To the chagrin of ethics watchdogs, Los Angeles city officials twice this week have softened the blow of fines levied against firms for laundering campaign money to City Hall politicians.
On Thursday, the Los Angeles Transportation Commission voted 6-0 to permit Bell Cab Cooperative to expand its operations by absorbing 250 "bandit cabs" into its fleet--only months after Bell agreed to pay $85,000 in fines for disguising the source of campaign contributions.
The merger makes Bell the largest taxi operator in the city and enhances its ability to turn a profit, Timothy Messer, Bell's general manager, said Thursday. "It's a blessing for everybody--for us and for the public."
Two days earlier, the Los Angeles City Council, after a contentious debate, voted 9 to 5 to waive nearly $200,000 in city fees for Los Angeles Marathon Inc., the organization licensed to operate the city's annual footrace. The nonprofit marathon group last fall agreed to pay $200,000 in fines to the City Ethics Commission in a separate money-laundering case.
The City Hall actions to benefit Bell Cab and the marathon send "a very mixed signal," said Ed Guthman, a member of the commission. "It makes you wonder if City Hall takes this money laundering very seriously."
Bell and L.A. Marathon were fined for illegally funneling large campaign contributions to city officials through a network of friends, relatives and business associates. These ostensible campaign contributors were later reimbursed by either Bell or the L.A. Marathon, ethics commission investigators said.
In a separate decision Thursday, the Transportation Commission approved a lighter-than-recommended punishment for Bell Cab in connection with the money-laundering scheme. The panel voted 4 to 3 to suspend Bell's privilege of working the lucrative taxi market at Los Angeles International Airport for 60 days; the commission staff had recommended a 90-day suspension. After the 60 days have elapsed, Bell can automatically resume serving the airport.
"All the commissioners are concerned that there may be a perception that we are rewarding Bell," said Department of Transportation General Manager Robert Yates. But Yates said the suspension is a tough step and that the public good is served by bringing the "bandits" into the system of tighter rules.
J. Stanley Sanders, an attorney for two competing cab firms and now a candidate to unseat Los Angeles City Councilman Nate Holden, called Thursday's dual commission actions "amazing" and a "slap on the wrist."
Other taxi franchise holders argued that Bell should have its privilege of operating at the airport revoked altogether and that all the city's cab companies should be allowed to absorb a proportional share of the 250 "bandit" cabs.
Thursday's Transportation Commission action gave Bell the right to operate a total of 350 cabs; its fleet had consisted of approximately 100 cabs. The additional 250 cabs will be bandits--most of them operated by drivers currently operating illegally on the East Side.
The bandits often do not have adequate insurance and operate cars that do not comply with city equipment safety rules.
By virtue of Thursday's commission ruling, the bandits will obtain amnesty but must comply with the city's stringent licensing rules.
Councilmen Mike Hernandez and Richard Alatorre supported the merger.
Alatorre aide Bonnie Brody testified Thursday that the East Los Angeles bandit cabs have provided Latino residents with an "extraordinary" service--cheap transportation in "undesirable areas" that the licensed companies are reluctant or unwilling to serve.
Councilman Joel Wachs and Marvin Braude, both of whom voted against waiving fees for the L.A. Marathon firm, were particularly harsh in condemning the waiver as sending a signal that the council was not serious about money laundering. Braude even proposed that the city go out to competitive bidding to see if other companies might offer to organize the race at a lower cost.