By on November 24, 2009

Of all the scams in all the world...

Traffic camera companies operating in Arizona may be committing a crime by operating without a private investigator’s license, a newly released memorandum to the state legislature explained. The non-partisan Arizona Legislative Council, the legislature’s official source for drafting and reviewing legislation, looked at the licensing question on behalf of state Representative Sam Crump (R-Anthem).

Under Arizona law, an individual who is not a police officer or insurance adjuster may not “secure evidence to be used… in the trial of civil or criminal cases and the preparation therefor” without a private investigator’s license. Violating this statute is a class 1 misdemeanor, and the legislative branch lawyers believe Arizona’s automated ticketing contractors could be guilty of this crime.

“Applying liberal construction of the definition of private investigator under the statute, the activities conducted by a photo enforcement company such as Redflex arguably fit within that definition,” the memo stated. “Mainly, Redflex gathers data and processes it for the purpose of identifying violators of the state’s traffic regulations…. In addition, ARS 32-2409 provides an extensive list of exceptions to the requirement of obtaining a license. It does not appear that Redflex would fall within any of these exemptions. Arguably, if the legislature wanted to exempt photo enforcement agencies from licensure, it could have done so by adding such agencies to the list of exemptions.”

This interpretation could have devastating financial consequences for Redflex and its competitor, American Traffic Solutions (ATS).

“If a private investigator license is required under the law, a contract to conduct private investigation activities without the requisite license could be unenforceable, and a later receipt of a private investigator’s license may not cure the prior misconduct of operating as a private investigator without a license,” the memo explained.

Both Redflex and ATS have argued that the private investigator statute does not apply to them. Redflex lobbyist Jay Heiler, for example, argued last week that the company was operating as an agent of the state Department of Public Safety. As an agent of law enforcement, Heiler argued, the company was exempt from the licensing requirement. The Legislative Council exlicitly rejected this line of reasoning.

“The contract between Redflex and the state of Arizona specifically defines the relationship of the parties and states that the vendor under the contract is an independent contractor and that neither party to the contract is an employee or agent of the other party to the contract,” the memo explained, citing Section 2.4 of the DPS-Redflex contract.

Lower courts in other states appear split on the question of whether photo ticketing companies require a license. The Legislative Council took Redflex to task for implying unanimity of court opinion by suggesting that decisions thrown out on technical grounds were actually rulings against the need for licensing.

“The court assumed without deciding that Redflex falls within the definition of an investigations company for the purposes of the court’s order,” the memo explained. “Interestingly, in a recent press release, issued by Redflex in response to the order, Karen Finley, president and CEO of Redflex, seems to imply that the court in Bell I specifically concluded that Redflex is not required to be licensed as a private investigation agency.”

On April 8, Dallas County, Texas District Court Presiding Judge Craig Smith threw out a case against a traffic camera company because the plaintiffs lacked standing to file their complaint. Smith clearly stated, however, that the photo ticketing company “is required to obtain a license under the Texas Occupations Code.”

A copy of the memo is available in a 350k PDF file at the source link below.

Source: PDF File Redflex Traffic Systems Private Investigator Licensing (Arizona Legislative Council, 4/7/2009)

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