A SoCal tow company accused of illegally selling service members’ vehicles reaches settlement with feds
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- San Clemente-based S&K Towing Inc. agreed to pay about $160,000 to settle allegations it violated the federal Servicemembers Civil Relief Act.
- The federal law provides financial and legal protections to active-duty military members and their families.
- Prosecutors accused the company in a March lawsuit of illegally selling 148 vehicles belonging to active-duty military personnel during a five-year span beginning in August 2020.
In the spring of 2024, a Marine Corps legal assistance attorney called a Southern California towing company with a warning.
The company could not sell an active-duty service member’s car without first obtaining a court order, the attorney allegedly reminded the manager and owner of the company.
“We do this all the time,” the attorney claimed the owner responded.
That phone call was used as evidence in a federal lawsuit accusing S&K Towing Inc. of illegally auctioning or disposing of 148 vehicles of active-duty service members stationed at Camp Pendleton, a massive military base housing about 42,000 active-duty military members, over a five-year span beginning in August 2020. Some of the cars were towed while soldiers were serving overseas, the lawsuit alleges.
On Tuesday, federal prosecutors announced a settlement with the San Clemente-based company.
The company agreed to pay about $160,000 to military personnel whose vehicles were towed by the company in violation of the Servicemembers Civil Relief Act, a federal law that provides financial and legal protections to active-duty military members and their families.
Two suspects were arrested and face federal charges after breaching Camp Pendleton during a traffic stop. Their car was carrying pounds of cocaine and fentanyl.
A spokesperson for the company did not immediately respond to a request for comment. But in its response to the federal lawsuit, the company defended itself in court records, denying some of the allegations. The company said its contract with Camp Pendleton did not make any reference to the federal law.
“This defendant will admit that it did its best to abide by [state laws] when it came to enforcing its lien rights on vehicles where the registered owner was properly notified and failed to retrieve their vehicle,” court records read.
Prosecutors said the company planned to shut down but agreed that if it decided to reenter the business it would adopt policies and procedures that would comply with the federal law.
“Members of the U.S. Armed Forces have a legal right to be protected while they serve our nation overseas,” First Assistant U.S. Atty. Bill Essayli said in a statement. “This settlement will provide compensation to impacted service members and serves as notice to all businesses to comply with federal laws that protect our military.”
“For far too long, tow companies have sold or disposed of servicemembers’ vehicles in violation of federal law,” Assistant Atty. Gen. Harmeet Dhillon of the Justice Department’s Civil Rights Division said in the statement. “This settlement sends a strong message that all towing companies must recognize servicemembers’ rights and take the necessary steps to comply with the SCRA.”
SpaceX and the California Coastal Commission have settled a lawsuit over the state agency’s attempts to regulate rocket launches from Vandenberg Space Force Base.
The settlement comes three months after federal prosecutors filed the lawsuit, accusing the company of illegally selling, auctioning or disposing of vehicles owned by SCRA-protected service members.
Prosecutors alleged in the court documents that the violations appeared to date back to the beginning of the company’s contract with the Marine Corps Police Department at Camp Pendleton. The contract stretched from August 2020 to April 2025, court records show.
The contract required that it comply with federal and state law — meaning, prosecutors said, that the company was required to verify an owner’s military status before enforcing its lien by selling or disposing of a towed vehicle. The company also didn’t obtain a court order before selling or auctioning the vehicles, the lawsuit alleges.
The company said in court records that it had hired a third-party company that specializes in verifying the registered owner and notifying them that the vehicle was impounded and subject to lien if the owner didn’t take action.
Federal prosecutors said, since 2011, it had obtained more than $489 million in monetary relief for more than 152,000 service members whose rights were violated under the SCRA.
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