Pence cancels BMV contract, asks for ethics investigation

Gov. Mike Pence is canceling a Bureau of Motor Vehicles contract with private license branch operator Express MVA and requesting a formal ethics investigation into a top BMV official who took a job at the company after allowing it to charge customers a “convenience fee” whose legality has been questioned.

“This Administration is committed to a government that is as good as our people,” Pence said Monday. “After this matter was brought to my attention, I called for the contract with ExpressMVA to not be renewed when it expires in October. I also asked for an investigation by Indiana’s Inspector General to ensure that state government adheres to the highest levels of transparency and full disclosure.”

Those moves come in response to an Indianapolis Star investigation published last week. The Star found that former BMV Chief of Staff Shawn Walters allowed a relatively small contractor called Express MVA to open a private license branch complete with BMV-issued workstations and access to the BMV’s computer system.

The arrangement cost the state no money, but allowed the company to charge customers — including auto dealerships — a so-called “convenience fee” for title and registration work traditionally provided by the BMV. Those fees can double the cost of the services and are often passed on to car buyers, who may not realize they could save money by going to a local license branch.

Walters then took a newly created executive job with Express MVA without seeking an opinion from the state’s ethics commission.

State law requires a one-year cooling-off period for employees who want to take a job with a company that does business with the state. The law is intended to prevent private companies from using lucrative jobs to entice or reward state officials who have the power to award them contracts.

In a letter Wednesday, Pence asked Indiana Inspector General Cynthia Carrasco to investigate whether Walters and another BMV employee, Deputy Director for Branch Support Robert P. Wood, violated the ethics law by going to work for the company.

“It is critical that taxpayers have confidence in their government, and in order to earn that confidence, our ethics laws must be enforced,” Pence wrote in his letter.

Walters did not return email and phone messages Wednesday evening. Neither did Express MVA owners Kevin Calvert and Doug Pillow. Wood could not immediately be reached for comment.

But in a legal deposition in another matter earlier this year, Walters said he has no oversight of the company’s Indiana operations.

The Star’s story also raised questions about the legality of the convenience fees. Although the BMV has allowed Express MVA and, later, other companies to charge the fees for years, state lawmakers did not explicitly authorize them until this year.

It’s not the first time the legality of fees have been called into question at the BMV.

As The Star has reported in an ongoing investigation of the agency, a class-action lawsuit filed in 2013 resulted in the BMV refunding $30 million to motorists for higher-than-allowed operator license fees. Since then, the BMV has refunded another $30 million in other overcharges. And a second, still-pending lawsuit seeks to recoup up to $40 million more in overcharges.

A Star investigation published in March found that top BMV officials — including Walters — knew about some of those fee problems for years, but chose to ignore or cover up the overcharges rather than refund the extra money and adjust to significant budget losses. Another Star investigation showed lingering vestiges of a political patronage system used to hire top officials of the agency.

The convenience fees were not part of either lawsuit. And BMV officials say they have no idea how much money private contractors have charged customers in convenience fees. But the potential charges are great.

Express MVA and four other contractors have handled more than a million title and registration transactions for the BMV during the past 18 months alone — about 6 percent of all BMV transactions. With convenience fees that can double or even triple the price charged by the BMV, the charges amount to millions of dollars.

Express MVA’s five-year contract with the BMV was scheduled to automatically renew until Pence intervened. A clause in the contract allows either party to opt out of the renewal provision. Similar BMV contracts with four other companies remain in effect.

The governor and state lawmakers have said previously that they plan to introduce legislation during next year’s legislative session to clean up the complex web of more than 1,000 BMV fees in state law. They said that legislation will include a provision to ensure that convenience fees are more transparent.

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