SAN FRANCISCO (KGO) — FBI agents descended on a troubled San Francisco towing business with law enforcement personnel staging outside for two hours, according to a witness.

“They were watching the place. They were ready with their guns, with their rifles,” said Maria.

Multiple agents came out of Specialty Towing with evidence bags as others questioned people inside.

One of the evidence bags listed 10 items and multiple keys and key fobs found under a TV by a wall.

EXCLUSIVE: Couple shocked after tow truck tries to nab their moving car in SF

The shop on Lane Street was one of the three locations federal agents checked on Thursday.

Maria lives next door to the towing business. She said agents began the operation between 6 and 7 a.m. She feared for her safety after hearing loud noises.

“I looked outside because I thought they were maybe fireworks,” said Maria, “I was a little afraid. I saw what was going on, and I went back inside my house.”

Specialty Towing and its owners have been under fire for months.

In April, we reported on a Specialty Towing tow truck that tried to hook a vehicle waiting at a red light with a driver and passenger inside.

Tow company in viral video was recently banned from doing business with SF, city attorney says

Earlier this year, San Francisco City Attorney David Chiu confirmed his office had been investigating “Auto Towing.”

The city suspended Auto Towing and several of its affiliates, including Specialty Towing, from doing business with the city. Chiu said then:

“We provided enough evidence such that Auto Towing could be permanently barred from doing business with the city for the next five years,” said Chiu.

After the raid, the U.S. Department of Justice confirmed to ABC7 News that Jose Badillo and Jessica Najarro who owned or operated Jose’s Towing and Auto Towing appeared in federal court Thursday to face mail fraud, wire fraud, and money laundering charges related to an alleged scheme to defraud an auto insurance company. Adding the couple “conspired to defraud an insurance company by submitting a fraudulent insurance claim on a wrecked car.”

The indictment says Badillo bought a car, said it was damaged and undriveable.

SF tow company banned from doing business with city after alleged scams, illegally towing cars

According to the DOJ, Najarro “obtained an insurance policy on, and later took title to, the car before falsely reporting to the insurance company in July 2019 that she had been in a single-car accident in it in San Francisco.”

The insurance company approved the claim and sent a check for $34,037.48

On Thursday morning, neighbors were shocked to see the FBI agents taking over the area.

“Having it be your neighbor next door, it’s a little alarming. Like what else was really going on there? I don’t know,” said Scott Rocha, co-owner of Associated Terrazzo.

If convicted, Jose Badillo and Jessica Najarro could each face up to 20 years in prison, and a fine of $250,000. We contacted specialty towing and did not get a response.

Full DOJ press release:

SAN FRANCISCO TOW COMPANY OPERATOR CHARGED WITH INSURANCE FRAUD AND MONEY LAUNDERING

Jose Badillo and a Co-Defendant Are Accused of Submitting a Fraudulent Auto Insurance Claim and Pocketing the Proceeds

SAN FRANCISCO – Jose Vicente Badillo and Jessica Elizabeth Najarro appeared in federal court today to face mail fraud, wire fraud, and money laundering charges related to a scheme to defraud an auto insurance company, announced United States Attorney Ismail J. Ramsey; FBI Special Agent in Charge Robert K. Tripp; and IRS Criminal Investigation (CI) Acting Special Agent in Charge Michael Mosley of the Oakland Field Office. The case has been assigned to the Hon. Rita F. Lin, United States District Judge. According to an indictment returned by a federal grand jury on July 9, 2024, Badillo, 28, and Najarro, 30, both of San Francisco, conspired to defraud an insurance company by submitting a fraudulent insurance claim on a wrecked car that Badillo purchased in June 2019. The indictment alleges that, when Badillo bought the car, it was undrivable, with severe front-end damage and a non-functioning engine. Nevertheless, the indictment says, Najarro obtained an insurance policy on, and later took title to, the car before falsely reporting to the insurance company in July 2019 that she had been in a single-car accident in it in San Francisco. The indictment further alleges that Najarro spoke with, and made materially false statements and misrepresentations to, an insurance representative in another state, after which the insurance company processed and approved her claim and sent her an insurance reimbursement check for $34,037.48. The indictment alleges that the full amount of the insurance reimbursement check was deposited a few days later into a Wells Fargo Bank account controlled by Badillo. The indictment also alleges that, at the time of the offenses in 2019, Badillo owned and/or controlled at least two companies engaged in the business of towing vehicles: Jose’s Towing, LLC, and Auto Towing, LLC, both of which operated out of San Francisco. Both defendants are charged with one count each of (i) conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. 1349; (ii) mail fraud, in violation of 18 U.S.C. 1341 and 2; (iii) wire fraud, in violation of 18 U.S.C. 1343 and 2; and (iv) money laundering, in violation of 18 U.S.C. 1957 and 2. Badillo and Najarro were arrested in San Francisco on August 8, 2024, and released on a $50,000 bond at their initial appearances later that day. Both defendants are next scheduled to appear in court on August 12, 2024, at 10:30 a.m., before the Hon. Lisa J. Cisneros for arraignment and identification of counsel. An indictment merely alleges that crimes have been committed, and both defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Badillo and Najarro each face a maximum sentence of 20 years in prison, and a fine of $250,000 or twice the gross gain or loss, whichever is greater, plus restitution, if appropriate, on each of Counts 1 through 3, which charge mail fraud, wire fraud, and conspiracy to commit the same, in violation of 18 U.S.C. 1341, 1343, 1349, and 2. They face a maximum sentence of 10 years in prison, and a fine of $250,000 or twice the amount of criminally derived property involved in the transaction, whichever is greater, plus restitution, if appropriate, on Count 4, which charges money laundering, in violation of 18 U.S.C. 1957 and 2. The court also may order an additional term of supervised release to begin after any prison term as part of the sentence for either or both defendants. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. 3553. This prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks. Assistant U.S. Attorneys Kyle F. Waldinger and Galen A. Phillips are prosecuting the case with the assistance of Amala James and Carolyn Jusay Caparas. The prosecution is the result of a lengthy investigation by the FBI and IRS CI.