Boston’s biggest taxi owner, under criminal investigation and facing a multimillion-dollar class-action lawsuit, is seeking to sell more than half his cab empire — an estimated $120 million divestiture that the city’s top police official is promising to block.
Edward Tutunjian intends to file court papers Monday asking judicial approval for the sale of up to 200 of his 372 city-issued medallions — or licenses — for at least $600,000 apiece. The sale would be to “an owner or owners who would make positive contributions to the Boston taxi system,’’ a spokesman for Tutunjian said in a prepared statement.
But Boston Police Commissioner Edward F. Davis, after learning about the pending sale from the Globe, said: “My recommendation is to stop any large transfer of medallions from Mr. Tutunjian due to the ongoing investigation. We want to make sure that he is not trying to walk away from his responsibilities to taxi drivers.” Under state law and city regulations, Davis has virtually unlimited authority to stop the sale.
Tutunjian was the focus of a Globe Spotlight Team investigation earlier this year documenting how many taxi drivers feel pressured to pay his staff petty bribes to get keys to taxis that they lease for about $100 for a 12-hour shift. The Globe reported that drivers are often told to make up phantom shortfalls that they cannot dispute because they do not receive receipts — a violation of city regulations that police have routinely ignored.
A federal criminal investigation into those practices is underway.
The day after the Globe series began in March, Mayor Thomas M. Menino ordered a sweeping review of how the city’s taxis are regulated and managed. The results of that examination are due to be released next month and could include a recommendation to end the Police Department’s historic role as regulator of those who drive and manage Boston’s 1,825 taxis, a billion-dollar industry.
On May 31, IRS agents with guns drawn descended on the Kilmarnock Street garage where Tutunjian, a Jordanian-born immigrant who entered Boston’s cab business in the 1960s, manages his fleet. The federal agents carted away boxes of Tutunjian’s financial records.
Under scrutiny by the city and federal authorities, Tutunjian is being pursued, too, in Superior Court where he and other large fleet owners are being sued by cab drivers who allege they have been wrongly classified as independent contractors instead of employees and are due hundreds of millions in unpaid wages and benefits.
In June, a state judge froze Tutunjian’s assets, ruling that cabdrivers have a “likelihood of success on the merits” of the class-action lawsuit.
Because of that order, Tutunjian’s lawyers need judicial approval of the sale of the bulk of his business.
Tutunjian representatives said he has not settled on a buyer or buyers for the lucrative licenses, but Davis’s swift action to thwart the sale was apparently prompted by suspicion that Tutunjian was ready to sell to a controversial New York City cab titan who earlier this year moved to buy two Boston medallions.
Evgeny Freidman manages hundreds of medallions — or licenses — in New York City and is the largest medallion owner there.
In February, a corporation owned by Freidman called Offense Defense Taxi Inc. bought two medallions in Boston for $585,000 apiece, according to a taxi industry publication.
In May, The New York Times reported that Freidman was facing $400,000 in fines for overcharging drivers for their daily cab rental rates in New York. The city said that reports of additional overcharges by Freidman could result in fines of more than $1 million. Freidman has denied the allegations.
Apparently concerned that Freidman is Tutunjian’s buyer, Davis said that he would not allow the transactions on two city-issued licenses to close as had been expected within days.
“We’re putting a stop to that,’’ the police commissioner said.
Davis said police officials have begun reviewing Freidman’s record as a taxi owner in New York, including media reports about overcharging drivers. “It’s certainly something that we’re concerned about,” Davis said.
Attempts to reach Freidman in New York were not successful.
Dot Joyce, spokeswoman for Menino, said he “has asked the [police] commissioner to use every authority he has to ensure that we have only responsible medallion owners in the city of Boston.’’
A sale to Freidman — or to any single buyer — would instantly make him Boston’s taxi king, supplanting Tutunjian. And if Freidman brings his New York brand of taxi management to Boston it may seem familiar to the cabbies who had worked for Tutunjian.
The son of a Russian nuclear engineer, Freidman emigrated with his family to the United States in 1976 when he was 5. His father started a modest cab company that the son built into what David Yassky, head of New York City’s Taxi & Limousine Commission, described as the city’s largest.
On his website, Freidman says he is “the owner and operator’’ of New York’s biggest fleet, 920 cabs. It says he also operates 510 taxis in Chicago and 200 in Philadelphia.
Shannon Liss-Riordan, the lawyer for the drivers in the class-action suit in Boston, expressed alarm that Freidman might be trying to enter the Boston market — and possibly dominate it.
She said that she spoke to Tutunjian’s lawyers recently and tentatively gave them the go-ahead to sell 200 medallions as long as Tutunjian set aside the proceeds for her clients if they won their suit or settled out of court.
But she said she was under the impression that Tutunjian intended to sell them in small quantities over a year and was troubled by accounts of a sale to one owner in New York.
Tutunjian’s spokesman said his decision to begin to step away from the business that made him a fortune was driven by personal considerations. “With Mr. Tutunjian nearing retirement age, he believes this is the right time to scale back his involvement in the industry,’’ the statement said.
Tutunjian bought his first medallion in the early 1970s for about $30,000 and he drove a taxi for another six or seven years, and then gradually increased his transportation business. In 2000, he doubled his fleet, buying some 160 medallions from the daughter of the late Checker Taxi founder Frank Sawyer, a legendary power broker and real estate owner.
Andrew Hebert, the former editor of a now-defunct Boston taxi industry newspaper who still works in the business, said Tutunjian might have two reasons to want to sell most of his medallions.
“Either he’s worried that the federal agents turned up financial information that’s going to implicate him in some kind of impropriety, or he’s worried about the current lawsuit over employee status,” Hebert said. If taxi drivers win the class-action suit, he said, Tutunjian “may owe a considerable amount of money.”
Freidman would be a logical buyer, Hebert said, and not only because of his recent attempt to purchase two medallions. Hebert said that Tutunjian told him several years ago that he had visited one of Freidman’s garages in New York City. And Freidman, a pioneer in the use of hybrid Ford Escapes as yellow cabs, loaned one to the city several years ago to promote the shift to hybrids in Boston that Tutunjian championed. The taxi Freidman loaned was displayed outside City Hall, said Hebert.
An unlikely tycoon, Tutunjian dresses modestly and can be seen personally collecting $50 parking fees in a lot he owns across the street from his garage on Kilmarnock Street when the Red Sox are in town. The garage is a few blocks from Fenway Park.
Besides his 372 taxi medallions — worth more than $600,000 each at today’s prices — he owns a limousine service and dozens of properties from Back Bay apartment buildings to multifamily houses in the suburbs west of Boston. He also owns vineyards in Chile and another corporation that sells space for advertisements on the roofs of taxicabs.