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Taxi owner fights city probe, allegations of Russian mob ties

 
Dispute underscores poor enforcement in San Francisco taxi cab industry

San Francisco transit officials have probed the city’s third largest cab company, Arrow Checker, over the past three years for allegedly gouging its cabbies and not addressing the needs of disabled riders.

But Arrow Checker owner Gratchia Makarian claims that the San Francisco Municipal Transportation Agency singled out his company because of a bias against its Russian-speaking owners. In a lawsuit against the city, Makarian claims that he’s being defamed by top city taxi officials who “have perpetuated rumors and made statements” about him being involved with the “Russian mafia.”        

“It is an extremely stupid allegation because I am Armenian,” said Makarian in an interview this week. “I have never been involved in any crime related to the organized crime. I have a clean record.”

A transit agency spokesman declined to comment because of the lawsuit. But former Taxicab Commission Executive Director Jordanna Thigpen, who along with her successor Christiane Hayashi is a accused of defamation, disputed the allegations. Thigpen said she didn’t “remember ever making a statement like that,” although she acknowledged that “a lot of people said that.”

Now a lawyer in private practice, Thigpen said that several investigations were launched during her tenure because Arrow Checker had “hordes and hordes of problems.” Thigpen said the city received an “excessive amount” of complaints from passengers about rude drivers and from drivers about being overcharged by the company’s management.

The fight between Makarian and the city highlights the touchy issue of policing the city’s freewheeling taxi industry. In true San Francisco form, the city has plenty of rules and regulations on the books, but it doesn’t normally enforce them, many in the industry say.

“There's been a pattern over the years of people pulling stunts in the cab business and not being punished and everyone getting punished by new rules,” said Richard Hybels who runs Metro Cab.

Mark Gruberg, a spokesman for the city’s taxi drivers union, said that companies routinely flout the rules, whether it’s taking prohibited “grease” payments from drivers for plum cars and fares, or prowling around the city’s streets in unregistered town cars. 

“The enforcement that’s going on is just a tiny drop in the bucket,” Gruberg said.

Hansu Kim, president of De Soto Cab and a former transportation consultant, said that San Francisco has “a long way to go before having the level of enforcement that other cities have.” 

“In New York, they have full investigative unit with guns and badges; in Las Vegas, if you’re operating a taxi that's not properly licensed they’re all over you,” Kim said. “One of the biggest challenges that this city faces is a lack of enforcement and lack of accountability in the taxi industry.” 

The result, Kim said, are unlicensed drivers, higher accident rates and drivers who are exploited by their cab companies.

Once the domain of the police department, policing taxis was shifted to the city’s transit agency in 2009. Now just four civilian investigators, armed with rulebooks and flashlights, must contend with 1,500 taxi medallion holders – as well as all the cabs and town cars that operate illegally without a medallion.

“During the transition between the former Taxi Commission and the SFMTA, there has been a gap in enforcement resources, but we have been building up those resources,” said Christiane Hayashi, deputy director of taxi services for the transit agency. 

Makarian is a slight balding man with a poker face. He finished in 99th place in a World Series of Poker event last year and said he views the cab industry like the game.

“You have to read people, and you have to know how people are coming at you,” said Makarian, whose company has 120 cabs.

In 2010, the SFMTA scrutinized Arrow Checker for illegally charging its drivers fees for cashing out their credit card fares at the end of the day. Although some cab companies are now allowed to pass along a 5 percent credit card fee to their drivers, Arrow Checker wasn’t at the time.

The investigation was fueled by allegations that Makarian wouldn’t cash Arrow Checker drivers out, forcing them to use the services of “The Russian Lady,” as she is known to everyone in the industry. The woman, who works out of a trailer on the Arrow Checker lot, charges a 10 percent fee for the service, cab drivers say.

Following the investigation, the SFMTA levied a fine of $16.2 million against Arrow Checker in 2011, according to the lawsuit. That number was calculated with a formula, SFMTA officials said, and it was later reduced. In the end, Arrow Checker agreed to pay around $6,000 to settle the matter, they said.

In 2009, the city began probing Arrow Checker over allegations that it charged drivers more than the allowable $100 fee per shift – but nothing ever stuck, according to the lawsuit. In 2011, the SFMTA sent letters to several Arrow Checker cab drivers accusing them of “not addressing the needs of the paratransit community,” the lawsuit says. San Francisco cabs are required to provide a certain amount of service to the elderly and disabled. 

Makarian said that the city hasn’t been able to prove the allegations and charged that rules are being “selectively enforced” against Arrow Checker. He added that the Russian woman isn’t affiliated with his company, saying that he too knows her only as the Russian Lady.

Makarian said he didn’t know if his company was still being investigated, and transit agency officials refused to answer questions on the matter. 

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