll of just over $3 million to their insurance carriers. The actual combined payroll was more than $16.7 million. The estimated loss to insurers was nearly $5.9 million.

The brothers also paid portions of employee wages in cash without withholding standard deductions, which led the Employment Development Department to open a separate payroll tax evasion investigation.

Mark Hassan's operations extended well beyond Hadley Tow. Through his company FMG Inc., he operated Courtesy Tow in Sylmar, Crescenta Valley Tow in La Crescenta, California Coach Towing in Walnut, and several other towing companies across greater Los Angeles. At the time of his arrest, he held active towing contracts with multiple Southern California law enforcement agencies.

The case is being prosecuted by the Los Angeles District Attorney's Office.

A History of Concerns

The fraud arrest was the most serious development in a long and troubled history between Hadley Tow and the city, but the concerns stretch back more than a decade.

The Whittier Police Department stopped using Hadley Tow in May 2013 following a series of documented violations. When the contract came up for renewal in October 2014, Police Chief Jeff Piper recommended against it, citing a pattern of concerns serious enough to put before the City Council.

According to a memo from Police Chief Jeff Piper, obtained by the Whittier Daily News through a public records request, those concerns included the mishandling of evidence from vehicles involved in serious and fatal collisions, allegations that Hadley staff pressured customers into using the company's own repair shop, and a string of citations and conduct issues involving drivers. The memo noted instances where evidence from fatal collision vehicles was improperly handled and a motorcycle being held as evidence from a serious crash was left outside in the rain.

Driver conduct was also flagged. In one documented incident, a Hadley driver pulled over for speeding became irate during the stop, grabbed a citation from the officer's hand, and drove off at speed. In a separate incident from October 2013, a Hadley maintenance worker was found parked in a disabled space with an open beer can and an empty liquor bottle visible inside the vehicle. The worker had a suspended license and an outstanding DUI warrant.

Despite the police chief's recommendation, the council deadlocked 2-2 in October 2014. Councilmen Joe Vinatieri and Fernando Dutra voted to renew the contract. Councilwoman Cathy Warner and Councilman Owen Newcomer voted against it.

It also came to light during this period that Hadley had hired lobbyists to help secure the renewal, including former City Councilman Greg Nordbak and former Whittier Uptown Association executive director Allan Nakken.

When the full council reconvened in December 2014, the contract was renewed 3-2. Councilman Bob Henderson cast the deciding vote, saying the Police Department should have sent formal written notices to Hadley before recommending termination. He voted yes while acknowledging that the evidence mishandling "should have been a serious warning instead of a conversation." Newcomer again voted no, calling the renewal "akin to ticket fixing." The council added a stipulation requiring close monitoring and regular performance reports.

The Police Department resumed using Hadley in March 2015. By the time of a September 2015 council review, new violations had already accumulated. A tow truck was cited for blocking multiple parking spaces. A vehicle was delivered to Hadley's yard instead of the body shop the owner had requested. A driver was arrested for driving under the influence. In one call, the Police Department waited 45 minutes for a Hadley truck that never arrived before contacting another company.

The council voted 4-0 to keep the contract. Mayor Dutra acknowledged the issues but said changing a business takes time.

"This business has been in Whittier for over 40 years and they have over 80 employees," he said. "We made a decision that we'd give them a second chance. We're still in that process."

Connections and Controversy

The Hassan family's presence in Whittier extended beyond the towing contract. In July 2016, ten residents from a Whittier hills neighborhood came before the City Council with allegations that police had looked the other way during an illegal block party and fireworks display on the Fourth of July. The residents alleged the incident involved brothers of Mark Hassan and two unnamed Los Angeles County Sheriff's deputies.

Residents described fireworks that shook windows, frightened pets and children, and sent sparks onto nearby homes. They said officers arrived but left without taking action, and that the fireworks continued after police left.

One resident called on Hassan to "stop bringing thugs, drugs and drunken parties" to the neighborhood. Another said residents felt "left to fend for ourselves."

The council directed the city attorney to refer the matter to the Los Angeles County District Attorney's Office for review.

What's Next

With Hadley Tow's contract terminated, two other companies currently hold towing agreements with the city: Bob & Dave's Towing and Vernola's Towing Services, both listed on the city's website. It is unclear how the city will replace Hadley Tow's role, or whether it will add another contractor.

The Los Angeles District Attorney's Office is prosecuting the fraud case against both brothers. The Employment Development Department has a separate payroll tax evasion investigation underway. Hadley Tow's attorney has said the charges are disputed and the company intends to fight them in court.