Can cops charge you $500 extra for a towing charge?

My friend just recently got pulled over with a suspended licence in a small town that I live in and there is one towing company and the cops told him that he has to pay the towing company $635 to get his car out $135 for the towing charge and $500 to pay the police department is this legal at all? I have never heard of this I have had my car impounded many times by cops and I only had to pay for the towing charge. It sounds like they are trying to rip him off.