POLITICS

BMV contractor puts 2 employees on administrative leave

Tony Cook
tony.cook@indystar.com

An Indiana Bureau of Motor Vehicles contractor, fighting for its life amid an ongoing BMV scandal, has put two employees on unpaid administrative leave pending the outcome of a state ethics investigation.

In its effort to persuade Gov. Mike Pence to reverse his decision not to renew its contract — which provides $6 million for the company and supports about 40 jobs — Express MVA said it was suspending Chief Operating Officer Shawn Walters and Director of Special Operations Robert “Pete” Wood.

Both men are the subjects of an Indiana inspector general investigation requested by Pence, a probe that was prompted by an Indianapolis Star investigation into BMV contracts and fees.

As BMV officials the two men played substantial roles in the state’s relationship with Express MVA, and were then hired by the company.

Walters, the BMV’s former chief of staff, helped negotiate the state’s contracts with Express MVA, which granted the company access to the BMV’s computer system to process vehicle titles and registrations for a “convenience fee” whose legality has been called into question. He then took a newly created executive position at the company.

It’s not the first time Walters has found himself at the center of controversy. A Star investigation earlier this year found that he was among the BMV officials who knew for years the agency was likely overcharging motorists, but that he and other officials chose to ignore or cover up the overcharges rather than refund the extra money and adjust to significant budget losses.

The agency has acknowledged overcharging motorists at $60 million in taxes and fees and faces a pending class-action lawsuit that seeks to recoup another $40 million. The convenience fees associated with the Express MVA contract are not part of the legal challenge or the refunds.

Wood was the BMV’s director of strategic partners until 2012. In that role, he oversaw Express MVA’s compliance with BMV policies and procedures before taking a job with the company. He later left Express MVA and eventually returned to the BMV, before once again taking a job with Express MVA in May.

At issue is whether the two men complied with state ethics laws put restrictions on employees who want to take a job with a company that does business with the state. Those restrictions are intended to prevent private companies from using lucrative jobs to entice or reward state officials who have the power to regulate or award contracts to them.

Pence canceled the company’s contract with the state and requested an investigation after the Star reported that Walters and other top BMV officials had allowed Express MVA to open a private license branch and charge customers – primarily auto dealers – a “convenience fee” that can double the cost of services traditionally available only through the BMV. Walters later took a job with the company without seeking an opinion from the state ethics commission.

Walters did not return messages from The Star seeking comment, but Wood defended his actions in a phone interview Thursday.

“I’m willing to cooperate 100 percent with the investigation because I know I’ve not done anything wrong,” he said.

Wood acknowledged that as a BMV employee overseeing Express MVA, it was his job to monitor the company’s compliance and report any problems to his supervisor.

But he said the inspector general’s office had cleared him to work for the company in an informal advisory opinion in 2012, prior to taking the job with Express MVA.

In that opinion, IG staff attorney Kristi Shute wrote that a post-employment restriction for state regulators didn’t appear to apply because decisions about consequences for noncompliant BMV contractors were made at “a higher level.”

Wood said he had no interaction with BMV employees at his new Express MVA job, which paid $13,000 to $14,000 more than his BMV job when incentive pay is included. He said his work at the company is focused on helping auto dealers and financial institutions check for outstanding liens.

Walters, however, appears to have had significant interaction with BMV employees until the agency cut off his access by instructing employees not to communicate with him.

In an interview with The Star on Wednesday, Express MVA CEO Kevin Calvert acknowledged that Walters had phone calls, social interactions and meals with BMV employees after he began working for Express MVA.

But he said those informal conversations did not involve Express MVA’s work in Indiana. Instead, they involved information Walters needed to help the company land contracts in other states, Calvert said.

Walters ceased such interactions after receiving a letter from the BMV’s attorney about a month after starting at the company, Calvert said.

He said Walters made less money at Express MVA than he had at the BMV or at the Indiana Family and Social Services Administration, where he worked for a year at a salary of $125,000 before taking the job at Express MVA. That job offered base pay of about $60,000 a year, Calvert said.

Despite his title as chief operating officer, Walters had no oversight over the company’s operations in Indiana, Calvert said, although Indiana is the only state where the company operates.

Instead, Walters was tasked with expanding the company’s business to other states, Calvert said. But more than a year after Walters was hired, those efforts have not yielded any new contracts.

If they had, Calvert said, Walters would have seen a significant jump in incentive pay.

Now, the company is focused on persuading Pence to reverse his decision not to renew Express MVA’s contract in October.

Calvert said the decision will result in more work for BMV license branches or Express MVA’s competitors, who may not have the capacity to handle the additional work.

“We’re looking for a solution at this point,” Calvert said, noting that the livelihoods of 40 employees are at stake.

So, too, is the roughly $6 million a year the company earns in convenience fees under the contract.

The BMV has allowed Express MVA and four other companies to charge customers those convenience fees for years, even though lawmakers didn’t explicitly authorize them until this year.

Advocates of the BMV’s arrangements with the private companies say they keep large volume customers like auto dealers out of BMV license branches, reducing wait times for other customers. But the fees are often passed through to car buyers, who may not realize they could get title and registration services less expensively at a BMV license branch.

Call Star reporter Tony Cook at (317) 444-6081. Follow him on Twitter: @indystartony.

Stories in this series

This story is part of The Indianapolis Star’s ongoing investigation of the BMV, which has acknowledged overcharging Hoosier motorists at $60 million in taxes and fees.

July 26:BMV official pushed fee, then took job with company that benefited A top BMV official encouraged the use of a fee whose legality has been questioned – and now he works for a BMV contractor that benefited from the fee.

May 24:Did patronage lead to BMV overcharges? The qualifications of several top BMV officials raise serious questions about whether expertise or political connections were more important at the troubled agency.

March 22:BMV ignored overcharges Top officials at the BMV knew for years they were likely gouging Hoosier motorists with tens of millions of dollars in excessive fees, but those officials chose to ignore or cover up the overcharges rather than refund the extra money and adjust to significant budget losses.