Toronto Star Taxi Plate/Leasing Investigation
April 22, 1998
Treatment of cabbies infuriates politiciansPlate holders will regret actions, councillor says
By Peter Cheney
Toronto Star Staff Reporter
Municipal politicians have reacted angrily to the case of two cab drivers who were apparently punished for speaking out against interests that control the Toronto cab industry.
``This tips the scale in favour of supporting the drivers' cause,'' said Councillor Dennis Fotinos, a member of a task force formed to clean up Toronto's troubled taxi business.
``If this kind of thing happens, I'm not going to tolerate it. It's going to make a case for much more rapid change, and in terms far less favourable to the owners.''
Fotinos and other councillors say the actions taken against cab drivers Steve Anemi and Mohammed Hoque make it clear there have to be changes in Toronto's controversial system of taxi licensing.
`If the owners are going to engage in these kinds of actions, they're losing sight of the forest for the trees. This will hurt them. They're going to be really sorry.' - Councillor Dennis Fotinos
Anemi had his all-important cab plate - the licence he needs to operate his taxi - taken away after speaking out at a Metro Hall meeting last month.
Hoque was suspended from Royal Taxi just 11 days after appearing in a Toronto Star series on the cab business.
Both drivers spoke out against the practice of plate leasing, which involves renting out city-issued cab plates to drivers who can't get their own.
As documented in a months-long Star investigation, plate leasing puts more than $30 million a year in the pockets of people who rent out their plates instead of using them to operate a taxi.
The series has prompted a sweeping investigation of the industry by municipal politicians. Taxi plate holders are lobbying to preserve the system, while drivers are demanding reform.
Fotinos said the apparent reprisals against Hoque and Anemi will mobilize public opinion against the plate holders.
``If the owners are going to engage in these kinds of actions, they're losing sight of the forest for the trees. This will hurt them. They're going to be really, really sorry.
``This is a democracy. You have the right to speak out without losing your job over it.''
Councillor Jack Layton said that what happened to Anemi is ``appalling and outrageous . . . here we have a man who was punished for speaking the truth.
``No one is allowed to be fired for speaking out. We are going to show him that the elected officials are behind him.''
Layton says Anemi's case makes it clear that taxi plate holders hold unreasonable power over working drivers. Under the current rules, a holder can take away a plate with just seven days' notice, and without giving any reason.
Without a plate, a driver can't operate and is effectively put out of business.
Councillor Howard Moscoe, also a member of the cab industry task force, said reprisals against drivers like Anemi are a clear illustration of the way the city's cab licensing system has been corrupted.
``What happened to him is disgusting. It's outrageous that the people who control the plates have that kind of power. It takes us back to the turn of the century.
``When people were trying to organize unions, they had a body of law to protect them. Our taxi drivers have nothing.''
Councillor Brad Duguid, another task force member, condemned the actions taken against the drivers.
``This kind of thing is the kind of thing that occurred during the darkest days of Communist rule, when people lost their ability to make a living for expressing their views.''
April 21, 1998
Cabbies' plates pulledDrivers who spoke out lose their livelihood
By Peter Cheney
Toronto Star Staff Reporter
Three weeks ago, cab driver Steve Anemi stood up at Metro Hall and spoke out against taxi-plate leasing, describing it as a ``feudal system'' that forced him to work 16 hours a day, yet never let him get ahead.
Now, Anemi says, he's paying the price: His taxi plate has been taken away.
Without the plate, Anemi can't work.
``What kind of system is this?'' Anemi asks. ``This is supposed to be a free country. But when it comes to the cab business, it's not.
``I spoke up. I said the truth. I'm supposed to be allowed to do that.''
Some believe what happened to Anemi is part of a growing backlash against drivers who spoke out during a Star investigation of the Toronto cab industry. In a letter to Toronto Councillor Dennis Fotinos, lawyer Ian Outerbridge says the actions taken against Anemi amount to ``the abuse and violation of our clients' rights of free speech.''
Others see it differently. The agent who took away Anemi's plate says there's no political motive - he says Anemi lost his plate because he owed money.
Anemi isn't the only driver affected. Cabbie Mohammed Hoque, also profiled in The Star series, was suspended from Royal Taxi on March 25 - 11 days after he appeared in the series.
In the series, Hoque documented a car deal in which he had been charged interest of over 28 per cent by a company controlled by Mitch Grossman, the city's biggest plate holder.
Rick Robertson, an official at Grossman's company, said Hoque's suspension had ``nothing to do'' with his criticisms. Robertson said Hoque was suspended because he owed the company money.
Hoque said the money in question has been on the books since 1996, the residue of the car deal.
Robertson said he had ``no knowledge'' of anything but Hoque's debt.
``He owes money. That's why he was suspended.''
But Hoque says he has no doubt that his suspension is related to his appearance in The Star's story.
The apparent reprisals against cabbies like Hoque and Anemi are the latest development in the ongoing shake-up in the industry.
More than three-quarters of Toronto's city-issued taxi licences - better known as cab plates - are held by people who don't operate cabs with them. Instead, they rent them out to working drivers, who pay an average of $1,000 a month.
Many plate holders rent out their plates through middlemen known as designated agents, allowing them to collect rents while having little or no connection to the cab business.
Cabbies have complained for years about the steep rents they have to pay, and the easily abused power of the designated agents who control many of the plates.
Anemi says his case makes that power all too clear.
Last month, Anemi spoke at a packed Metro Hall meeting, where politicians heard deputations from drivers, plate-holders and others associated with the industry.
Anemi told members of a council committee that plate leasing had to be fixed because it has damaged the industry and crushed the hopes of working drivers.
Anemi says that, after he appeared at the Metro Hall meeting, Danny Hisson, the agent who controlled his plate, presented him on April 1 with a disclaimer and told him to sign it. The disclaimer stated that plate leasing was an accepted part of the taxi industry.
Anemi refused to sign. Later that day, he said, after coming back from his 7-year-old son's first communion, he found a hand-delivered notice in his mailbox informing him that his plate lease was being cancelled in seven days.
Without the plate, he can't operate his taxi.
Under the rules set by the Toronto Licensing Commission, a lease can be cancelled with just one week's notice, with no reason given. Cabbies say this gives agents and plate holders easily abused power.
Hisson said in an interview that Anemi's plate cancellation had nothing to do with his comments or his refusal to sign the disclaimer. Hisson said the cancellation was due to the fact that Anemi owed him approximately $3,000.
Anemi says he had owed Hisson money for years, as part of an account he maintained with Hisson's company.
``Every driver out there owes money,'' he said. ``It's impossible not to.''
On April 1, Hisson said in an interview that if Anemi paid the money he owed, his plate would be reinstated. Anemi paid the money, and produced a receipt to prove it. Robert Stewart, a paralegal representing Hisson, also confirmed the money was paid.
But Anemi's plate was still removed.
Stewart says there is ``no connection'' between Anemi's role in the taxi debate and the loss of his plate. He said Anemi's debt was the only factor: ``He owed money . . . that's why he lost his plate.''
Hisson admitted to The Star that he presented Anemi with the letter in question. He said the letter had been given to every cabbie who rents a plate from him, and the letter had been ``placed in their files.''
``What's wrong with that?''
March 29, 1998
Happy cabby, tidy cabToronto politicians have taken the first steps towards reforming the city's troubled taxi industry.
The move - badly needed and long overdue - came last week when a city committee set up a task force to look at the problems and suggest reforms.
The task force will be guided by these principles: the need for clean, safe cabs, knowledgeable, courteous drivers and a system that provides plate holders and drivers a fair return.
--> These are worthy goals. Now the task force members and city politicians must demonstrate they have the backbone to carry out the necessary changes.
The taxi industry is in a mess because few of the people who hold the 3,477 taxi plates actually drive a cab, which is what regulators intended. Instead, the vast majority of plates are rented out to drivers, often through middlemen who tie leases to exploitative package deals.
The plate holders - who include lawyers, dentists, and middlemen - are siphoning an estimated $30 million a year out of Toronto's cab industry without contributing anything.
Dennis Fotinos, the city councillor who heads the committee that set up the task force, said the ``party is over'' for the plate holders. ``Taxi cab licences should be licences to do business, not licences to make money,'' he said.
As an interim move, Fotinos suggests recognizing that plate leasing - though illegal - is here to stay and that lease rates should be regulated.
This would be a good first step. As we have argued, reasonable lease rates would put more money in the pocket of drivers while still providing plate holders a return on their investment.
He also pledged to tighten up ridiculous rules allowing plates to be passed from one family member to another, ensuring the lucrative licences never leave a family.
The task force will also review the five-point reform plan put forward by the Toronto Board of Trade.
The board's most promising recommendation would limit the age of a Toronto taxi to eight years. If this suggestion were implemented, 800 of Toronto's 3,500 taxis would be off the streets next year. Now, taxis remain on the road for as long as they can pass a safety inspection, which is done three times a year.
Unfortunately, the board's other reforms fall short of what is needed and worse, risk enshrining the very ills that have created the industry's problems.
Toronto's taxi business is beyond tinkering. What is needed is a full-scale overhaul.
But it won't be easy striking a compromise. On one side are drivers fed up with working long hours, seven days a week for a meagre return. On the other are plate holders who don't want to see their investments undermined.
City politicians have said some encouraging words about fixing the taxi industry. They must go beyond rhetoric and take bold action to reform the way this city's taxis are run.
The people who take cabs and the people who drive them all deserve change.
25 March 1998
CABBY INDUSTRY IS IN FOR REPAIRSWorking 'in 19th Century Conditions'
By DON WANAGAS
City Hall Bureau
Yet another political task force has been set up in hopes of reforming Toronto's troubled taxi industry.
But angry cabbies are already raising concerns they'll end up losers in the exercise unless something is done to change the way taxi plates are handed out.
"The current system represents a gross exploitation of drivers," Owen Leach told city council's emergency and protective services committee yesterday.
"We are being robbed and forced to work in 19th century conditions."
The committee session verged on violence early in the afternoon when about 60 hacks were barred entry to the meeting room where cab owners and plate holders had already been admitted.
Eventually, committee chairman Dennis Fotinos adjourned the meeting and moved it to the building's larger council chamber so everyone could be accommodated for what turned into a three-hour hearing marathon.
At issue was a Toronto Board of Trade report released earlier in the day that proposed a five-point plan to revive T.O.'s ailing cab industry.
"We are concerned about the frequency and severity of complaints about the taxi industry," board rep Louise Verity said.
The board requested support for its recommendations for newer cabs, more effective safety inspections, fairer leasing arrangements, pride of ownership and better regulation of middlemen who control taxi licences.
Councillor Howard Moscoe said the board proposals are "fundamentally wrong" and entrench the existing system. The committee is expected to report with a reform package within 90 days.
25 March 1998
Insults fly at taxi talksBy Peter Cheney
Toronto Star Staff Reporter
The battle over Toronto's taxi industry has taken on a human face at Metro Hall.
For hours on end yesterday, often-impassioned speakers told politicians what should be done to fix the troubled industry - and how those changes could affect their lives.
``We are in a situation where a feudal system has been allowed to exist,'' driver Steve Anemi told a packed council chamber. ``This is wrong, and you have to fix it.''
Anemi said he works 14 to 16 hours a day, seven days a week, but can't get ahead. His single biggest expense is the rent he pays to use a city-issued taxi plate held by a person he has never seen.
``I pay $950 a month to work. I ask you - how much do you pay to have a job?
``If you fixed these problems, maybe I would have time to see my children. Maybe I would have enough money to go to a restaurant. Maybe I would have enough to live like a human being.''
Anemi was one of many speakers who appeared before Toronto's normally obscure emergency services committee to give their views to politicians who will try to reform the troubled cab industry.
Hundreds showed up to make their case, forcing the committee to move into council chambers to accommodate the crowd.
The size of the crowd reflected a growing sense of urgency over taxi industry reform. After decades of being kept on the back burner, the issue has been sparked to life by a multi-part Toronto Star investigation called ``A Licence to Print Money.''
As The Star learned by obtaining the long-secret list of taxi licence holders and searching thousands of corporate documents, few of Toronto's 3,477 cab plates are used by an owner who operates the taxi.
Instead, the vast majority of plate holders rent them out to working drivers, often through middlemen called designated agents.
Plate leasing puts an estimated $30 million a year into the pockets of plate holders and middlemen. Even though there are rules designed to stop it, plate leasing has now become almost standard practice in the Toronto taxi industry.
The outcry over plate leasing and whether or not it has contributed to the decline of Toronto's now-notorious cab fleet has given new impetus to the reform movement.
After years of inaction on the issue, politicians now find themselves at the centre of a storm. Yesterday, politicians voted to appoint a seven-member task force which has been given 90 days to come up with a plan for reforming the cab business.
What remains to be seen is how that will done - and who will be affected. As the hearings made clear, politicians face a difficult task. Along with drivers like Anemi, they heard from dozens of people who hold cab plates.
The emotion involved was clear as drivers, plate holders and politicians squared off in sometimes-nasty exchanges.
Driver Jerzy Garnecki, who drives without a plate because he believes the system is corrupt, accused some plate holders of ``urban slavery.''
``If you had it your way we'd just go back to the boats and ship the slaves out. . . . You're running a racket.''
Plate holder Jim Monaghan called Garnecki ``the biggest thief on the road.''
``We worked 40, 50 years for what we got, and now you want it for nothing. Well, you can't have it!''
For both drivers and plate holders, the debate over industry reform is a crucial one. Drivers say things have to change. Plate holders say they can't.
``Whether it was right or wrong, this is what people planned their lives on,'' said Jim Bell, a third-generation taxi operator whose family holds six plates. ''You can't just change it all.''
Jim Kee, who represents a group of 200 ex-cabbies who now rent out their plates as a form of pension, said the rights of people like them must be at the centre of any reform.
``They depend on these plates for their income. What you are doing is scaring the daylights out of them.''
Kee agreed that high lease rates have hurt drivers, but says that's due to factors beyond their control, including sub-leasing and greedy agents - the middlemen who handle plates for many holders.
``Drivers are paying the highest price at the opposite end. We sympathize with them. . . . But we need our designated agents. We trust our agents not to capitalize on our plates at the expense of the driver.''
Driver Eugene Meikle offered a different perspective: He told the committee that plate leasing is illegal, and that reform must be designed to stop it.
``The laws are written in plain English. Any Grade 8 student can understand them. But for years they have been broken - and the Metro Licensing Commission and the city have done nothing.''
``The Toronto Star has exposed this whole rotten industry - a system where drivers are slaves. This has to stop.
``You are tailoring a law to accommodate a crime.''
The cab industry task force is expected to hear from hundreds of people as it considers what must be done. It will also consider recommendations made by the Toronto Board of Trade, which has spent several months looking at the cab business.
Those recommendations were presented yesterday, only to be attacked immediately both by drivers and Councillor Howard Moscoe, who told the board that they had been ``conned'' by plate holders.
``You should be ashamed to present this document,'' Moscoe told the board. ``This is a shoddy report that does nothing but underscore the rot.''
Moscoe said the recommendations were useless because they did nothing to fix plate leasing - instead, he said, they would make it worse.
Board of Trade chair Ross Dunsmore said he was disappointed at the level of acrimony that greeted the board's recommendations.
``Every time people try to talk about this industry they get in a fight. We know what we've put forward isn't a complete solution - but it's a start. We have to move forward here.''
March 20, 1998
Cabbie waits for pot of goldShe's 11th on list for taxi plate worth $90,000
By Peter Cheney
Toronto Star Staff Reporter
Some day soon, Wilma Walsh will be handed a piece of tin that could be worth $90,000.
After driving a cab for 15 years, Walsh is near the top of the waiting list for a Toronto cab plate. Right now, she's number 11 on a list that numbers more than 3,000.
Despite her impending windfall, Walsh says the system that has made taxi plates worth so much money has to change.
``Being number 11 on the list, my first instinct is to just say `Give me the plate and leave things the way they are.' But I have to admit that things aren't really fair. They have to be fixed.''
As detailed in a Star series entitled Licence to Print Money, the value of Toronto cab plates has been driven up by a questionable process called plate leasing.
Even though there are rules designed to stop it, plate leasing now involves more than 75 per cent of the city's taxi licences, and puts an estimated $30 million a year into the pockets of people who hold cab plates but don't use them.
Instead, these plate holders rent out their plates to working drivers, who pay an average of $1,000 a month.
As one driver put it: ``I'm paying for what was supposed to be mine in the first place.''
As The Star discovered by obtaining the long-secret list of taxi plate holders and searching thousands of corporate documents, many plates are in the hands of people you wouldn't expect. Among them are Bay Street investors, dentists, lawyers and people who live outside Canada.
The Star's series has sparked a widespread reaction from politicians, drivers and members of the public.
Provincial Economic Development Minister Al Palladini said it's time the taxi ``mess'' was ``put to an end.''
He said it's clear serious reform is necessary. And although those reforms must take place at the local level, Palladini said he will be paying close attention to what's done.
``We all have an interest in this,'' he said. ``The taxi business affects a lot of people. What we have has hurt the city.''
Toronto Councillor Howard Moscoe (North York Spadina) promised this week that ``the bubble will burst for plate holders.''
Many plate holders, meanwhile, have been stunned by the adverse publicity, and are afraid it could lead to changes that could wipe out much of the value of their investment. Among those lobbying at Metro Hall this week were Mitch Grossman, the city's biggest plate holder, and Peter Regenstrief, a $325-an-hour lobbyist retained by the plate holders.
What will happen next is anybody's guess. Almost everybody agrees the system is a mess, but plate holders insist it can't be changed.
``This is the way things have worked for a long time,'' says Andy Reti, a former driver who holds four cab plates. ``If you change it, a lot of people are going to get hurt.''
One of the most controversial aspects is the fact that plate holders are allowed to sell their plates on the open market or pass them along to their heirs. This has helped dry up the supply of plates and sharply increased their value.
Reti says there's nothing wrong with keeping taxi plates in a family generation after generation, even if they're rented out instead of being used by the plate holder.
``What's wrong with that? Think about when the first settlers came to Canada and took the land from the natives. Who got the best real estate? The first people there. That's just the way it is.''
Charles Archibald, a lawyer who chairs the Toronto Licensing Commission, says the current system is based on breaking the law.
``This (plate leasing) has been going on for years and years. It was never approved, not by members of this commission. We have never approved it.
``As you have seen, this is very, very complicated. A lot of people don't grasp this.
``If people are circumventing legislation, even if it's gone on for many years, it has to be stopped. And that's what we're going to try and do. Plate holders keep saying we can't change things. I say we can. We can go to court and argue. Let's see who wins.''
Cab driver Walsh, now so close to getting her plate, realizes reform would hurt the value of the licence she has waited so long for. Yet, she still thinks the changes should be made.
``The way it is now, people who got their licences for a song 40 years ago are getting their pension - except it's not going to them. It's going to their grandkids. It's a funny kind of pension.
``I guess I should think about my grandkids, too, and try to keep things the way they are. But I know it isn't right. They have to fix it, even if it costs me money.''
Walsh said she believes strongly in owner-operated cabs. But as the investigation documented, the number of owner-operators has fallen to less than 23 per cent of the fleet.
March 18, 1998
Time to overhaul Toronto's taxi business
Call a cab and chances are you'll get a driver working for a pittance at the wheel of a worn-out ex-police cruiser.
But as Star reporter Peter Cheney revealed in a series of weekend stories, there are many people making huge profits from the taxi business without contributing anything to it.
The plates, meant to be a licence to own and operate a cab, have become a licence to print money.
Cheney found that three-quarters of the 3,477 plates are leased out to drivers, instead of being used to own and operate a taxi, which is what regulators intended.
The plate holders include dentists, lawyers, investors and, remarkably, people who live abroad.
Toronto's taxi industry is in a mess because some of these plate holders don't care about the condition of the cars or the service to passengers.
They only care about milking as much as they can from their investment. The plate holders and middlemen are siphoning an estimated $30 million a year out of Toronto's cab industry.
By the time a driver pays a plate owner his cut - which can range from $800 to $1,200 a month - and covers other costs such as gasoline, there's little compensation left for the long hours.
Up to now, the problem has defied solution. A bylaw already in place requires the plate owner to own the cab.
To circumvent the bylaw, some drivers are forced to sign over their cars to the plate holder so the plates and car ownership match.
For too long, the city has suffered the effects of this flawed regulatory system. It has only made the plate holders richer while serving neither the drivers nor the passengers.
So what to do about the mess? The Toronto Licensing Commission, which oversees the taxi industry, can't turn back the clock and return ownership of individual plates to individual cabbies.
And it can't flood the market with new plates. That would make existing plates virtually worthless, hurting not only the profiteers but the innocent plate holders - former drivers or their families - who rely on the income to support their retirement.
The ideal situation is beyond our reach. We have to work with current reality. That requires the commission to recognize that the leasing of plates by anonymous investors is a fact of life in Toronto.
What is needed is firm, fair regulation that provides a return to investors, a fair living for those who do the work, the cabbies, and - the point of all this - clean, safe, new cabs for the travelling public.
That could be done by holding annual hearings to set a lease rate that provides a reasonable return to the plate holder and allows the driver a chance at making a decent wage.
To break the stranglehold that a few plate owners have over the industry, it would make sense for the commission to handle all leasing on the owners behalf.
That would prevent unscrupulous owners and agents from securing under-the-table payments or tying leases to overpriced dispatch services or imposing exploitative ``package deals'' on drivers.
This plan has several advantages. It would cut the value of the plates - down from the $90,000 they fetch now - but still leave owners with a reasonable income from their investment.
With more money in their pockets, drivers would be able to take better care of their vehicles. This, combined with reasonable limits on the age of Toronto taxis, would improve the ride for passengers.
And with lower-priced plates, some drivers would have a better shot at affording one.
To its credit, the licensing commission has recognized the problem and made improvements. But it is limited in what it can do.
The real push for change - not cosmetic changes but a meaningful overhaul of the industry - must come from Toronto councillors.
If you're fed up with being taken for a ride by Toronto's taxi industry, call your local councillor and demand change.
17 March 1998
TAXICAB LICENCES FLAGGED FOR CHANGEMoscoe vows to `burst bubble' of profiteering
By Peter Cheney
Toronto Star Staff Reporter
The days of profiteering from Toronto cab licences have to end, says Councillor Howard Moscoe.
``The message we're going to put out is that these plates are business licences, not a licence to print money,'' he says. ``The bubble is going to burst.''
Moscoe (North York Spadina), a member of the Toronto Licensing Commission, said a Toronto Star investigation of Toronto's cab licensing system has revealed just how serious the problems in Toronto's cab business really are.
As detailed in the Saturday and Sunday Star, three quarters of Toronto's city-issued taxi licences are rented out by people who charge working drivers to use them, instead of operating a taxi.
Among those who hold Toronto cab plates are lawyers, dentists and people who live outside Canada. Plate holders and middlemen collect an estimated $30 million a year in rents.
Several studies have said the rents charged by plate holders have cut the incomes of working drivers and contributed to the deterioration of the Toronto taxi fleet.
`There are two ways to go about this. The gentle letdown, or the crash. If they (plate holders) come to the table prepared to talk seriously, we can avoid a crash and try not to hurt people who don't deserve that.' Howard Moscoe Licensing commission member
Moscoe said The Star's investigation has sparked a renewed call for reform of the taxi regulation system. He warned that plate holders must be prepared for serious change, or risk losing the asset value of their plates, which now sell on the street for $90,000.
``There are two ways to go about this,'' he says. ``The gentle letdown, or the crash. If they come to the table prepared to talk seriously, we can avoid a crash and try not to hurt people who don't deserve that.''
As The Star revealed after cracking the long-secret list of cab plate holders, many are held by people who have large numbers of plates, often held through multiple corporations that obscure the true extent of their holdings.
The top 10 family and individual plate holders alone hold over 300 plates. But along with the multiple plate holders are many smaller ones, in some cases aging cabbies and their widows, who depend on the rental income from their plates as a form of pension.
``Those are the people we've got to protect,'' says Moscoe.
Moscoe says one way to reform the industry is for the city to lease out plates to drivers, then use the money collected to buy back plates from current holders. Part of the money would also be used to create a pension and benefits package for drivers.
The lease rates charged by the city could be far lower than those currently charged, Moscoe said. Right now, most drivers pay $1,000 a month. Moscoe suggested the city could charge about $600.
Moscoe warned that the value of plates will fall, no matter what reforms are enacted, because their current value is based on the rents charged.
As The Star detailed in its investigation, plate holders can earn a return of about 13 per cent, even if they pay the top street price of $90,000 for their plates.
``The value the plates have now is artificial,'' Moscoe said. ``It can't be sustained.''
Moscoe said plate holders must accept the fact their plates will decline in value.
``If they keep on taking a hard-nosed approach to this, they're going to risk losing everything. If we do this reasonably, it can work.''
The state of the industry has also prompted a call for action to federal regulators.
In a complaint to Ottawa's Federal Competition Tribunal, a group of Toronto drivers charge that the industry has been damaged by unethical practices that hurt both drivers and consumers.
The six drivers charge that a ``conspiracy'' has created a highly profitable trade in taxi licences - and that a number of municipal politicians have helped preserve the status quo.
Among the charges levelled in the complaint:
- That taxi plate holders have conspired to control the market in licences, maximizing their value at the expense of both drivers and the public.
- That campaign contributions to city councillors have encouraged them to protect plate holders' financial interests at the expense of drivers, fare-paying passengers and the city itself.
- That plate holders take about $30 million a year out of the industry.
- That the system ``promotes the use of old, improperly maintained and dangerous taxi vehicles.''
- That lazy municipal bureaucrats allowed plate leasing to proliferate.
The drivers who filed the complaint say the trade in taxi licences violates the federal Competition Act, and they have asked for an inquiry into the Toronto industry.
Prepared by Toronto lawyers Ian Outerbridge and Murdoch Martin, the 11-page complaint makes a number of allegations about the industry. These include what the complaint claims is a highly orchestrated lobby campaign that has kept municipal politicians on side.
The complaint charges that plate holders employ a lobbyist to maintain connections with Toronto councillors. The complaint says the lobbyist met with Councillor Dennis Fotinos (Davenport), the chairman of the emergency and protective services committee, and reported that Fotinos was ``solidly behind the owners.''
Fotinos told The Star it's ridiculous to suggest he has been unduly influenced by the plate holders or any other lobby group.
``My position on taxi licences has always been that we need to get to a position where a cab licence is what it's supposed to be - permission to drive a cab.''
Fotinos said it's no secret that plate holders have used professional lobbyist Peter Regenstrief to present their case.
``He's never denied lobbying for the cab industry. He's very upfront about that. It's no secret.''
Fotinos also said that he and many other councillors have received election campaign contributions from the cab industry but denied it played any role in his decision-making.
``We took contributions from many groups and many individuals. That is perfectly legal and above board. There's nothing wrong with that.''
The complaint sent to Ottawa charges that the city and the Toronto Licensing Commission have helped create the trade in licences by succumbing to the influence of lobbyists and failing to enforce their own rules.
``We believe, as well, that these activities are in fact blatant and open and known, and acquiesced in or condoned both by the commission and the municipality, brought about in part because of the lobbying activities . . . of the combination and conspiracy . . .,'' the complaint reads.
The complaint charges that the rents earned by plate holders who rent out their licences have fuelled the steep rise in the value of plates:
``The price of these licences fluctuates like the bond market and is a direct function of the annual income return that can be had from the leasing of these licences to third-party drivers . . .''
The complaint also says the list of cab plate holders has been kept secret, making it impossible to know who holds the plates, or how many they have:
``It is almost impossible for the applicants to identify the people who are involved in this conspiracy . . . an attempt to identify who the owners of these taxi cab licences are has only produced a list of the licence plate numbers and pseudonyms under which the owners carry on business . . .''
The confidential list of plate holders was obtained by The Star last May. After discovering that many plates are held through corporations, The Star searched thousands of corporate documents to get the names and addresses of the people behind them.
March 15, 1998
LICENCE TO PRINT MONEY
A TORONTO STAR INVESTIGATIONFare play?
by MIKE SLAUGHTER
JUST SPIT, NO POLISH: Toronto cabbies once wore uniforms, but the business was far from gentell, says Al Sadoff who began driving in the '50s. In the beginning, Toronto's taxi business was a cutthroat enterprise. Owners took the drivers for every nickel they could - and the drivers did the same to their passengers
Toronto Star Staff Reporter
When you went for an interview with Joe Starr, the first question was always the same: ``Kid, do you know how to steal?''
The Toronto cab industry of the 1940s and '50s was tough. And nobody in it was tougher than Starr, the legendary head of National Taxi.
Starr was an ex-boxer who kept a cigar stub clamped between his teeth and was apparently devoid of sentimentality. When his father died in Florida, someone asked Starr when he was bringing back the body.
``What for?'' he replied. ``He's dead.''
Starr knew the way it worked on the street: You had to ``cheat and beat.'' He taught his drivers to take their fares for every nickel they could - and in turn, Starr took the drivers for every nickel, too.
Al Sadoff, who learned the trade under Starr, remembers how Starr demanded that drivers make him 50 cents every 15 minutes. Once Sadoff got stuck in traffic, but Starr still demanded his usual take.
``I paid him to work,'' says Sadoff.
In the cab industry, it was every man for himself and you made a buck any way you could.
That hasn't changed. But other things have. Unlike today, for example, the cab firms of Starr's era actually owned cars. Some operators actually bought new vehicles - an unheard of extravagance in the modern era.
Today, it has become virtually impossible to assemble a fleet.
Even though a car may be painted in the colours of Beck, Diamond or Co-Op, that doesn't mean they are owned by those companies. Far from it.
Of Royal Taxi's approximately 400 cars, for example, not one is owned by the company.
In Starr's day, more than half the industry consisted of owner-operated cabs. Other people drove for fleets like National or Metro, or rented cars by the day or the week.
In those days, the practice of leasing plates to cabbies was strictly a small-time operation. More of the industry's revenues stayed in the business and were spent on cars, maintenance and drivers' incomes.
Even then, some of the players who would help make plate leasing the way of the future were getting their start. One of those was Sam Grossman, who built the city's biggest cab plate empire.
Grossman, who came to Canada with his family in the '20s at the age of 3, was the son of a poor garment worker. He grew up in the Spadina garment district with five brothers and sisters.
Grossman sold newspapers on the street and dropped out of school in Grade 5. He got into the cab business as a driver, but soon saw a better way to make money.
``My father had a vision,'' says Grossman's son, Mitch. ``My dad's vision was that he would buy up taxi licences, and that some day they would be valuable.''
Not only did Grossman amass the city's biggest collection of cab plates, but he helped spearhead key moves that would make them valuable.
Along with his brother-in-law, Irving Oilgisser, Grossman operated a cab company called Robinhood. The name came from Oilgisser's fascination with the Merry Men.
Grossman and Oilgisser worked hard running taxis - but their real business was cab plates. By the time they died in the early '90s, they had amassed at least 145.
In his 50 years in the cab business, which ended with his death in 1993 at age 69, Grossman was a defining figure. He was known as ``the toughest man in the cab business,'' a ruthless negotiator and demanding boss. He was 6 feet tall and weighed 250 pounds, a formidable man with a booming voice and a quick temper.
Every morning at 4:30, Grossman would go to Fran's Restaurant or the Mars diner, driving his signature red Cadillac with custom plates lettered SAM 111. Over coffee, he would meet with cronies.
Grossman was supremely well- connected.
And he used these connections to collect cab plates. Any time a driver who had a plate was short on cash, Grossman would be there, ready to buy.
A SOFT TOUCH
Grossman would lend drivers money for a down payment on a car or plate. In exchange, he would hold a lien. If a payment was missed, Grossman would send a tow truck to get the car, with the plate attached. Many drivers signed their plates over to him to clear debts.
Away from work, Grossman was known as a soft touch. He gave generously to synagogues and never refused a worthy cause.
When the former Metro Licensing Commission was asked to transfer Grossman's plates to companies controlled by his heirs, the transfer fees came to more than $600,000. (The family ultimately negotiated the fees down to half that, arguing they imposed an undue financial hardship.)
The Grossmans and the Oilgissers weren't the only ones who collected cab plates.
Abe Bresver, an accountant who got involved in the cab business as an investor, began buying up licences in 1955, assembling a collection that reached 200.
Bresver formed a partnership with Grossman that lasted several years, but they eventually parted. ``We didn't see things the same way,'' Bresver says. He later sold most of his plates. Now 80, he still owns 11.
Another key player of the Grossman/Bresver era was Jack Goldberg, who (along with his sister) still holds 37 plates through a series of companies. Goldberg spends much of his time in Florida, but maintains a small office above a pizzeria at the corner of Albany Ave. and Bloor St. W., where he collects monthly rents from the cabbies who use his plates.
Goldberg does business the old-fashioned way, keeping records on paper and collecting cash when possible. On the wall of his office is a signed picture of Mel Lastman: ``Happy birthday to a great guy from your favourite mayor.''
Goldberg sees no problem with Toronto's plate system. He regards the money he collects as his just reward. ``These are my plates and I get to make money off them,'' he says. ``So what?''
Goldberg came to Canada with his family in the '20s. They lived on Palmerston Ave. and ran a family fur-trimming business.
As a boy, Goldberg sold papers at Spadina and College. His specialty was jumping on streetcars with an armload of papers and selling them as he went through the car. If a customer didn't have the right change, Goldberg would take what he had, and promise to come back. Goldberg would time his trip so that he could get off the car without returning with the change.
In 1945, Goldberg got into the cab business when his sister's husband died. She had married a cabby who started Dufferin Taxi. Goldberg joined her in the business as a 50-50 partner.
They operated out of a garage on Dupont St., just west of Bathurst. They owned cars and rented them to a day driver and a night driver.
In 1957, taxi plates came under the control of the newly formed licensing commission, which was headed by Fred Hall, a former York reeve who was hounded by allegations of corruption.
According to Goldberg and others interviewed by The Star, the allegations were true.
``Fred Hall was a crook,'' Goldberg says. ``You wanted something, you paid him off. Right there, right in his office, cash. That's the way it worked.''
By the early '60s, black-market plate leasing was growing. It was against the law to even lease a taxi, let alone a plate, to others, but leasing grew anyway. Its profitability made it impossible to stop.
After the licensing commission was formed, plates were issued according to a complex formula that gave some plates to drivers and some to taxi owners - supposedly allowing them to build fleets.
But many of the plates that went to drivers ended up in the hands of plate collectors.
Owners like Grossman and Oilgisser would approach drivers whose names were coming to the top of the list and offer them cash to sign over the plates.
In 1963, under pressure from plate holders, the licensing commission decided to allow the sale of cab plates on the open market. Almost instantly, plates increased in value.
Bureaucrats realized too late the decision had been a mistake.
The licensing commission tried to reduce the plates' value by issuing more, but since there were always more drivers than plates, it didn't work.
The growing black market meant the plates were worth far more than the city charged for them.
By the late '60s, more and more plate holders were renting their taxis to others instead of operating them personally.
There was just one problem - it was illegal.
Taxi operators argued that taxi leasing should be legalized, since it would allow cabbies to fund their retirement.
In 1974, Metro council appointed a committee, headed by Mel Lastman, to study leasing. The committee recommended that taxi leasing be approved.
But the rules were clear: The plate holder had to supply a taxi, complete with meter, radio and insurance.
More and more, however, it was the plate itself that was leased, not the taxi. Circumventing the law soon became almost standard practice. By the early '80s, the age of the ``Florida taxi owner'' was well under way.
As word got out about plate leasing's profitability, it wasn't just cabbies and fleet managers who had plates. Increasingly, plates fell into the hands of pure investors.
Getting a plate had become like winning a lottery - you paid less than $3,000 to get it from Metro, but it was instantly worth 20 to 30 times more. It was even more lucrative to ignore the short-term profit and hang on to the plate, letting it produce rental income for generations to come.
A BAD DECISION
By the early '80s, at least one accountant was telling well-heeled clients that a Toronto cab plate was the best investment around. Investors with available capital bought them from other plate holders.
This drove up the price of plates - and the cost to working drivers. Between 1993 and 1995, even though the cab industry was in decline, the price of a cab plate on the open market rose 45 per cent - from $48,614 to $70,632.
Virtually everyone but plate owners says the decision to allow leasing cabs was a bad one.
``The decision came about because it was happening so much anyway,'' says Dorothy Thomas, co-author of a report on the Toronto taxi industry. ``But it turned out to be the thin edge of the wedge.
``The plate owners pushed for the lease system. They wanted it. Until there was leasing, the plate had no value. The system should never have been set up in the first place. It was a big mistake. ''
``What was approved was leasing a taxi,'' says Toronto Licensing Commission manager Carol Ruddell-Foster. ``Not leasing a plate.''
Today's regulators find themselves stuck with what has been called ``the $300 million nightmare'' - 3,477 taxi plates that have acquired a street value of $90,000 apiece, in the hands of people who have come to view the plates not as municipal licences but as personal property.
Rebecca Kuttner, a 74-year-old widow who inherited plates from her husband in the '60s, says there's no way she'd give them back.
``I raised two boys on these plates,'' she says.
``They're mine. You can't end the system now. Come on, let's get real.''
Some plate holders will say the system is not ideal, but add that it can't be changed.
``If you were going to start over again, maybe you wouldn't do it this way,'' says Peter Regenstrief, a lobbyist who works for plate holders. ``But the plate system is a reality. Our position is, don't crash the asset.'' Mitch Grossman says the system is here to stay.
``The government has allowed a plate to become an asset,'' he says. ``They knew the way it worked, and they let it go on.
`` . . . is it fair to take away someone's investment? And is it going to make the taxi industry better?''
For drivers, the growing trade in cab plates has made it virtually impossible to get one.
Louis Racz, a shift driver, pointed out the driver's dilemma in a presentation to the licensing commission last year:
``Imagine if the same system applied to plumbers, electricians, teachers, doctors, lawyers - even bakers and barbers. . . . Suppose that when they retired, they could sell or lease out their licences and never relinquish them?
``These plates are supposed to be a licence to operate a cab. But we can't get one.
``The people who hold the plates have made us into slaves. Doesn't anyone else think this is wrong?''
How did today's mess happen? In the view of many, the politicians and regulators were no match for the players in the taxi industry, who have broken the rules for so long that they now claim it's their right.
``A lot of the owners are pirates,'' says John Duffy, publisher of Taxi News.
``And when I say pirates I don't mean it in a pejorative way. I say it with sneaking admiration. They're tough. . . .
``They see the system and work it for all they can.
``If there's a loophole, they drive right through it.''
March 15, 1998
CABBY'S LIFE IS LONG DAYS, LOW PAY, NO HOPEMIKE SLAUGHTER
Leasing a plate `like having your blood sucked'
By Peter Cheney
Toronto Star Staff Reporter
A lot of people talk about free enterprise. Kami Hajimirzakhni lives it.
Seven days a week, 12 months a year, his days begin the same: up before 5 a.m., breakfast alone. While his wife sleeps, he heads to the 1992 Chev Caprice that he is paying for on his credit card.
To save parking costs, he keeps the car on the street, even though his insurance, which costs $5,000 a year, doesn't cover theft or vandalism. Every dollar counts.
Hajimirzakhni, known to his friends as Haji, is a Toronto cab driver, which makes him an entrepreneur in the truest, most sobering sense of the word.
He has no guarantees, only risk and potential.
On an average day, working 12 to 14 hours, he will collect about $140 in fares. On a bad one, he might take in $80 or less. From that he must pay his costs, which run to about $3,100 a month.
If he worked only five days a week, like most people, and took a vacation, his costs would work out to more than $150 a day - more than he usually collects.
He keeps the repo man from his door by renting his car to another driver at night - and by working 365 days a year.
The days pass in a blur - his birthday, his anniversary, Ramadan, Labour Day - all are spent behind the wheel of his car. Haji is tired, but he goes on, hoping to stay afloat until something changes.
Except it never does.
At 27, Haji finds himself trapped in what appears to be a no-win situation, sinking under an ever-increasing expense load: gas, insurance, tires, traffic tickets. It all adds up.
``The way it's going, I don't see a good future,'' says Haji. ``I don't see how this is going to work out.''
Haji's biggest expense is the postcard-sized metal plate attached to the right corner of his car's trunk lid.
This little piece of metal is a city-issued cab licence. On the open market, one of these plates is worth $90,000 - about nine times the value of Haji's car.
Like most cabbies, Haji could never afford to buy a plate, so he rents one instead, from a company named Whitedoor Cab Ltd.
The price is $995 per month.
Whitedoor is one of several companies controlled by Mitch Grossman, holder of the city's biggest collection of cab plates. Combined, these companies hold 70 plates, according to corporate records obained by The Star in May, 1997.
Grossman also controls at least 172 other plates as the city's biggest ``designated agent.'' The plates he holds or controls yield rents estimated at about $1 million a year.
Haji, on the other hand, has nothing to show for his labours but two maxed-out credit cards, an apartment he can barely afford and no pension.
Like many drivers, Haji slipped into the cab business. He came to Canada from Iran in 1987, hoping for a better life. But when he realized he had few options outside cab driving, Haji bought his ow car, believing that would allow him to get ahead.
Instead, it has become a trap.
His costs have mounted, even as revenues have declined; fax machines, courier services and changes in ridership have cut taxi use.
Despite that, the price of renting a plate has gone up every year. Just a few months ago, Haji's monthly plate rent was raised from $925 to $995.
After six years, he feels worn down by the industry's hopeless economics.
``I know that every business has its complications,'' he says. ``But this is crazy. It's like having your blood sucked.''
If he could get a city-issued plate, Haji's problems would probably be solved, since it would cut his costs by almost $12,000 a year.
But he can't. The wait for a city-issued plate is estimated at more than 20 years.
The price of a plate obtained through the Toronto Licensing Commission is $5,681, plus an annual renewal fee of $836.
Haji finds himself in an odd position: The municipal licence he should be able to get for $5,681 is available only through a private party at a cost of $90,000.
Since he can't afford that, Haji rents. But renting a plate carries costs you might not expect.
For example: The name on the car's ownership isn't Haji's. Instead, it's listed in the name of Whitedoor Cab. Haji doesn't like it, but if he wants the plate, he has no choice but to go along.
This odd arrangement is commonplace in the Toronto cab business. It allows plate holders to meet the letter of the law.
Under city bylaw 20-85, the plate holder is supposed to own the cab, complete with meter, radio and insurance. Its intent was to ensure that plate holders are in the cab business.
To get around that requirement, plate holders routinely get drivers to sign over their cars so the names on the plate and car ownership match.
In an interview with The Star, Grossman admitted he doesn't own a single taxi in the commonly accepted sense of the word, even though dozens - including Haji's - are in the names of his companies.
Unlike Grossman, many plate holders collect their rents through middlemen known as designated agents.
More and more, cab plates are used as investments by people who never see the cars that carry their names.
Consider the case of Jaspal Kaur Padda, holder of Taxicab Owner's Licence 1373.
In October, 1996, a mechanic inspecting the taxi registered in her name found the front end so badly damaged that the car could have lost its steering and brakes at the same time. Last September, Padda was called before the licensing commission. She arrived with an interpreter and her agent.
When asked how such a serious defect could have escaped her attention, she admitted she'd never seen the car.
``What, if any, involvement does Ms Padda have in the operation of the taxicab?'' the commission asked the agent.
The answer: ``None.''
Padda's plate was suspended for a month and she was ordered to attend a 16-day taxi course. Her agent, Robert Stewart, told the commission Padda couldn't take the course because she couldn't speak English.
Padda was told she could bring a translator. Her plate is no longer under suspension.
She has yet to take the course.
Padda's case is symptomatic of the problems created by Toronto's cab system.
Although licensing officials have known about the situation for years, they say it's almost impossible to stop. Once a cabby signs over his car, a plate holder can claim to own it.
A cab plate has become more than an income-generating property; it's also an instrument of control.
How great is that control?
Consider the taxi that Haji drives.
It was purchased from Robinhood Taxi, a Grossman company.
The financing was done through Symposium Finance and Management Services, owned by Grossman. Haji says the interest rate was about 20 per cent a year - a charge Grossman denies.
To save interest costs, Haji paid off the Symposium loan by getting a cash advance against his Visa card.
But Grossman's company is still the official owner of Haji's car. It is painted in the colours of Royal Taxi (at Haji's expense). Every month, Haji pays $410.25 to keep his car in the Royal brokerage, a dispatch service.
Although there are other brokerages, Haji says he would lose his plate if he left Royal, which is owned by Grossman.
Haji says he doesn't see how drivers can prevail against plate holders, who spend hundreds of thousands on legal fees, lobbying and campaign contributions to municipal politicians who oversee the cab industry.
The difference between the owners and the drivers is explained by Charles Archibald, a lawyer who chairs the licensing commission.
``I've made it clear to the drivers that they have to mobilize. They never came. But the owners were down here every day; the cabbies were out on the street, working like hell.
Haji's seven years in the business have shown him the impossibility of the drivers' position. He works about 85 hours a week, 52 weeks a year, for an income of less than $30,000.
He hasn't taken a vacation in four years. He keeps waiting for a miracle that doesn't happen - for business to improve, or for his costs to go down.
He can't see what else he could do for a living, given his skills and background - he's a new Canadian with a high school diploma whose work experience consists of driving a taxi.
To top it all off, he would still owe money if he left the cab business. ``I don't see a lot of choices,'' Haji says.
He feels trapped. He took part in the 1994 taxi strike, which was a futile attempt by drivers to get lower lease rates. Since then, they've gone up.
Haji dreams that some day he'll own a house, but he and his wife can barely afford the $820 monthly rent on their apartment.
When he thinks about it, he finds it hard to believe that his single biggest expense is his taxi plate, which costs him more than the monthly lease on a new Mercedes or BMW.
``If I wasn't paying that, things would be totally different,'' he says.
Haji came to Canada with high hopes. He studied computer programming at Seneca College, but dropped out when he ran out of money.
He got into cab driving out of desperation, starting in 1990 with a cab he rented by the week from an agent.
Haji paid $525 a week for seven shifts, plus fuel. He started work at 4:30 in the afternoon and got off at 4:30 the next morning.
The cab industry was better then; there were more fares. Haji cleared as much as $600 a week. Haji thought investing in his own vehicle would be a better long-term strategy.
In 1991, he bought a used Caprice through the agent for $17,000. But he couldn't find a plate. The agent offered him what's known in the industry as a ``package deal'' - a plate, insurance and brokerage fees.
In the package deal, the agent or other middlemen typically mark up every element of the package, tying the sale of these other items to the one indispensable element: the plate.
Even the price of cars is affected by the plate, since many agents are also car dealers. In many cases, if a driver wants one of their plates, he has to buy his car from the agent, or the plate goes to a driver who will.
Haji's car, for example, cost $11,000 when it was purchased from Grossman. Haji says he could have bought a similar car for about $9,000 elsewhere, but then Grossman wouldn't have given him a plate.
``What can you do?'' Haji says. ``I don't have a plate. If you want theirs, you have to play the game.''
When asked to respond to specific allegations by drivers, including Haji, Grossman did not return calls.
As Haji learned, the cab business is a cruel one, ruled by an unyielding supply-and-demand equation that keeps the cost of a plate high; there are almost 11,000 licensed cab drivers, but only 3,477 plates.
Many drivers are even worse off than Haji. In the cab world, drivers are ranked in order of their power and ability to earn a living. At the top are the owner-operators, who own both car and plate.
In Toronto, they are an increasingly rare species. In 1973, almost half the cabs in the city were owner-operated; today, it's less than a quarter.
Next come drivers like Haji, who own the car, but not the plate. And then, one giant step down, are the bottom feeders of cabbiedom: shift drivers who rent their car by the day or night for $50 to $90 per 12-hour shift.
The vehicles they get are most often the worst taxis on the road. These are the tramp steamers of the cab fleet, often owned by people who never see them, rented to the first comer and driven 24 hours a day, 365 days a year, stopping only for essential repairs.
For shift drivers, there is no alternative. Shift driver Eugene Meikle, for example, has been waiting 13 years for a plate. But when he last checked, there were 300 people ahead of him. So he rents, paying $70 plus gas for a 12-hour shift.
What does he get for that? A seven-year-old Ford with more than a million kilometres on it. The body is wavy from sloppy repairs, the rear bumper hangs at an angle and one door handle is held on with frayed duct tape.
Meikle resents the years he has spent paying rent.
``I've paid half a million to these guys, and what do I have to show for it? Nothing,'' he says. ``As it stands, a guy like me has no hope.
Haji doesn't know if he'll ever get a plate. No new plates have been approved for issue since 1993.
The market in plates has produced gridlock: No one gives the plates back to be reissued and used by a new generation of drivers.
As he cruises the streets in his Chev, working yet another 12-hour shift, Haji considers the plate system that has forced him to hand over so much of his earnings for so many years.
``A lot of the time, I don't think about it, because it's been with me so long,'' he says. ``But when I look at it, I can't understand how anyone can allow this to go on.
March 14, 1998
Surprising collection of people hold platesby MIKE SLAUGHTER
BRICKS AND MORTAR: Investment broker Howard Laxton, who lives in this Forest Hill house,
heads a company that holds seven taxi plates.
By Peter Cheney
Toronto Star Staff Reporter
The people who hold cab plates might surprise you. Consider the following, who are all licensed Toronto ``taxicab owners,'' according to documents obtained by The Star:
Laxton Investments Ltd., operated by Howard Laxton, a broker with First Marathon, a Bay Street investment firm. Listed in the Canadian Directory of Directors, with a home in Forest Hills, Laxton heads a firm that holds seven plates.
Harry Greenberg and Associates, headed by lawyer Saul Schwartz: three plates.
Sheryl Lipton, dentist. Lipton and her brother Sidney inherited two plates from their father, who drove a cab.
Joram Gold, lawyer. (Gold is facing charges over a drug operation and has been suspended from practising law by the Law Society of Upper Canada since 1995, after being found guilty of professional misconduct.)
Carlton Da Silva, ex-cabby now living in Venezuela.
Guy-Nat Holdings, headed by David Piekarz, a businessman who lives in Israel, and lawyer Joel Winch. Guy-Nat holds four plates. Winch also holds several plates under his own name.
By searching thousands of corporate documents, The Star found a process of consolidation that has put large numbers of plates in the hands of a few.
TIME IN FLORIDA
Together, the top 10 individual and family plate holders hold more than 300 plates. Based on official records of the Toronto Licensing Commission obtained in May, they include:
Mitch Grossman and family - 72 plates. Estimated gross plate lease revenue, $864,000 a year.
Jack Goldberg, a businessman who spends much of his time in Florida, holds 37 (along with his sister, Gertie Racko). Estimated gross revenue, $444,000 a year.
The Mandronis family (Alana, Anna, Christine, George, James, Matina, Nota, Peter and Sandra) - 29 plates. Estimated gross revenue, $348,000 a year.
Eli Messica - 27 plates. Estimated gross revenue, $324,000 a year.
King of the cabs
Hy Weinrib - 26 plates. Estimated gross revenue, $312,000 a year. Between 1995 and 1997, at least nine of Weinrib's plates were temporarily suspended after the cars that carried them were judged ``dangerous and unsafe.''
The Marmorstein family (Jeffrey, Joseph, Leah, Magdalena) - 24 plates. Estimated gross revenue, $288,000 a year.
Former cabby William Rotstein - 23 plates. Estimated gross revenue, $276,000 a year.
Marlene Oilgisser - 22 plates. Estimated gross revenue, $264,000 a year.
Anne Marie Pressman, widow of a cabby - 21 plates. Estimated gross revenue, $252,000 a year.
Henry Hoefmans - 20 plates. Estimated gross revenue, $240,000 a year.
March 14, 1998
King of the cabsThis man dominates Toronto's taxi industry.
He is Mitch Grossman and, in the words of one driver, `he is God'
By Peter Cheney
Toronto Star Staff Reporter
IT HAS BEEN said that no one gets rich in the cab business. But that was before Mitch Grossman's family came along.
In his tailored suits and year-round tan, Grossman has the look of a Bay Street executive or the owner of a successful software company.
But he is neither. Grossman is the king of the Toronto taxi industry, heir to an empire that lifted his family from poverty to privilege in a single generation.
At 40, Grossman lives a life no cabby could dream of. He drives a black BMW 740 IL, list price $93,000. He lives in a newly bought North York luxury home. His last house, where he lived for years as Mayor Mel Lastman's next-door neighbour, was purchased without a mortgage.
Grossman has never driven a cab. And even though there are at least 62 taxis in his companies' names, he admits he doesn't actually own any of them - at least in the usual sense of the word.
Yet he has made millions from the cab business.
Grossman's fortune is based on cab licences, the postcard-size pieces of metal attached to the trunk of every Toronto taxi. Although they cost pennies to make, cab licences are worth $90,000 apiece today.
They fetch that kind of price because they are money-makers. They are supposed to be a licence to own and operate a taxi. Instead, most have been turned into cash cows, yielding their holders $800 to $1,200 a month.
And no one has more plates than Grossman.
According to municipal and corporate records obtained by The Star, Grossman and other members of his family, including cousins, hold 94 cab plates. At today's prices, those plates would sell for $8.46 million and yield gross annual rents of more than $1.1 million.
Until recently, the family's collection was far larger - as high as 145 plates, according to municipal transfer records examined by The Star. Those records show that Grossman, his mother and sister have sold 51 plates since 1993.
For years, the list of plate holders has been confidential. And as The Star learned after getting the list, unravelling who owns what can be complex.
The postcard-size plates attached to the trunk of every Toronto taxi are worth $90,000 apiece.
Grossman, for example, doesn't have a single plate listed in his name, yet municipal records as of May show he held at least 70 through five corporations: Robinhood Taxi Ltd., Lo-Jo Holdings Ltd., Mitch and Associates Taxi Ltd., Whitedoor Cab Ltd., and 373031 Ontario Ltd. (Grossman says the records are outdated and he owns only 62 plates.)
Twenty-four more plates are held by his mother, sister and a cousin, again through named and numbered corporations.
Grossman's power in the cab industry is magnified by his role as the city's single biggest ``designated agent,'' representing at least 172 plates owned by other people.
Agents are middlemen who manage plates, allowing holders to collect rents without any involvement with the cabs that carry their names, or the drivers who operate them.
Grossman plays a much more active role in the business than most. As well as being Toronto's biggest plate holder, he is also the operator of a number of companies, including Royal Taxi, one of the largest dispatch services in the city.
Grossman's operation is on Sherbourne St., south of Queen. Outside his office is a constantly changing line of used cars available for sale. Many are used police cruisers, the vehicle that has become almost standard issue in the Toronto taxi fleet.
Used cars are just one component of Grossman's operation. He also owns a service station, a towing company (Hallam Garage), a lease operation (Tudor Leasing) and a finance company (Symposium Financial and Management Services).
Grossman's cab plates ensure a steady stream of customers. Without a plate, a cabby can't operate a car - and plates are the only essential ingredient in limited supply.
You can get a car, a radio or a meter anywhere. But if you need a plate, the options are few.
As the man who controls close to 10 per cent of the city's entire plate supply, Grossman wields considerable power.
As cabby Surinder Kumar puts it: ``If you want to work, you have to play his game. You have no choice.''
For Kumar, the plate game has been a losing proposition. He became a cabby after he lost his factory job when the company folded. Now, he finds himself trapped, forced to pay a huge percentage of his fares to lease a piece of tin riveted to the trunk of his car.
``The plate system is a rip-off,'' says Kumar. ``You can't win . . . A cab driver doesn't have a life. I see my wife in the morning and that's it. I leave in the dark, I come home in the dark.''
Grossman spoke recently to The Star. At his office, which is decorated with family photos, he described himself as an above-board businessman whose greatest pleasure is watching his three young sons play sports.
``We want our side of the story told,'' he says. ``We take our industry seriously . . .
My job is to make my drivers money. I hope my peers also recognize this as their job function.''
Although he could probably live off his plates without working, Grossman says he goes to the office each day out of pride and because his father trained him to work.
``My father was a proud man,'' he says. ``Nobody gave him anything. He taught me his values.''
It's clear there is a lot of money to be made in Grossman's various operations. According to cabbies interviewed by The Star, getting one of Grossman's plates usually requires joining his dispatch service, at $400 a month.
Then there is financing. Cabby Mohammed Hoque showed The Star a sales agreement for a used taxi bought from one of Grossman's companies. The contract included interest charges that worked out to 28.3 per cent annually.
UNDER THE TABLE
Many drivers voiced complaints about their dealings with agents who handle leased plates. Many said they had to make under-the-table cash payments to get a plate.
Grossman refuses to comment on specifics of his dealings with individual drivers, but confirms the existence of under-the-table payments.
``I know it happens in the business, but I don't do it,'' he says. ``It's wrong.''
Asked if his company charges interest rates of 20 per cent and more, Grossman says he ``couldn't believe it would be that high.
``It's hard for me to say whether it's true or false without knowing . . . the business etiquette involved.''
Grossman says offering cars and financing to drivers is a service: ``The average cab driver can't walk into a bank and get a loan for a car. That's why we have cars for sale . . . We're helping people get started.''
Although many believe rents paid to plate holders have damaged the Toronto cab fleet by discouraging investment, Grossman disagrees.
While he concedes the fleet is in poor condition, he says plate leasing isn't the cause. ``Plate leasing is a mirage,'' he says. ``It's got nothing to do with anything.''
Grossman says the real problem is bad law-making and weak enforcement that allows old cars and unlicensed taxis to stay on the road.
``There are a lot of rogue drivers out there,'' he says.
Grossman says the way to get old cars off the road is to institute age restrictions for cabs.
Not everyone sees it the same way. Numerous studies have identified plate leasing as a fundamental economic problem. Many connected with the industry say the rents paid to plate holders make it impossible to pay for better cars.
Carol Ruddell-Foster, who heads the Toronto Licensing Commission, says it is ``hypocritical'' for plate holders to say the cab fleet could be fixed simply by instituting age restrictions for cabs.
``It's easy for them to to say, because they won't be the ones paying for it,'' she says. ``The money they take out means nobody can afford better cars.''
In the Toronto cab business, a plate is the equivalent of the Holy Grail. Drivers spend decades waiting for one. A plate can mean the difference between a comfortable life and servitude.
The licensing commission issues plates for $5,681. But there is a catch: It is almost impossible to get one that way.
The supply of available plates has been declining for years. Many are passed along by plate holders to their heirs - as in the case of Grossman and members of his family.
Few return their plates to the city. Instead, they are sold on the open market to the highest bidder. Increasingly, this has put plates in the hands of wealthy investors and multiple plate holders instead of working drivers, since few could afford $90,000 to buy one.
Nor are there any newly minted plates available.
Plate holders, including both working drivers and plate tycoons, have successfully lobbied against the issuing of any new ones, since that would reduce the value of their plates.
No new plates have been approved for issue since 1993. The wait for one is now estimated to be at least 20 years. Some drivers have died before their names came to the top of the list.
As a result of this restricted supply, the rents charged by plate holders have soared, even though cab industry revenues have fallen, owing to the advent of fax machines and courier services.
Today, the average cost of renting a plate is $1,000 a month - an amount that can represent 30 to 50 per cent of a driver's revenue.
Many drivers told The Star they find themselves trapped in a cycle of declining revenues and increasing costs, forced to pay a large percentage of their earnings to private interests that have gained control of municipal licences.
``This plate is government property,'' says Kumar. ``Why does one man get to have so many plates, while another man has to work his whole life for nothing?''
At the root of the mess is a heavily abused bit of legislation known as Bylaw 20-85.
The bylaw is supposed to ensure a person who gets a Toronto cab plate actually owns a cab and takes care of it. But, as The Star learned, countless Toronto ``taxicab owners'' are owners in name alone.
Here is how it works with many drivers:
To lease a plate, a cabby has to sign over the ownership of his car to the plate holder.
Transferring the ownership means the name on the car and the plate match, allowing the plate holders to claim it is a complete taxi, not just a plate, that they are offering for rent.
For drivers, this means they don't have title to the cars they pay for and maintain.
It also means many are forced to pay dramatically more for their insurance.
Since they don't legally own their cars, they have to pay ``fleet'' rates, which are far higher than the rate for owner-driven cars.
Cabby Mohammed Hoque, for example, had an insurance policy that cost him $825 a month (or $9,900 a year), yet carried a $10,000 deductible - and didn't cover him when his car was stolen.
In the Toronto cab industry, there is almost no one who hasn't heard of the Grossman family. For decades, their name has been synonymous with the business - and with cab plates.
Grossman's plate collection came from his father, Sam, who got into the cab business in the '40s and began collecting cab licences a short time later.
Grossman's father and his brother-in-law, Irving Oilgisser, assembled what is by all accounts the biggest collection of plates in Toronto history.
Although they weren't particularly valuable when Grossman and Oilgisser began collecting them, the plates later became far more valuable as the practice of leasing grew, allowing holders to use them as investments.
Mitch Grossman says his father ``had a vision'' of the potential in cab plates.
``My dad was a very intelligent man,'' he says. ``He was always having visions.
``My father worked hard for everything he got. Nobody ever gave him anything for nothing.''
HEIR TO FORTUNE
According to municipal records obtained by The Star, Grossman and Oilgisser held 145 plates:
Ninety-four were listed in the names of Grossman and Oilgisser family members or corporations they controlled as of May. Transfer records show that family members and corporations they controlled had sold 51 others.
Sam Rampersad, a plate owner and agent, puts it this way: ``The Kennedys were in booze, the Grossmans were in plates. That's the way it is.''
As heir to his father's fortune, Mitch Grossman was considered the cab industry's crown prince in waiting.
His mid-'80s wedding was the industry's power event of the decade, with no expense spared.
The wedding and the preceding stag clearly illustrated the extent of the family's influence.
On hand were hundreds of cabbies, plate owners, suppliers, mechanics - anyone who had reason to curry favour.
``You couldn't afford not to be there,'' says one cabby. ``In the Toronto cab business, Mitch Grossman is God.''
March 14, 1998
A licence to print moneyTiny metal plate at heart of taxi industry woes
By Peter Cheney
Toronto Star Staff Reporter
The battle for Toronto's cab industry is being waged in grease-stained garages, at city hall and on the streets where drivers troll for fares.
At stake are hundreds of millions of dollars, the fate of more than 10,000 cab drivers and the quality of taxi service in Toronto.
By almost any account, that service is rotten. Study after study has condemned it.
Many of Toronto's cabs are rickety former police cruisers with more than a million kilometres on them. And the drivers aren't much better: Among the complaints from riders are reports of drivers who don't know their way to the airport.
No one has summed up the cost of Toronto's cab fleet better than John Duffy, publisher of the Taxi News, an industry publication:
``We're all paying for it,'' Duffy told The Star. ``Everyone who gets into a lousy cab, every driver who can't pay his bills, every business that has fewer customers because they didn't come back to Toronto.''
So what's behind the mess?
A months-long Star investigation turned up numerous problems. Among them were fraudulent car inspection practices, weak bylaw enforcement and unethical business dealings.
But those problems are merely the symptoms of a deeper malaise: A flawed regulatory system that lets investors rake in millions by collecting city-issued taxi licences and renting them out to working drivers at an average cost of $1000 a month.
It's known as plate leasing, and it has led to a curious situation: Working drivers find it almost impossible to get a plate, yet more than 2,600 are in the hands of people who don't operate a cab.
Plate leasing puts more than $30 million a year in the pockets of plate holders and middlemen. That money is ultimately paid by passengers and cab drivers, who find themselves caught in a system that has been described as ``urban feudalism.''
The system has also damaged the industry, since little of the money collected is reinvested in better cabs or driver training.
As The Star learned by obtaining the confidential list of plate holders and searching thousands of corporate documents, plates are held by dentists, lawyers, Bay St. investors, and people who live outside Canada - among them a businessman who holds four cab plates through an Ontario corporation, but lives in Israel.
Leasing has turned Toronto cab plates - which have an official price of $5,681 - into a lucrative investment and driven up their street price to $90,000.
Plate leasing has been going on for decades, but in the past few years it has become epidemic. As one senior bureaucrat put it: ``Toronto has become the best city in North America to be an absentee cab owner.''
Studies have shown that leasing can take as much as 50 per cent of a driver's earnings.
One cabby, an immigrant who works seven days a week, 12 months a year to make ends meet, puts the drivers' dilemma this way:
``It's sick, man. I work all day and night, and I go home with nothing. The guys who own these plates could be sitting off in Florida, doing nothing. You tell me, is this right?''
The driver pays more than $1,000 a month for his plate, leaving him nothing to spend on his car, which has more than a million kilometres on it.
``You shouldn't have to pay to be in my car,'' he says. `` . . . But I can't afford to buy a new one.''
As The Star learned, more than three-quarters of Toronto's 3,477 taxi plates are leased, instead of being used as regulators intended - to own and operate a taxi.
``These are municipal licences,'' says Eugene Meikle, a cab driver who has led an often-lonely crusade against plate leasing.
``The city owns them. Why do they let people charge us to use what should be ours in the first place?''
The law was intended to ensure that a plate holder owns a taxi - but many ``taxi owners'' have never seen the cars that carry their name.
This is so common that it's given rise to a bitter joke that runs through the industry:
``A Toronto cab owner wouldn't know his car if it ran over him.''
Carol Ruddell-Foster, manager of the Toronto Licensing Commission, the agency that regulates the cab industry, calls the ownership of many taxis ``a legal fiction.''
The money to be made by leasing cab plates has made them irresistible to investors.
Even at the top street price of $90,000, a taxi plate yields an annual return of about 13 per cent.
And for those who got their plates from the city, or inherited them, the return is much higher.
Plate holders deny that leasing has hurt the business. They say it's ``free enterprise,'' and that the business can easily absorb the cost of leasing.
``I think it's a good thing,'' says Mitch Grossman, president of Royal Taxi and the city's biggest plate holder.
``You get the best of both worlds.''
Licensing commission chair Charles Archibald says ``. . . the leasing situation in this city is abominable. There are people taking advantage of other people for their benefit . . . the situation is so widespread that it cannot be allowed to continue.''
Economist Dan Hara, who specializes in cab industries, says plate leasing has created ``. . . a slumlord situation - owners distanced from their properties, with no real interest in anything but collecting the cheques.''
Many believe leasing makes it almost impossible for operators to put better cars on the road.
``By the time (owners) have taken their cut there's not much left,'' says Ruddell-Foster. ``It's crippling the industry.''
A 1996 report by Dorothy Thomas and Dan Shimski, civilian members of the licensing commission, said leasing had damaged the industry by adding cost without adding value:
``. . . the high cost of leasing has contributed to a deterioration in the quality of taxicabs,'' the report concluded. ``In order to meet these costs, drivers may work up to 17 or 18 hours a day. In many cases, drivers soon discover that they cannot make enough to pay their operating costs, and vehicle maintenance is compromised to cut expenses.
``The results are obvious on the street: the quality of taxicabs is deteriorating, except in the case of owner-operated taxicabs . . . Ultimately, the public pays in poorer service.''
A 1997 report prepared for the city's Board of Trade came to a similar finding.
Plate leasing has had a profound effect on the Toronto taxi industry. Here are some of the problems that emerged during the Star investigation:
Many drivers interviewed by The Star said they paid up to $5,000 in under-the-table ``key money'' charges to rent a plate.
Agents can make or break a cabby by controlling access to plates. Documents obtained by The Star showed that the city's top five agents alone control 663 plates.
Many drivers said agents had them buy cars, insurance packages and sign up for financing from them at interest rates approaching 30 per cent.
Drivers are working longer and longer hours to make ends meet. Some drivers interviewed by The Star work 365 days a year for a return that works out to minimum wage.
Fraudulent inspections can keep bad cars on the road. Some operations replace parts like tires, seats and floor mats the night before an inspection, then put the old ones back afterwards.
Drivers are supposed to keep records of their fares, allowing inspectors and tax authorities to check on operations, but many don't. Some drivers collect welfare, since there's no documentation of their incomes. Some plate holders and agents collect in cash - again evading the taxman.
These kinds of practices are easy to get away with in Toronto, since the licensing commission has only 40 inspectors for more than 25,000 businesses.
In the late '50s, Metro chairman Fred Gardiner minced no words when he described what was wrong with plate leasing: ``The licence owner was in a position to make another man his slave for life.''
Gardiner said plate leasing let licence holders ``sit back smoking a cigar, feet on the desk, while a number of people are running around 12 hours a day, trying to make a living on the licence.''
The rising asset value of cab plates has made it harder than ever for working drivers to get one, since many have been snapped up by investors, reducing the supply.
The supply has also been choked off by plate holders who pass on their plates to their heirs. As it stands, a plate holder can keep a licence in the family forever.
Plate leasing has traditionally been defended as a ``pension system'' for aging cabbies and widows. And in some cases, that's the way it works.
Al Sadoff, who spent decades in the cab business, depends on the income from four cab plates to support himself and his wife Sylvia, who is in a nursing home.
``Nobody's taking my plates away,'' says Sadoff, 77. ``They're mine. If they want them, it'll be over my dead body.''
Lewis Nichols, a cabby who retired in 1995 after almost three decades of driving, lives off the rent he collects from his plate, which was issued to him by the city in 1976.
``After 29 years, I think I'm entitled,'' Nichols says. ``We get nothing. No pension, no sick benefits. Nothing.''
Only the licensing commission has the power to give plates to drivers, but since they have become commodities, few come back for reissue.
As the supply of plates dries up, those left out complain that the pension system they are supposed to create is breaking down.
For some, cab plates have provided millions. And for many others, nothing.
``Where's my pension?`` driver Louie Racz asks. ``I'll never get one.''
Plate holders defend the system as one that can't be changed.
``Our government has allowed the industry to operate in this format for 25 years,'' Mitch Grossman says. ``They can't change it now.
``In the the past, they have circumvented the law,'' Ruddell-Foster says of plate holders. ``We want to stop that. There are too many absentee owners.''
Joel Winch, a lawyer who holds several plates and represents others for a businessman who lives in Israel, says the bylaw that's supposed to stop leasing is meaningless: ``That's a law you can drive a tank through.''
Plate holders say that if the city wants to take back their plates, it will have to pay them $90,000 each. At that rate, it would cost more than $300 million to expropriate all the plates.
Plate holders are pushing a 10-point reform program they say will improve the industry. The key points include age restrictions on cars and improved driver training.
The reform package also includes a plan to ``collateralize'' plates.
As it stands, banks won't lend money against a plate because the holders don't actually own them; the city does.
Under the plate holders' reform package, the plates would be recognized as personal property. This would allow drivers to buy their own plates, they say.
Another key plate holders' proposal is ``split ownership,'' which would eliminate the requirement that plate holders own a taxi. Under split ownership, drivers could keep title to their cars instead of signing them over to plate holders.
Peter Regenstrief, a lobbyist for plate holders, says the reform package is a ``reasonable and realistic'' way to address the problems.
``There's a lot of value in these plates,'' he says. ``Our point is simple - don't crash the asset.''
But cabby Eugene Meikle says the plate holders' reforms are a Trojan Horse: While they appear to offer solutions, they are in fact designed to secure the asset value of plates while eliminating any responsibility for the cabs they're assigned to.
``If they allow split ownership it's all over. They'll just make it legal for them to steal from us.''
Ruddell-Foster says the key to any meaningful reform is ensuring that people use cab plates to operate taxis. Without that, she says, fewer and fewer plates will be available for drivers.
``These plates aren't investments,'' she says. ``They're business licences. It's hypocritical for people who are sucking all the money out to demand that someone else pay for better cars - they're the ones who are supposed to own them and take responsibility.''
Councillor Howard Moscoe calls the system ``obscene.''
Moscoe and other councillors have suggested a number of reforms.
One was to cap lease rates and create a benefits package for drivers. Another was to take back all the plates and let the city lease them out at a lower rate.
But Moscoe says that and every other suggested reform has been defeated by the plate holders' lobby. ``Every time we try to do something, they've lobbied it into the ground,'' he says.
Moscoe says the simplest way to fix the system would be for the city to issue a plate to anyone who wanted one.
``If you did that, there would be true competition,'' he says. ``The whole house of cards would collapse, just like that.''
Back to the Taxi-L Regulation Page