Edward J. Tutunjian, the king of Boston’s struggling taxi industry, has agreed to pay more than $2 million in fines and may face prison time after he was charged Tuesday with federal tax and fraud offenses, three years after IRS agents raided his garage headquarters near Fenway Park.
Tutunjian, who has owned Boston Cab for more than four decades, was charged in US District Court in Boston with payroll tax evasion, employing illegal immigrants, and failing to pay overtime wages.
His company, EJT Management Inc., which bears his initials and through which he operates Boston Cab, was also charged with defrauding the Department of Housing and Urban Development by enabling EJT employees to obtain federal housing subsidies they were not entitled to.
Tutunjian and EJT have signed plea agreements in which they pledge to make full restitution, totaling more than $2.3 million, federal authorities said. Prosecutors said they will seek a prison term of at least two years, followed by 12 months of supervised release for Tutunjian, who is expected to be summoned to court at a later date.
One of his lawyers, Andrew Good, said in a statement that the 66-year-old Belmont tycoon “accepts full responsibility for his unlawful practices.’’
“These practices ceased almost three years ago,’’ he said. “All of the unpaid taxes and overtime wages will be paid with interest and penalties.’’
Two months before IRS agents with guns drawn executed a search warrant at Tutunjian’s headquarters in May 2013, he was the focus of a Boston Globe Spotlight Team series that found widespread exploitation in the industry. At the time, Tutunjian owned 372 taxi medallions, or about one in five of all medallions in the city, and ran a business empire worth about a quarter-billion dollars.
At Tutunjian’s garage on Kilmarnock Street, employees were startled to hear about the charges. Cabbie Johnny Celestin, 45, said, “He got charged?” His eyes widening, he added “Wow. . . . I can’t believe it.”
He said Tuntunjian is more pleasant to deal with than some of the managers. “Eddie’s a nice guy,” he said. “But some of the other guys, they give you the key [to drive] but they’re not the nicest people.”
Celestin said he believes Tuntunjian will avoid prison, despite the prosecutors’ expected recommendation. “He’s got money, I don’t think he’ll go to jail,” he said.
Donna Blythe-Shaw, who recently retired as a representative of the Boston Taxi Drivers Association, said the charges show corruption in the industry has thrived under a series of mayoral administrations.
“The city needs to stop turning a blind eye to the taxi industry and create a civilian commission to regulate the industry and clean it up,’’ she said.
The office of Mayor Martin J. Walsh could not be reached for comment Tuesday night.
A native of Jordan who immigrated to Watertown as a teenager, Tutunjian became perhaps Boston’s most invisible tycoon. His medallions — which rose steadily in value until competition from ride-hailing companies Uber and Lyft undercut the taxi business — bankrolled ventures ranging from Back Bay apartment buildings to vineyards in Chile.
But the charging document released Tuesday alleged Tutunjian did much of his business dishonestly, and in cash.
With about 6,000 licensed cabbies in Boston, Tutunjian and other medallion owners long enjoyed a buyer’s market of potential drivers willing to pay them roughly $100 a day to operate cabs. The drivers keep the money they earn after paying that fee to fleet owners.
Although the state’s highest court ruled last year that the drivers are independent contractors, Tutunjian and EJT directly employed mechanics, dispatchers, office workers, and others. Prosecutors alleged that a number of these workers were illegal immigrants not allowed to work in the United States.
Tutunjian concealed the size of the company payrolls from the Internal Revenue Service, thus hiding the amount of federal employment taxes he and EJT were supposed to pay, prosecutors alleged. He did this by paying in cash and keeping the payments off the books.
Tutunjian also allegedly did not pay the required overtime rate to employees who worked more than 40 hours a week, though some worked as much as 60 hours. He concealed this by making employees punch in 40 or fewer hours on an electronic time clock, and then paid those workers in cash for their overtime at the regular rate rather than at time-and-a-half.
Prosecutors also alleged that a number of EJT employees were living in federally subsidized housing in Cambridge and elsewhere, some of which had waiting lists. The amount of the subsidy and eligibility to live in the units depended on tenants’ incomes.
From January 2009 to May 2013, EJT allegedly helped certain employees get housing benefits they were not entitled to by providing information that did not accurately reflect the wages paid to them in cash.
Andrew Hebert, a manager at USA Taxi in Dorchester and onetime editor of the defunct taxi industry publication Rear View Mirror, said Tutunjian represented the old guard. “I’m sorry to hear that he’s going to jail,’’ Hebert said. “It sounds like he made some big mistakes, but he’s not a bad man.’’
In a related case, EJT dispatcher Girma Tilahun, 60, and his wife, Wudnesh Wolde, 53, of Cambridge, agreed to plead guilty to immigration fraud and paid $234,987 in unpaid federal income taxes and $62,340 to HUD, federal authorities said.
Another former EJT employee, Tutunjian’s nephew, Raffi Chapian, 44, of Waltham, has agreed to plead guilty to failing to pay income taxes from 2010 to 2014, serve six months in prison, and pay $72,335 in unpaid taxes.
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