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L.A. Taxi Business Hits Bumpy Stretch of Road

Claims of fraud roil the industry while drivers organize to fight a system they say exploits them.

July 13, 2006|Jessica Garrison | Times Staff Writer

Never a smooth ride, the taxi business in Los Angeles has detoured into rough territory, roiled by meter-rigging, corruption allegations and labor strife.

City officials and taxi franchise owners are blaming each other for failing to prevent widespread fraud; one city official estimates that earlier this year up to 20% of all licensed taxi drivers rigged their meters to reap illegal profits.

At the same time, dozens of drivers are organizing to confront company managers and city officials. They claim they are exploited by a system that forces them to work punishing hours for a pittance while the men who run their companies siphon off profits that should belong to them.

With gas prices near record highs, drivers want an increase in meter rates for the second time in three years -- and some have threatened a strike if they don't get it.

If that isn't enough, drivers and company officials say the industry is threatened by hundreds of unlicensed, bandit cabbies who steal their business and put customers at risk in unsafe vehicles. The drivers also say they are victimized by unscrupulous hotel doormen with their hands out for kickbacks to let drivers pick up guests.

Gary Vogan, 52, who has been prowling the nighttime streets of Hollywood in his taxi like "a shark" for 20 years, ferrying drunk revelers and charming customers with his comedy routines, says it is a pivotal moment for the industry.

"It used to be that nobody speaks for the driver ... most of us are immigrants; we don't know how to play the political system," said Sentayehu Silassie, a native of Ethiopia who has been a taxi driver since 1989. "Now the companies are being challenged, and the city too."

The taxi business, which is one of the few low-skilled jobs in the U.S. that allows people to work when and where they want, has always attracted oddballs and mavericks -- which means the industry is rarely tranquil.

But the usual controversies escalated more than a year and a half ago when several drivers, with the help of legal aid lawyers and organizers, formed the Los Angeles Taxi Workers Alliance and began trying to challenge the city's taxi system.

Company officials say the alliance represents only a small group of disgruntled drivers who have discredited themselves with wild claims.

The city has awarded nine companies franchises to operate all 2,300 legal taxis. Most of those firms are organized as cooperatives.

Drivers own their own cabs, and each week pay a set amount -- about $300, though the figure varies from company to company -- to cover overhead costs, including dispatch, advertising and liability insurance. Cabbies who drive someone else's taxi pay an additional fee, as much as $200 per week. And all drivers buy their own gas.

Drivers keep everything else they earn -- but members of the alliance say they suspect that company managers use a web of complicated corporate structures and intimidation to skim off the weekly payments of unsophisticated drivers, the vast majority of whom are immigrants from Ethiopia, Armenia, South Asia and the former Soviet Union.

"The analogy we like to use is sharecropping on wheels," said Betty Hung, directing attorney of the employment law unit at the Legal Aid Foundation of Los Angeles.

Drivers acknowledge that they have no evidence of specific corruption. But they say they think their weekly fees exceed expenses. They allege that many of the taxi companies, though claiming to be democratically run cooperatives, actually go to great lengths to shroud their financial dealings in secrecy and resort to intimidation and harassment to keep control.

Earlier this year, Gurmet Singh, a driver with United Independent Taxi Drivers Inc., charged that company President Martin Shatakhyan threatened his life after he asked for a financial statement.

"He told me that it was none of my business and don't discuss this matter and if you continue to talk about this matter I will kill you," Singh charged in a lawsuit filed in Los Angeles Superior Court.

Shatakhyan and his attorney, Neil Evans, dispute that allegation, saying Singh is a disgruntled driver who has been disrupting business. Shatakhyan had earlier sued Singh for slander.

Other drivers from United also filed suit seeking access to the company's books, which they said they had been denied in violation of the firm's own bylaws.

The drivers pointed to a 2001 audit of the company by the accounting firm Deloitte and Touche that found, among other things, that the company had destroyed financial records, misclassified political contributions and paid out $2 million to "cash" in 1999 and 2000.

Last fall, Los Angeles Superior Court Judge David Yaffe ordered the company to let the drivers examine the books.

Now, lawyers for the company and the drivers are squabbling over whether the order was followed.

"They sent me a bunch of documents. It's not what I asked for," said B. Kwaku Duren, the drivers' lawyer. "So I filed an appeal."

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