59 Cab Drivers Face Charges

The Wall Street Journal

Taxi drive Jordan Feldman is taken into custody by police officers on charges of fraud at the Manhattan Supreme Court in New York, Wednesday, September 22, 2010. Manhattan District Attorney Cyrus Vance announced the arrest of dozens of taxi drivers that committed fraud against passengers during a press conference.

Nearly five-dozen cab drivers were accused by the Manhattan district attorney's office of overcharging customers in a long-running scheme that involved preying on people they suspected were tourists.

Manhattan District Attorney Cyrus Vance announced the charges Wednesday, saying 45 of the 59 drivers face felony charges, including one who allegedly overcharged his passengers 5,127 times and raked in more than $11,000 in fraudulent profits.

The drivers are accused of changing a setting on their taxi meters to show that trips within the five boroughs were actually outside city limits, thereby doubling the rate charged.

When the New York City Taxi and Limousine Commission first announced its investigation in March, it claimed that as many as 35,558 cab drivers were alleged to have committed the offense at least once, and that more than $8.3 million in fraudulent charges were collected over a two-year period.

On Wednesday, Mr. Vance said those charged with flipping the switch to illegally charge customers did so only about 77,000 times combined, racking up more than $235,000.

City officials said that in total about 2,000 of the 48,000 or so licensed cab drivers have faced some sort of disciplinary action, including having their licenses revoked or being fined. Those charged criminally flipped the switch to the higher rate at least 300 times each.

The case first made news in March, when the TLC said it was investigating drivers for using the higher rate, known as Rate Code 4. Officials were tipped off by a customer who complained, and the TLC then proceeded to use global positioning systems and other technology inside the cabs to investigate the scheme.

David Yassky, chairman of the TLC, said it appeared the majority of the fraudulent trips were charged to those making trips to the airport, Grand Central Terminal and Times Square, alleging the drivers focused on those most likely to be tourists.

"The entire taxi system, which is a jewel of the city…depends upon trust," Mr. Yassky said. "We are determined to protect the integrity of the taxi."

Mr. Yassky also said new technology placed in every taxi since May should spell the end of this particular scheme, as passengers will now be alerted by a beep and a message when a driver has flipped the meter to the rural rate.

The New York Taxi Workers Alliance in a statement raised questions about why the defendants were being charged now and why 21 of them were led to report Wednesday morning to the TLC headquarters, where they were arrested.

In a Manhattan courtroom late Wednesday, many of the defendants were brought in chained together in groups of 10 to be arraigned on two counts each of scheming to defraud.

The first defendant to be arraigned, Joseph Kastner, pleaded not guilty and was released from custody after a judge rejected the prosecutors' request to have bail set at $10,000.

Mr. Kastner allegedly overcharged passengers nearly 4,000 times and made more than $7,000 on the scheme. His lawyer said he denies all the allegations made in the indictment.