It was one of those glittering entertainment-industry evenings. A fleet of sleek stretch limousines fanned out around town, scooping up Cher, Bobby McFerrin, kitsch horror queen Elvira and others to fetch them to the 1988 MTV Video Music Awards show last September.
Reclining in the plush splendor of their chauffeur-driven coaches, the stars were unaware that the limousine company hired for the occasion was a renegade firm operating outside the law--although one of the celebrities did complain after arriving at Universal Amphitheatre that her driver had made sexual overtures.
The rich and famous, as well as the couple down the street, have been victimized by price-slashing "bandit" limousine companies. Legitimate operators say the bandits are driving them out of business, and that state regulators are failing to control them.
"It's so easy for them to undercut us," said Wilma Stevens, general manager of Anaheim-based Cameo Limousine Inc., which runs a of fleet of 13 cars and two vans. "But they are haphazard in every way. They don't maintain their cars, they don't keep their operations safe. I tell people it doesn't matter who you go to, just make sure that the company is licensed and has a good reputation in the business."
Operating potentially unsafe vehicles without proper licenses and insurance, the renegades have been involved in hit-and-run auto accidents and prostitution. Some have offered "prom night specials" of drugs to high school students. Studies in Sacramento and Los Angeles have shown that more than half of the advertisers in the local Yellow Pages are bandit companies, often operating on a shoestring out of storefronts or private homes.
The Public Utilities Commission, which regulates the industry, has found problems with renegade operators in Orange County, Sacramento, Modesto, San Diego and Palm Springs. Los Angeles County, with its affluent neighborhoods in Beverly Hills and in the San Fernando Valley, "is the most serious of all," said Larry McNeely, a PUC enforcement official.
With its equally affluent clientele, Orange County also represents a lucrative market for limousine companies and a target for illegal operators, said John Morgan, an investigator in the PUC's Santa Ana office.
While there are about 150 to 200 licensed limousine, bus and van carriers in Orange County, there may be just as many operating illegally, Morgan said.
State law requires limousine operators to have at least $750,000 in public liability insurance on each car and to obtain an operating license from the PUC, which takes 1% of the gross revenue as a fee. Experts in the field say these bills can add up to more than $20,000 a year for the average mom-and-pop fleet of three limousines.
Avoiding the insurance and PUC fees allows the bandits to undercut legitimate operators by $10 an hour or more, according to Alan Shanedling, vice president of the Limousine Owners Assn. of California, based in Lawndale. That has put pressure on the legitimate side of the industry, forcing some limousine companies to become bandits themselves, according to the PUC's McNeely. "It's almost a cannibalistic" situation, he said.
Some established operators say the PUC must shoulder some of the blame for the problem.
"The PUC takes our money and in return they are supposed to keep us from being harassed by local municipalities and to keep illegals off the street. But they don't have the manpower to do it," said Harold Berkman, president and owner of Music Express Inc., a respected limousine operator in Southern California specializing in the celebrity trade.
According to investigators and industry experts, the problems with bandits are an unwanted side effect of the Gold Rush-like boom the limousine industry has gone through in recent years. After the 1984 Olympics in Los Angeles, when some operators offered their cars for $1,500 a day, interest blossomed in the business as an investment.
"For a couple of years, it was at the top of everyone's list of business opportunities," said Scott Fletcher, editor of Limousine and Chauffeur magazine. "Everyone jumped into it."
Creative Financing
Creative auto financing allows small businessmen with big dreams to get into the driver's seat. A buyer can drive off the lot in a $50,000 vehicle with "almost nothing down," Shanedling said.
McNeely estimates that there are now 2,000 licensed firms in California, up from about 900 5 years ago, adding that "there has been tremendous growth in the bandit side of it."
The PUC said passengers have been injured in accidents involving bandit companies. The agency is investigating two recent accidents in the Los Angeles area. In one, an Orange County bandit service carrying two passengers hit a parked car, then sped off. A wheel came off another limousine operated by the same company, and the limousine struck a car.
