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Boston takes first steps on cab industry abuses

Signs of overcharges on drivers found; consultant may be hired this week

Eight weeks after Mayor Thomas M. Menino ordered a sweeping review of Boston’s $1 billion taxi industry, the city says it has begun to crack down on continued exploitation of cabbies, uncovering what appear to be violations by a cab owner who was charging drivers fees not allowed by the city.

Police spokeswoman Cheryl Fiandaca said the Boston Police Department’s hackney division identified what she called “potential wrongdoing’’ involving overcharges levied on several cabdrivers but declined to identify the company or the amount until the case is complete.

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Police Commissioner Edward F. Davis is reviewing the matter and plans to make sure the drivers are compensated, Fiandaca said.

A more thorough top-to-bottom examination of the troubled taxi industry — to be done by an independent outside specialist — was expected to have begun by now. But it has been stalled by the requirements of public bidding laws, city officials said.

Menino ordered the comprehensive review on April 1, the day after a Globe Spotlight Team series began documenting how the Boston Police Department’s hackney division often punishes drivers but condones egregious conduct by cab owners, including pressuring cabbies to pay petty bribes to rent the taxis they drive.

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At the time, Menino said he hoped to hire a nationally recognized taxi industry specialist within days and seek recommendations within two or three months that could dramatically reshape how Boston taxis are regulated and managed.

The Menino administration solicited competitive bids, as state law requires for contracts costing at least $25,000, but received only two proposals by a May 6 deadline, said Dot Joyce, a spokeswoman for Menino.

“This multimillion-dollar medallion owner . . . makes a complaint, and he rescinds an order that affects the whole industry.”

Donna Blythe-Shaw, Organizer for the Boston Taxi Drivers Association  
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Concerned that the April 15 Boston Marathon bombings might have contributed to the tepid response, the city requested a new round of bids and received the original two and a third by last Tuesday’s deadline. The city expects to choose a consultant this week and the review will be due within 90 days, Joyce said.

Cabdrivers waited in line for fares in Logan International Airport’s taxi pool.

2012 file/John Tlumacki/Globe staff

Cabdrivers waited in line for fares in Logan International Airport’s taxi pool.

“The mayor would have liked to get this started the day in which he announced it,’’ said Joyce. “In fact, he’s as frustrated as anybody that we haven’t been able to move faster. Unfortunately, we’re under the constraints of public bidding laws.’’

In the meantime, the city’s hackney division is preparing standardized receipts for cab owners to give drivers to address a problem that the Globe found is rampant: Drivers seldom get receipts when they pay to lease taxis and therefore cannot challenge overcharges that are common in the industry.

In addition, the hackney division recently completed background checks on all cab owners to make sure they do not have criminal records, Fiandaca said. Such vetting is routine for cab drivers but, until now, was not for the owners.

Each of the city’s 1,825 medallions has a market value of about $600,000. With 6,200 licensed cabbies in Boston, taxi owners enjoy a surplus of people willing to pay them $100 or so to drive a 12-hour shift.

The nine-month Spotlight Team investigation documented numerous abuses of drivers in the taxi industry by wealthy fleet owners. Drivers who lease cabs from the biggest fleet, Boston Cab, owned by the multimillionaire Edward J. Tutunjian, routinely pay small bribes to employees of Tutunjian who distribute keys to his 372 cabs. Cabbies are forced to pay for gas from the company’s overpriced pumps and are sometimes squeezed to make up phantom shortfalls in the payments they make to the owner after every shift — shortfalls almost never documented with a receipt.

Federal authorities have started a criminal investigation of the company, the Spotlight Team reported. A spokeswoman for US Attorney Carmen M. Ortiz declined to confirm or deny the investigation last week.

As the city begins to address some of the problems revealed by the Globe, driver advocates say fleet owners continue to flout city regulations and abuse drivers without fear of the city revoking their licenses, or medallions. And, although Menino said after the first story was published, “We’re not going to tolerate this nonsense,’’ several advocates say little has changed.

Donna Blythe-Shaw, an organizer for the United Steelworkers and the Boston Taxi Drivers Association, noted that USA Taxi in Dorchester has defied a city regulation all year by charging an $18 premium to cabbies who lease 2009 hybrid Ford Escape taxis on top of the standard $77 fee that drivers pay each 12-hour shift. Boston police sent fleet owners a notice in January reminding them that under city regulations, they can only charge the $18 premium for cabs that are less than five years old; vehicles made in 2009 no longer qualify, the police said in that January notice.

“The overcharges are still going on,’’ Blythe-Shaw said last week. “I’m still waiting for this sweeping review. I haven’t seen a thing.’’

USA’s owner, George Summers, said in the Globe series that he bought the Ford Escapes between April and June 2009 and felt entitled to charge the $18 premium a full four years. He repeated that position last week, citing the cost of maintaining a dozen 2009 Escapes that have logged as much as 300,000 miles. Just the other day, he said last week, he replaced a transmission for $3,500. “I incur heavy expenses to maintain the cars,’’ he said.

Summers said he went to the hackney division several days ago to make the same pitch to a sergeant — and found a sympathetic ear. Shortly afterward, Captain Steven McLaughlin, the highest-ranking officer in the unit, sent a fax to medallion owners with a giant “X’’ scrawled on the order prohibiting the $18 premium on 2009 cabs and this notation in marker: “On hold until further notice.’’

Fiandaca said McLaughlin simply wants to review the rule to make sure “what’s being done is fair and equitable’’ and insisted that nothing has been decided.

But Blythe-Shaw said the backpedaling confirmed the central finding of the Globe’s nine-month investigation: that the hackney division’s system of enforcement is lopsided.

“This multimillion-dollar medallion owner goes down to [hackney], makes a complaint, and he rescinds an order that affects the whole industry,’’ she said. “It’s astonishing.’’

McLaughlin declined to comment.

With the outside review of the taxi industry yet to start, cabbies and advocates complain of other abuses. Several, for example, have alleged that medallion owners continue to strong-arm cabbies who lease medallions that they attach to taxis they have purchased.

Tahir Khan, a 54-year-old cabbie from Revere, said he has been leasing a medallion for 11 years from Peter Kouracles, who owns a handful of medallions. He pays Kouracles $500 a week — the maximum legal rate — and in cash, because Kouracles refuses to accept checks, Khan said. Khan never receives a receipt, he said, a violation of hackney regulations.

In September 2011, Khan said, he spent $25,000 for a 2012 Ford Escape cab, borrowing $5,000 from Kouracles at 12 percent interest. He paid off that loan, he said, but owes another friend several thousand dollars.

About six weeks ago, Khan said, Kouracles called with stunning news. The medallion owner told him he was not going to renew their annual lease agreement on June 1 because of rising business expenses. Instead, Kouracles offered to buy the car back from Khan — but only for $9,000 because the Escape has about 100,000 miles on it — and lease it to Khan to drive, Khan recalled. The cabbie refused.

Later, Khan said, Kouracles called him again. He told Khan that he would buy the cab from him for the original $25,000 cost and let Khan and a friend lease it for $850 a week, well below the maximum hackney-sanctioned rate of $970. Khan told the Globe he was inclined to accept the deal.

Still, Khan said, he called Captain McLaughlin last week to complain about how the medallion owner was treating him. McLaughlin was “really rude’’ and dismissive, Khan said, and told him that Kouracles had a legal right to not renew the lease. Khan also alleged that during their negotiations Kouracles had offered to renew the medallion lease, but only if Khan paid $570 a week — well above the legal rate — a deal he refused. According to Khan, McLaughlin said the police couldn’t do anything because no illegal rate was ever charged.

When a Globe reporter called Kouracles Wednesday, the medallion owner said, “Have a nice day,’’ and hung up.

Fiandaca, the police spokeswoman, said she found Khan’s description of McLaughlin’s attitude “incredibly hard to believe’’ and that McLaughlin has resolved the dispute between Khan and Kouracles.

Eleven days after the Globe series began on March 31, Commissioner Davis suspended Mark Cohen, the civilian who had overseen the taxi industry since the 1980s, for alleged misconduct with a subordinate in the hackney unit. Cohen was placed on paid leave from his $110,000-a-year position pending an internal inquiry into a reported heated exchange between him and the employee. Cohen’s alleged misconduct evidently stemmed from the stress he was under as a result of heightened scrutiny of the unit, an official with direct knowledge of the incident told the Globe at the time.

Fiandaca said last week that she expected the investigation of the allegations against Cohen to be completed within two weeks.

City officials say they have made progress on another front: finding out what happened to funds intended to aid the families of taxi drivers who die on duty. The Boston Taxi Drivers’ Bereavement Fund was established in the late 1980s with a $50 contribution for each taxi medallion held by its owner. At that rate, about $75,000 should have been set aside to benefit taxi drivers’ families, because there were about 1,500 medallions at the time.

When the Globe asked the Police Department in March about the whereabouts of the money, a department spokeswoman said the fund has been inactive for nearly a decade and there were no plans for an investigation “absent any evidence of wrongdoing.’’

Menino’s spokeswoman, Dot Joyce, said last week that city officials have determined the fund was transferred to the city treasurer in 2005, when it contained $45,000, and none of it has been spent. Neither she nor Fiandaca knew whether any money from the fund had gone to drivers’ families before the transfer.

“The Police Department has now found it and knows where it is,’’ Joyce added.

But Blythe-Shaw of the Boston Taxi Drivers Association questioned whether the city had the authority to transfer the money to the treasurer.

“It wasn’t tax dollars,’’ she said. “What’s it doing in the Treasury?’’

Jonathan Saltzman can be reached at jsaltzman@globe.com.
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