To hear some local cab drivers tell it, Yitbarek Syume was the king of the Crown Vic, the titan of the Town Car, the maestro of the Grand Marquis. Under the hoods of the big cars that make up the District’s cab fleet, very few could match his technical skill.
“He was a great mechanic,” says one cab company honcho.
In fact, Syume, for some time, had a call-in radio show on a local radio station—the Click and Clack for the Amharic-speaking set. “Just like Pat Goss!” said one mechanic for United Ventures Consortium, a Northeast outfit comprising six Ethiopian-owned taxi companies.
The mechanics of the District bureaucracy, though, were lost on Syume and his friends. Rather than navigate proper channels to secure taxi company licenses and individual hack licenses, or “face cards,” for his drivers, Syume and co-conspirators allegedly tried to short-circuit the process.
According to federal indictments filed last week, Syume approached D.C. Taxicab Commission chair Leon Swain Jr. with bribes starting in September 2007, not much more than a month after his confirmation as taxi commissioner. Over the next two years, Syume would hand Swain $220,000, expecting taxicab company licenses in return. Just in the past month or so, Syume also handed Swain another $91,000 in bribes in return for individual hack licenses.
Unfortunately for Syume, he didn’t do his homework: Swain, a former cop, wasn’t as receptive as he made out; soon after being approached by Syume & Co., Swain went to federal authorities, ended up wearing a wire and luring dozens of wannabe cab drivers to a Ward 8 apartment to take their money in exchange for hack licenses—sparing them the process of having to head up to UDC for 60 hours of classes, then schlep down to taxicab commission headquarters for a test.
The result was that Syume, along with alleged fellow ringleaders Berhane Leghese and Amanuel Ghirmazion, ended up in handcuffs last week, along with those dozens of aspiring drivers who paid expecting hack licenses. All pleaded not guilty Monday in federal court.
But the investigation continues. Still to be determined is how deep into the John A. Wilson Building the probe might reach. Already snagged is Ted Loza, chief of staff to Ward 1 Councilmember Jim Graham, chair of the committee overseeing the taxicab industry. Two other key staffers on that committee were scheduled to give grand-jury testimony on Thursday.
Corruption in the taxi industry is nothing new. In a 1992 sting, the executive director of the taxicab commission was implicated in a scheme awfully similar to the one that Swain supposedly thwarted. It’s a cash business, after all, and nothing invites graft like big piles of green.
And this slimy sector in recent years has been racked by changes threatening the industry’s most liquid players—the complex of cab owner/operators, company owners, insurance companies, garages, and other businesses that have long profited under the city’s loose regulatory regime. The sea change was hastened by the mandatory installation of time-and-distance meters, an initiative championed by Mayor Adrian M. Fenty to make fare calculation more transparent.
Syume was one of the few operators in town who saw his profits rise with the advent of meters. From a small garage on 5th Street NE in Eckington, Syume created and ran United Fleet Management in partnership with Causton Toney, Swain’s predecessor as chair of the Taxicab Commission and a former development official in the Anthony A. Williams administration. United had a network of garages where cab drivers could pay the $400 or $500 to buy a new meter and have it installed. With thousands of city cabs needing meters, and only a handful of garages authorized to install them, Syume and his partners stood to profit mightily.
Out of that 5th Street garage, Syume has a trio of cab companies—Jet, Mutual, and Olympic. His alleged co-conspirators, Berghese and Ghirmazion, hold licenses for another trio of companies—Alert, Majestic, and Terminal—listed as having their office on Kennedy Street NW. Syume and Berghese, one fellow cab company owner reports, were quite close—“like two arms,” he says.
According to the indictments, the three ringleaders expected there to be some sort of restrictions imposed on the District’s cab industry—something akin to the medallion system in New York, where the number of cabs are capped and the licenses to operate a cab become valuable commodities, traded for amounts upward of $500,000 in Gotham. Here’s where the bribes came into play: In one indictment, the co-conspirators are charged with trying to procure “face cards” for wannabe drivers, but that would be small potatoes. The big action in this line of fraud, however, revolves around multi-company licenses. These prized commodities, the conspirators likely figured, would be in line to appreciate in value should the cab fleet be restricted. According to the indictment, Syume and Leghese discussed selling each license for $150,000.
The local cab industry, as currently situated, is populated by a few big but little-known players. There’s Jerry Schaeffer, owner of more than a dozen cab companies, an insurance outfit, and emperor of a complex of gas pumps, garages, and car lots on Benning Road NE just east of RFK Stadium. Vaugn G. Williams is behind Yellow Cab on Bladensburg Road NE. Then there’s dozens of other, smaller companies and associations, many of them Ethiopian-owned, and many of them licensed during Toney’s tenure as DCTC chair.
The heart of the industry is individual cab owner/operators, who own their cars and usually affiliate with one of the 118 currently licensed cab companies in town. Typically, the drivers pay to get their cars painted and lettered in a given company’s colors, then pay that company a fee every two weeks to cover dues and insurance. This is the system that medallions would almost certainly kill.
In June, Graham introduced legislation to create just a system. Under his bill, a medallion or certificate system would essentially cap the number of city cab drivers. The outstanding issue is why he did that. After meters were imposed, a task force on industry issues was formed composed of members of the taxi, tourism, and hospitality industries. After meeting throughout 2008, the group issued a report finding that a medallion or certificate system was not necessary.
Yet Graham explained on the council dais that a “pressing and urgent problem” existed, in that there were too many cab drivers becoming licensed in the District. A 1,000-strong backlog of driver applicants had built up, and Graham explained that allowing all those drivers on the street, in addition to the 8,000 currently licensed drivers, would be a bad thing. “We need to limit the number of operators, or this boat is going to sink by its own weight,” he explained. The legislation was needed to “save this industry from simply having so many taxicab operators that it cannot function.”
A medallion system would also be desirable to your average city official because it would generate loads of revenue. In an initial auction, the District could stand to rake in millions as companies scramble for an initial stake in the industry. Subsequent auctions, where a few additional medallions would be meted out every year, not to mention taxes on the transfers of medallion ownership, could mean an seven-figure boost to the District’s bottom line at a time when it’s sorely needed.
And then there are the big business interests that would stand to profit. Specialty lenders thrive on medallion systems, providing what are essentially mortgages to cab drivers and companies looking to finance the purchase of a cab permit. One giant in the field, New York’s Medallion Financial, has interests in regulated cab systems across the country and is said to be exploring the D.C. market. And then there’s Solomon Bekele, a Potomac resident who owns Crown Insurance, one of four companies operating in the city that offer the short-term insurance policies that have always covered the local taxi industry.
Bekele has become almost a mythic figure, a bogeyman, in local taxi circles. A strong backer of both meters and medallions, Bekele less than a decade ago had all but cornered the Atlanta taxi industry. The Atlanta Journal-Constitution in 2001 deemed him “Atlanta’s taxi king” and described how Bekele has swooped in after Atlanta implemented a medallion-like system in the late 1970s, eventually coming to own a quarter of Atlanta’s cabs. He also sold insurance to the drivers, investing his proceeds in commercial real estate in Atlanta and Montgomery County.
Bekele has been an outspoken advocate for both meters and medallions over the years, and he’s been a prodigious donor to local politicos, including Fenty and Graham. According to one denizen of the area around Syume’s 5th Street garage, Bekele was a frequent visitor there. Both cab drivers and small company owners expect Bekele to re-create his takeover of the Atlanta market should D.C. decide to limit its cab fleet.
“He’d have been on Page 1 if they ever got it,” says Willie Wright, a hack since 1948 and a longtime driver organizer. “As far as I know, he has all kinds of operations. He covers the waterfront.”
Still to be determined, too, is the role of Abdulaziz Kamus, a fixer and Ethiopian community leader said to have been the man who handed bribes to Loza. He has maintained close ties to Graham over the years, going back to a 2004 trip he organized. This paper once hailed Kamus as “de facto leader of D.C.’s Ethiopian community,” and in a community in which the taxi business played so crucial a part, there’s no surprise that Kamus would be deeply involved in the industry’s political wrangling.
“When there was an election, he organized the cab drivers,” says hack Alemu Demissie, 50, who says those efforts would extend to arranging rides for cabbies from their homes to polling places. “He was a good organizer.”
Syume was also an organzer of sorts, and he’s also had contact with Graham. In February 2008, Syume gathered a half-dozen other company owners to mret with the councilmember. Graham spokesperson Brian DeBose says they discussed “a potpourri of issues,” including insurance enforcement and taxi fares.
Graham, in an interview with WTTG-TV earlier this week, dodged questions over whether he had ever been offered bribes. He has resolutely denied accepting them.
Into this world steps Fenty, and by all accounts his efforts to reform the taxi business have paid off. Not only has his takeover of the Taxicab Commission won him the conversion to a meter system—along with the eternal praise of regular cab riders—but his appointment of Swain seems to have indeed helped to change the culture at the commission.
Swain, says former DCTC nominee Dale Leibach, was put in by Fenty to clean house at a body charged with regulating a notorious industry—a body with a somewhat notorious reputation itself.
“It was clear that the mayor wanted him to go in and clean up a messy, corrupt cab system,” says Leibach, a PR consultant and ex-husband of former Ward 3 councilmember Kathy Patterson. “He was very open about some of the cab companies using threats and coercion and that it would be important to stay together as a group to get some things changed.”
Additional reporting by Jason Cherkis
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