SF-Based Towing Operator Faces Insurance Fraud and More Charges After FBI Probe

Updated 4:30 p.m. Thursday

After FBI officials raided Specialty Towing in San Francisco on Thursday, a tow company operator appeared in federal court, charged with insurance fraud and money laundering.

Jose Badillo was indicted on four counts, including mail fraud, wire fraud and money laundering charges related to a scheme to defraud an auto insurance company, U.S. Attorney Ismail J. Ramsey announced Thursday. Jessica Najarro faces the same charges as Badillo, one of two owners of a “predatory” towing company that was barred from doing business with San Francisco for five years last month.

According to an indictment returned by a federal grand jury on July 9, the pair allegedly “conspired to defraud an insurance company by submitting a fraudulent insurance claim on a wrecked car that Badillo purchased in June 2019.”

The car was undrivable and severely damaged. Najarro obtained an insurance policy for it and, one month later, falsely reported that it had been in a single-car accident. An insurance company reimbursed her $34,037.48. The indictment alleges the money was deposited into a bank account controlled by Badillo.

Badillo and Najarro were arrested on Thursday. Both were released on $50,000 bonds. They are scheduled to be arraigned on Aug. 12. A press release from the U.S. Department of Justice said the indictment is the result of an investigation by the FBI and the criminal investigation division of the IRS.

Early Thursday morning, an FBI spokesperson confirmed the agency had “conducted court-authorized law enforcement activity in the 2000 block of Oakdale Avenue in San Francisco.” FBI officials, an armored vehicle and an ambulance were seen outside 2045 Oakdale Avenue, the address of Specialty Towing, early Thursday morning.

It was not immediately clear whether the raid was related to Specialty Towing, which Badillo owns. The FBI spokesperson contacted by KQED declined to provide additional information.

A website for Specialty Towing lists seven Bay Area locations, including one on Oakdale Avenue as well as an address on 87th Avenue in Oakland. The San Francisco City Attorney’s Office confirmed the latter address is associated with a towing company owned by Badillo and Abigail Fuentes, who came under fire after a video showing a Specialty Towing truck trying to tow a moving vehicle went viral in April. On July 23, City Attorney David Chiu announced that the couple had been barred after finding they illegally towed cars and scammed owners.

The couple operated three towing companies: Auto Towing, Jose’s Towing and Specialty Towing and Recovery. Reports of people being scammed by the companies date back at least to February 2019, when Sammy Hallaq had his black 2007 Toyota FJ Cruiser illegally towed from a Foods Co. parking lot in the Bayview. Hallaq’s quest for retribution eventually led to Badillo and Fuentes being charged with a combined 18 felonies.

Auto Towing also illegally towed at least six vehicles from a bank parking lot in the Portola neighborhood between February and May 2023 without the bank’s permission, and Chiu said his office found that Auto Towing “was engaged in predatory behavior and unfair business practices.”

Chiu said the company intentionally misled and scammed people out of hundreds of dollars by illegally towing cars and taking them to a lot separate from their permitted operating location, “making it difficult for owners to find their cars.”

Fuentes and Badillo are also named in multiple civil and criminal welfare fraud cases. In an ongoing 2021 civil fraud case against Fuentes, court documents allege that after Badillo was banned by the California attorney general in 2017 from ever operating a towing business in the state — he transferred ownership of the business to Fuentes and continued to run it.

Separately, the San Francisco District Attorney’s Office charged Fuentes with 12 felonies and Badillo with six felonies in October related to an alleged welfare fraud scheme. The couple are also alleged to have defrauded multiple benefits programs. According to court documents, while Fuentes worked as a senior eligibility worker for the city’s Human Services Agency, she approved Badillo’s benefits requests. He reported having a monthly income of $1,000 and no additional assets.

While receiving public benefits, Fuentes and Badillo’s companies had a gross annual income of over $2 million. According to court documents, they also own four properties in San Francisco and, in 2023, bought a Lamborghini valued at over $280,000.

Attempts to reach Fuentes and Badillo were unsuccessful.