The decades-long reign of Boston’s “taxi king” is coming to an end.
Edward J. Tutunjian — whose Boston Cab empire crumbled amid competition from Uber and allegations of worker exploitation that triggered a federal investigation — has agreed to sell his company, 362 taxi medallions, and several properties in the Fenway to developer Jay Doherty for approximately $145 million.
“We have an airtight contract,” Doherty said in an interview. “They agreed to honor it, and we’re very happy.”
Tutunjian did not respond to requests for comment.
Doherty said his primary interest is in Tutunjian’s property, 2.1 acres across four parcels in the red-hot Fenway area. He plans to build a large residential development on the property, while finding a transportation company to operate the taxi business.
In 2016, a federal judge fined Tutunjian $2 million and sentenced him to 18 months in a halfway houseafter he pleaded guilty to payroll tax evasion, failing to pay overtime to employees, hiring illegal immigrants, and helping workers win federal housing subsidies for which they didn’t qualify.
Those charges stemmed from a 2013 Boston Globe Spotlight Team investigation, which reported that Tutunjian’s managers exploited Boston Cab’s largely immigrant workforce by demanding petty bribes in exchange for shifts and garnishing drivers’ pay to make up for supposed fare shortfalls. IRS agents raided Boston Cab’s Fenway headquarters two months after the series was published and hauled away boxes of financial records.
But the emergence of Lyft, Uber, and other ride-hailing services has arguably done the most damage to Boston Cab. In his lawsuit, Doherty said Tutunjian told him that the decision by public officials to allow ride-hailing firms to operate under less regulation than taxis, and the resulting depreciation of Boston Cab and its medallions, were the primary reasons why he decided to sell.
Some cab drivers are furious that Tutunjian, despite his conviction, is poised to walk away with a $145 million payday.
“He’s not a businessman — he’s a liar,” fumed Ahmed Ali Farah, a Somali immigrant who drove for Boston Cab in the early 2000s. “Those cabs he’s selling, they’re not his. All the money came from the drivers. If there’s justice in this state, the drivers, they own it. But as always, Eddie is the winner and we are the losers.”
Farah, who sued Tutunjian in 2004 for disability discrimination, said there was one silver lining: “I am happy he’s not going to be anyone’s boss anymore.”
The purchase has yet to close, as Doherty said he is still conducting due diligence on Tutunjian’s holdings. Among the complications: arranging the transfer of Tutunjian’s properties and medallions, which are held by dozens of paper corporations.
Doherty will also need approval from the Boston Police Department’s Hackney Carriage Unit to take possession of the medallions. Last summer, with the federal case looming, Tutunjian received police permission to transfer his medallions to his children and his wife, Nancy Tutunjian. But police officials froze that transfer after Tutunjian pleaded guilty.
A police spokesman told the Globe this week the hackney unit ultimately concluded Nancy Tutunjian was “suitable to hold the medallions,” but that the unit “has since learned that the transfer to Nancy has not occurred and other options are being considered by the medallion owner.”
Doherty already has an idea for what he wants to build on the real estate, located near the intersection of Queensberry and Kilmarnock streets: a multifamily residential complex. Zoning rules for the Fenway, he said, would allow a project as large as 400,000 square feet. However, he promised to meet with nearby residents before pushing ahead with redevelopment.
Neighbors, Doherty said, “could be really happy that some operations are departing, but may have reservations about other things, like height.”
But if Doherty’s path to redeveloping the Fenway land is long, the challenge of taking over Boston Cab is even more daunting.
The taxi business is in free fall, mostly thanks to competition from Uber and Lyft. Ridership in Boston is down in recent years, and the value of medallions has plummeted — from nearly $700,000 earlier this decade to below $100,000 by the end of 2016. Several owners who had tried to sell their medallions recently received no offers.
Moreover, some medallion owners say they are having trouble finding drivers willing to pay them for a shift behind the wheel. Advocates for drivers have blasted public officials for not moving to restructure the failing system.
Doherty declined to assign a value to the 362 medallions he is purchasing. But the developer insisted he would not have paid $145 million for the land alone. Cabot, Cabot, & Forbes is in talks with transportation companies, including one that operates a taxi fleet in Canada, and another in Israel.
“We are working on business models we hope and expect will be viable in today’s climate, notwithstanding Uber,” Doherty said, noting recent criticism of ride-hailing services and how they treat their drivers. “We’re inheriting a company in an industry that’s in tremendous flux, so we’re talking to people around the globe that are looking at what to do with these shells that still have some kind of franchise.”
Doherty said he may employ a “Whole Foods/fair trade” model, pitching Boston Cab to progressive consumers as an upscale, higher-priced service that pays its drivers well.
“Uber may well kill everything, but clearly there’s blowback happening,” he said.
Doherty even left the door open for Tutunjian to participate, saying, “these kind of deals are usually more of a collaboration in the end, whether people come to it reluctantly or not.”