A Virginia Beach towing firm accused of illegally auctioning seven service members’ vehicles agreed to shell out $90,000 to settle a federal lawsuit.

The agreement comes after a year-long legal battle in U.S. District Court against Steve’s Towing Inc.

Federal prosecutors accused the company of violating the Servicemembers Civil Relief Act by illegally seizing and selling vehicles belonging to seven service members, including a member of SEAL Team 2 who was deployed overseas. According to the act, towing companies need a court order before auctioning off service members’ vehicles and are barred from enforcing a storage lien while service members are deployed — plus 90 days after their return.

Under the proposed consent order, which must still be approved by the court, Steve’s Towing Inc. will pay $67,500 to the affected service members. The firm will also pay up to $12,500 to compensate additional servicemembers whose vehicles it may have sold without obtaining court orders.

Another $10,000 civil penalty will go toward providing training to its employees on the Servicemembers Civil Relief Act and developing new policies and procedures consistent with the act.

“This resolution will compensate all of the servicemembers whose vehicles were illegally taken from them while they were serving their country,” said Kristen Clarke, assistant attorney general of the Justice Department’s Civil Rights Division.

The investigation into Steve’s Towing began when a SEAL Team 2 Petty Officer 1st Class returned from an overseas deployment only to find his vehicles, parked across from team headquarters at Joint Expeditionary Base Little Creek, were gone.

The 1992 Toyota Land Cruiser and 1987 Toyota 4Runner had been towed from the military base by Steve’s Towing and sold without a court order despite one of the vehicles containing “evidence of the Navy SEAL’s military service” — including a duffel bag of military uniforms and a Naval Special Warfare Development Group Sniper challenge coin.

The vehicles also had Arizona license plates. While Steve’s Towing asked the Virginia Department of Motor Vehicles for vehicle records, it did not check with Arizona.

Thirty-six days after towing the vehicles, on Feb.7, 2020, Steve’s Towing filed liens to cover storage charges of $970 each for the vehicles, the lawsuit said.

That same day, Steven E. Gilliam, the company’s president, reported to the Virginia DMV that the company enforced its two $970 storage liens on the Land Cruiser and 4Runner by purchasing both from itself for $500 each, the lawsuit said.

The company never obtained a court order allowing it to dispose of the vehicles, the lawsuit said.

“Servicemembers often rely heavily on their personal vehicles to commute to work and care for their families. A servicemember’s loss of a vehicle, therefore, can affect the military’s readiness,” said Jessica D. Aber, U.S. Attorney for the Eastern District of Virginia.

Caitlyn Burchett, caitlyn.burchett@virginiamedia.com