Boston’s Hackney Division Proves Bias In Favor of Medallion Taxi Industry Yet Again

Taxi Tycoon Transfers 362 Medallions To Wife

Edward J. Tutunjian, the longtime owner of Boston’s largest taxi fleet who was charged Tuesday with federal tax and fraud offenses, quietly transferred ownership of 362 taxi medallions to his wife in the last couple of weeks, according to his lawyer.

Attorney Andrew Good said Wednesday the Boston Police Department’s hackney division approved the transfer, worth potentially tens of millions of dollars, to Tutunjian’s wife, who has long helped him run Boston Cab. He said the 66-year-old businessman has diabetes and his health has declined.

“He hasn’t been running things for some time,’’ said Good, adding that Tutunjian sold 10 other medallions before the most recent transfer.

Donna Blythe-Shaw, a former representative of the Boston Taxi Drivers Association, which has accused Tutunjian of exploiting a workforce largely of immigrant cabbies, said the transfer was an attempt by the Belmont tycoon to protect his assets and that the city should never have allowed it.

“I’m not only surprised,” she said, “I’m disgusted by this.”

 

Under state law and city regulations, the Boston police commissioner has broad authority to decide whether an individual is suitable to own a medallion, or taxi license.

Edward F. Davis, then Boston’s police commissioner, blocked Tutunjian’s potential sale of medallions to a New York cab titan in 2013 because the prospective buyer faced $400,000 in fines for overcharging drivers for daily cab rentals there.

Asked why the department allowed Tutunjian to give his wife hundreds of medallions — which can sell for about $130,000 each — a police spokesman said in a statement: “As we understand it, the federal investigation is still active and ongoing. As such, it would be inappropriate for us to comment further until the case is resolved.”

Tutunjian on Tuesday agreed to pay more than $2.3 million in fines for payroll tax evasion, employing illegal immigrants, and failing to pay overtime wages. Prosecutors say they will seek a prison term of at least two years, followed by 12 months of supervision.

Blythe-Shaw said Mayor Martin J. Walsh and the City Council should rescind Tutunjian’s transfer of his medallions to his wife, who now runs the business with his daughter.

“He was not a suitable owner,’’ Blythe-Shaw said. “You’re telling me his wife and daughter are? They’ve been running the business, too. . . . I’m surprised by [Police] Commissioner [William B.] Evans’s decision to agree to that transfer.’’

Tutunjian was the focus of a Boston Globe Spotlight Team series in 2013 that found widespread exploitation of drivers in the taxi industry. At the time, he owned 372 taxi medallions, or about one in five of all medallions in Boston, and ran a business empire worth about a quarter-billion dollars that included Back Bay apartment buildings, lucrative parking lots and garages, and vineyards in Chile.

The Globe investigation found that the cab industry was a world of serial indignities that drivers endure while many cab owners walked off with huge and remarkably easy profits.

Drivers at Boston Cab routinely paid dispatchers small bribes, commonly from $5 to $20, to get the keys to cabs that leased for 12-hour shifts, the investigation found. This was on top of the $100 the city allows medallion owners to charge for the right to lease a cab.

But if Tutunjian was king of the taxi industry in Boston, the industry has crumbled in the past three years because of fierce competition from Uber and Lyft, not to mention a federal investigation that burst into public view two months after the Globe series when IRS agents executed a search warrant at the Boston Cab headquarters.

When the series ran, taxi medallions — tin squares affixed to the trunks of cabs that owners lease to shift drivers — fetched about $600,000, or roughly 20 times what Tutunjian paid for his first. Now, they are listed for sale online for as little as $130,000.

Taxi industry veterans said the plunge is no surprise given the soaring popularity of ride-hailing services that don’t face the same licensing and regulatory requirements.

“When you can operate a taxi essentially with no medallion, it makes them almost worthless,” said James Endicott, owner of Summit Management, which holds a number of Boston taxi medallions. “It’s devastating this industry, and the people who created this industry — the city governments — are responsible for it, and they’ve chosen to turn their backs on the people they regulate.”

Taxi drivers and others in the industry have urged the city to level the playing field and to root out corruption, with modest success.

In 2014, Walsh announced the formation of a 24-member Taxi Advisory Committee to overhaul regulations and policies for the industry.

But the efforts prompted only a few changes that did little to stop the erosion of the taxi business, according to two members. Those included lowering the fees cab drivers pay to lease new taxis and allowing owners of three or fewer cabs to forgo paying mandatory fees for radio dispatch service.

“Basically, nothing came out of it — absolutely nothing,” said Endicott, a member of the panel that represented large medallion owners.

While the Spotlight series focused on fleet owners’ treatment of cab drivers, the federal charges against Tutunjian hardly mention cabbies, who the state Supreme Judicial Court ruled last year are independent contractors, not his employees.

Instead, the focus was on the workers Tutunjian and his company, EJT Management Inc., directly employed — mechanics, dispatchers, office workers, and others. Prosecutors alleged that a number of these workers were illegal immigrants.

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.

He also allegedly did not pay the required overtime rate to employees who worked more than 40 hours a week.

Adelaide Pagano, a Boston lawyer who helped cab drivers unsuccessfully sue Tutunjian and two other fleet owners based on allegations that the drivers were misclassified as independent contractors, said she was disappointed the charges didn’t address exploitation of cabbies.

But she said the charges “give a lot of credence to the allegations we’ve been hearing from taxi drivers for years.’’

Jennifer Pinkham, an attorney who represents the Boston Taxi Owners Association, a group of hundreds of medallion owners, said she hopes Tutunjian’s downfall “will make people more aware that you have to be treated fairly.”

But she emphasized that most medallion owners are responsible business owners. “There are always bad people out there and just because there’s one bad apple doesn’t make them all bad,” she said.

Boston Cab driver Mikael Oucible, 34, said he might have to look for another company to lease cabs from.

“Yeah, it’s going to affect my job like Uber does,” he said.

“Uber is doing more than he’s doing.”

Travis Andersen of the Globe staff contributed to this report.

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

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