Nonetheless, large companies often turn a blind eye to brokers, and it's not immediately clear why. Luxor handled the Khan complaint by putting Khan on its payroll, which made his brokering activity legal, even though Rathbone isn't sure what he officially does at the company. Two other companies that received similar complaints also hired their brokers.

The question then, is why these companies would go through the trouble of protecting brokers rather than eradicating them. Even with the cost of overhead, the earning potential from a traditional "gas-and-gate" model dwarfs that of a backdoor company that merely rents its color scheme. While Rathbone says Luxor actually charges more than $400 to rent the company's identifying colors to a broker — the company's full "basket of services" is worth "something in the four figures," he says — he still admits it's more profitable for the company to outfit its own cars and rent them directly to drivers — if you stick to regulations, that is.

But many companies (more than half, according to Kim) have found a way to make brokering profitable. In a 2008 affidavit for San Francisco's now-defunct Taxi Commission, medallion holder Scott Van Leuven said that Luxor's owner, John Lazar, connected him to an illegal broker named Driss "Kiki" Elassali, who paid $2,500 a month in cash to rent Van Leuven's medallion — more than the market rate at that time. Lazar's critics accuse him of colluding with other brokers as well, and pocketing some of the cash as a kickback. Rathbone declined to address those accusations, but says Luxor currently divides its business between gas-and-gate, and an outsourcing program that Khan helps oversee.

Kim says he has to compete daily with companies that spend nothing on infrastructure because they're just serving as middle-men to medallions. "They don't have any dispatch orders, they don't purchase the vehicles and run them," he says. "They're just outhouse operations."

He and other gas-and-gate companies have found a receptive audience at the SFMTA, whose deputy director of taxis, Christiane Hayashi, is working on legislation that would curb third-party brokering. Richholt says he's also cracked down on absentee medallion holders who profit only by leasing to brokers, and ignore their 800-hour cab-driving requirement. In the past year he's submitted six investigations for hearings and opened six more. Meanwhile, the SFMTA shifted to an electronic waybill system that should hinder waybill forgery, though it's still possible for drivers to log in with someone else's password.

Yet it may be impossible for SFMTA to completely clean up the taxi industry, since so much business still happens off the books. Kim insists that many San Francisco companies have no idea who drives their cabs. Richholt agrees that the taxi cash economy has created ample opportunities for extortion, and myriad ways to conceal it. "Wherever there's a rule," he says, "there's someone figuring out ways to get around it."

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7 comments
guest
guest

If MTA would at minimum make it known to drivers that gate control applies to every cab maybe something could be done. They won't even take that step so how serious are they. "Too hard to prove " is their answer to everything including the "tipping" problem. A lot of crimes are hard to prove if you demand photographic evidence. Let the tryer of facts decide if evidence is credible.


Gusto
Gusto

" brokers keep a lifeline for the worst drivers in San Francisco."

Actually that would be Lyft, Uberx, etc....

Ragazzu
Ragazzu

Taxi driving isn't really a cash business anymore. Typically half or more of a driver's gross during a shift is paid on plastic. It would be nearly impossible to make a living refusing credit cards these days.

waitnomore
waitnomore

Waitresses & Waiters have been 'skinned alive' over tips for years.  The IRS created a formula which divides the restaurants gross revenue by the number of Waitstaff then taxes them at a set percentage, ignoring a list of variables.  Waitstaff are not guaranteed a set tip amount, and most establishments require them to tip-out bartenders, hosts, bussers, cooks etc.  And, Hotels have been applying a 20% service charge to their entertainment invoices, that's not a gratuity for servers.  If Waitstaff are racked over the coals for tips, then everyone else should pay their fair share too.

Ragazzu
Ragazzu

@waitnomore You're right, but this article is not about taxi drivers cheating on their taxes.

waitnomore
waitnomore

Waitresses & Waiters have been 'skinned alive' over tips for years.  The IRS created a formula which divides the Restaurants Gross Revenue by the number of Wait Staff then taxes at a set percentage %, ignoring a list of variables.  Waitstaff are not guaranteed a set tip amount, and the majority of restaurants require them to tip-out  bartenders, hosts, bussers, cooks etc.  And Hotels have been applying a 20% service charge to their entertainment invoices, that's not a gratuity for servers.
  If Waitstaff can be raked over the coals for tips, then everyone else should pay their fair share, too.


sfmf2013
sfmf2013

Illegal taxi medallion brokers can easily be stopped by putting an end to all Long Term Leases. The problem grew out of control because the SFMTA was too busy trying to make long time drivers pay 300K for a medallion when they really should have been going after these brokers instead.

The SFMTA needs to focus on stopping illegal limos from stealing the fares of taxi drivers off the street. This is a much greater problem to a drivers income than the stupid $5 to get a cab for a shift.WTF. Where is your common sense people?????

 
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