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Law, Service Take Back Seat in ‘Bandit’ Limo Firms

Times Staff Writer

It was one of those glittering entertainment-industry evenings. A fleet of sleek stretch limousines fanned out around town, scooping up Cher, Bobby McFerrin, kitsch horror queen Elvira and others to fetch them to the 1988 MTV Video Music Awards show last September.

Reclining in the plush splendor of their chauffeur-driven coaches, the stars were unaware that the limousine company hired for the occasion was a renegade firm operating outside the law--although one of the celebrities did complain after arriving at Universal Amphitheatre that her driver had made sexual overtures.

The rich and famous, as well as the couple down the street, have been victimized by price-slashing “bandit” limousine companies. Legitimate operators say the bandits are driving them out of business, and that state regulators are failing to control them.

“It’s so easy for them to undercut us,” said Wilma Stevens, general manager of Anaheim-based Cameo Limousine Inc., which runs a of fleet of 13 cars and two vans. “But they are haphazard in every way. They don’t maintain their cars, they don’t keep their operations safe. I tell people it doesn’t matter who you go to, just make sure that the company is licensed and has a good reputation in the business.”

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Operating potentially unsafe vehicles without proper licenses and insurance, the renegades have been involved in hit-and-run auto accidents and prostitution. Some have offered “prom night specials” of drugs to high school students. Studies in Sacramento and Los Angeles have shown that more than half of the advertisers in the local Yellow Pages are bandit companies, often operating on a shoestring out of storefronts or private homes.

The Public Utilities Commission, which regulates the industry, has found problems with renegade operators in Orange County, Sacramento, Modesto, San Diego and Palm Springs. Los Angeles County, with its affluent neighborhoods in Beverly Hills and in the San Fernando Valley, “is the most serious of all,” said Larry McNeely, a PUC enforcement official.

With its equally affluent clientele, Orange County also represents a lucrative market for limousine companies and a target for illegal operators, said John Morgan, an investigator in the PUC’s Santa Ana office.

While there are about 150 to 200 licensed limousine, bus and van carriers in Orange County, there may be just as many operating illegally, Morgan said.

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State law requires limousine operators to have at least $750,000 in public liability insurance on each car and to obtain an operating license from the PUC, which takes 1% of the gross revenue as a fee. Experts in the field say these bills can add up to more than $20,000 a year for the average mom-and-pop fleet of three limousines.

Avoiding the insurance and PUC fees allows the bandits to undercut legitimate operators by $10 an hour or more, according to Alan Shanedling, vice president of the Limousine Owners Assn. of California, based in Lawndale. That has put pressure on the legitimate side of the industry, forcing some limousine companies to become bandits themselves, according to the PUC’s McNeely. “It’s almost a cannibalistic” situation, he said.

Some established operators say the PUC must shoulder some of the blame for the problem.

“The PUC takes our money and in return they are supposed to keep us from being harassed by local municipalities and to keep illegals off the street. But they don’t have the manpower to do it,” said Harold Berkman, president and owner of Music Express Inc., a respected limousine operator in Southern California specializing in the celebrity trade.

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According to investigators and industry experts, the problems with bandits are an unwanted side effect of the Gold Rush-like boom the limousine industry has gone through in recent years. After the 1984 Olympics in Los Angeles, when some operators offered their cars for $1,500 a day, interest blossomed in the business as an investment.

“For a couple of years, it was at the top of everyone’s list of business opportunities,” said Scott Fletcher, editor of Limousine and Chauffeur magazine. “Everyone jumped into it.”

Creative Financing

Creative auto financing allows small businessmen with big dreams to get into the driver’s seat. A buyer can drive off the lot in a $50,000 vehicle with “almost nothing down,” Shanedling said.

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McNeely estimates that there are now 2,000 licensed firms in California, up from about 900 5 years ago, adding that “there has been tremendous growth in the bandit side of it.”

The PUC said passengers have been injured in accidents involving bandit companies. The agency is investigating two recent accidents in the Los Angeles area. In one, an Orange County bandit service carrying two passengers hit a parked car, then sped off. A wheel came off another limousine operated by the same company, and the limousine struck a car.

PUC officials say bandit limousine companies have served as fronts for illegal activities. “We’re fully aware they are involved in narcotics and prostitution,” said McNeely. “During prom season, we heard more than once that companies would take you to the prom and you would get five lines of coke.”

A Monterey County drug dealer used his unlicensed limousine service to deliver cocaine, authorities said. After penetrating the operation, they discovered well-maintained “trip sheets” showing the destination of the drug shipments.

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sh Slow to Get Tough

Critics in the industry say the PUC has been slow to get tough on the lawbreakers. McNeely agrees that the criticism “probably is correct. Several cases went by the wayside” in the past because of a shortage of enforcement people.

Morgan, for example, is the only investigator assigned to Orange County and his territory previously included San Bernardino County as well. His current caseload includes about 50 suspected bandit operations.

“By the time you get around to investigating a company they will be gone,” he said. “I would estimate that when the latest Yellow Pages come out, 25% of those companies listed are no longer in business. Within a year, probably 50 to 60% of companies go out of business.”

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In August, 1987, however, the California Legislature authorized the creation of the Passenger Compliance Unit in the PUC, with six new enforcement positions, to deal with the problem. McNeel, a former state Department of Justice official, was brought in to work more closely with local prosecutors around the state.

The new approach has yielded results. At least 17 unlawful-business-practice suits have been filed against bandits. Judges have issued restraining orders to stop operations in some of the cases and ordered the seats removed from one company’s limousines to make sure the vehicles stayed off the streets.

Charges Pending

In addition, criminal misdemeanor charges are pending against several companies in Orange County, Morgan said. He would not elaborate on the cases.

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The Orange County district attorney’s office is also investigating two companies and expects to file civil lawsuits within the next few weeks for operating without a license, failing to provide adequate insurance and performing inadequate safety equipment checks, said Gay Geiser-Sandoval, a deputy in the office’s consumer protection branch.

A January state auditor general’s report indicated that the PUC still has its work cut out for it, however. The report said the agency had failed to follow up on nearly half of the cases against unlicensed operators. Further, seven of the bandits involved in those cases were still doing business in December.

“I’ve never seen this, where companies are blatantly operating in violation of the law,” said McNeely. “They continue operating even when they know we’re watching them, thumbing their noses at the investigating agency.”

In one of the Los Angeles bandit cases, the operator of JJ&T; Limousines was accused of leaving high school students stranded on graduation night and of failing to return deposits. Sir Michael’s Limousines Ltd., which has since obtained a license, was spotted at the Academy Awards show last year carrying a Los Angeles city councilman, according to a PUC investigator. Twenty-one other illegal operators carried clients attending the same Academy Awards show.

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Didn’t Check Company

Another Los Angeles suit was filed against Elegant Limousines Inc., which provided limousine service at the MTV awards show. Karen Sortito, an account director for the western division of MTV Networks, said MTV paid Elegant $17,737 and promoted the limousine company in millions of American homes with a free, on-air advertisement.

Although there were no accidents, Sortito said a celebrity complained “that one of the drivers was sexually suggestive to her.” Sortito said she did not check the status of the company because “they were referred to me” by a co-worker.

That wasn’t the only problem involving Elegant. When the future Margery Pinedo met a limousine in Van Nuys that was to take her to a San Gabriel church for her wedding last Sept. 3, she found a red-faced driver without a tie who proceeded to lose his way, she said in an interview. Worse, the air-conditioner was out of order. With the temperature soaring, the interior got so hot that Pinedo’s 3-year-old niece suffered a bloody nose. Pinedo’s $900 wedding dress wilted. Refused a refund and a replacement car, the newlyweds finally discharged the limousine at the church, abandoning plans to ride to the reception in luxury, according to Pinedo.

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The bill was above $200 for 45 minutes, Pinedo said. “We tried not to let it spoil the whole day.”

Legitimate companies, who say the bandits are giving them a black eye, are applauding the stepped-up enforcement efforts of the PUC. “Even though only a few cases have been prosecuted, the word does spread and cleans up quite a few others,” said Glenn Barrons, president of the Limousine Owners Assn.

Move by Legitimate Firms

And many industry observers say there has also been a move by legitimate owners to put bandit companies out of business.

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“I’m sure there are many still operating out there, bit it’s not so apparent any longer,” said Pat Erskine, owner of the Limousine Information Center of Orange County, a ground transportation travel agency. “If (legitimate companies) hear of someone out there, they contact the PUC and they follow up on it.”

While operators are supposed to list their PUC permit numbers in their advertisements, not all do. Also, bandits have been using phony numbers for several years. A simple rule of thumb for a person shopping for a limousine is to look at the price, industry experts say. If the company advertises a rate much lower than others, it might be wise to be suspicious.

“Cheap is cheap,” said Berkman, of Music Express. “You can’t give cheap and be legal.”

Times staff writer Carla Rivera contributed to this story from Orange County.

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