Did Cab Drivers Expose Loophole Or Defraud City?

OCEAN CITY — When the town of Ocean City established the 25 percent transfer fee for taxi medallions in last month’s controversial ordinance, seemingly no one thought that the town’s take would ever be a quarter.

Three taxi medallions have been sold or transferred thus far since March 1 in which the town collected transfer fee sums of $375 and $700 respectively, but the town quickly raised a proverbial red flag when one was sold for a mere dollar last week at City Hall, earning the town 25 cents in transfer fees.

As a result, the Mayor and Council have taken umbrage with the sale of that medallion between Classic Taxi and Century Taxi and will be holding a public hearing on Monday to determine the fate of medallion #130.

“One of the medallions that have been sold is in question as to its transfer and I’d like to make a motion to hold a public hearing to bring in both Memory Lane Transportation Inc, which trades as Classic Taxi, and Century Taxi that were involved with this transaction, and to have them come in to explain how this transaction took place,” said Councilman Jim Hall at Tuesday’s work session.

The council voted unanimously to hold a public hearing, which is scheduled for Monday night, and perhaps as a direct result of the attempted $1 sale of the medallion, also voted unanimously to require a minimum of $500 for future transfer fees collected by the city.

In addition, the town will also hold the first right of refusal on any taxi medallion sale, as per another unanimous vote.

In the days that followed, City Council members were unusually mum about the situation, noting they would make their feelings known at the public hearing, but Mayor Rick Meehan noted a certain irony about this particular transaction.

“Christy [Freeman] and Ray [Godman, who own Classic Taxi] were probably the most vocal people who were against the installation of the $1,500 medallion fee,” said Meehan, “so, it doesn’t seem like the best business move to buy one and then turn around and sell it for a dollar.  Obviously, it raises a few red flags.”

Freeman, on the other hand, argues that they did nothing wrong, and said that the transaction of money was done, approved, and notorized at City Hall on March 25, before having that medallion moved up to the Ocean City Police Department for car inspection and eventual attachment of the medallion to Century Taxi owner Ken Hovance’s car.

“Ray, Ken, and myself walked in together to City Hall, I paid the remainder of the $1,500, which was $1,350 because you have to pay for the whole medallion before you sell it, and then when that was taken care of, Ken paid us one dollar for the medallion, because we think the city has gotten more than enough money from the taxi industry throughout this whole process,” Freeman said.

Freeman says that she and Hovance had spoken and arranged prior to the March 1 medallion sale, that if one party had their name called in the auction to purchase the medallion, and if that party couldn’t get the car on the road in time, the other would buy the medallion, pay the remainder of the fee and transfer the medallion for $1.

Freeman says that she won the auction, purchased the medallion at the 10%, or $150 fee at the time of purchase, only to realize that she wouldn’t be able to get the car on the road before the required 30 days expired.

As a result, the three went to City Hall and did the transfer on March 25, in which allegedly Hovance gave Freeman $1,350 outside City Hall for the remainder of the medallion fee, and then got the transfer approved inside.

Freeman contests that both she and Hovance had been “open and honest” concerning the $1,350 and had told several council members during personal conversations, including she says, Jim Hall.

“Everyone knew that it was Ken’s money and we were open about that and the whole thing got approved and now I get told on the city’s intentions to take us to a public hearing, which is ridiculous,” said Freeman. “[Assistant to the City Manager] Kathy Mathias called me and said there would be a certified letter coming to inform us of the hearing, but we still haven’t received that. We paid all the money for that medallion at City Hall in front of numerous people, so why do they care how I got the $1,500, all the ordinance says is I have to pay $1,500, and I did, and then I chose to sell it for $1 to Ken.”

City Solicitor Guy Ayres said that although there is nothing in the ordinance that says that Freeman can’t get the initial $1,500 fee from another party, but the issue in question is the amount for which it was transferred.

“The ordinance doesn’t address if someone’s spouse or parent or investor paid for the medallion up front,” said Ayres. “The issue here is what the medallion was transferred for, and if that number coincides with what they signed on the affidavit.”

Anonymous reports inside City Hall say that the Mayor and City Council are seething about the $1 transaction and some have pointed out that if the two parties are found to be in violation of town ordinance, they could be fined, stripped of their medallions, or even, in an extreme case, debarred from doing business in the town of Ocean City entirely.

The mayor noted that during the medallion ordinance debates, Freeman’s comments and recommendations were not only heard, but also put down in writing in the ordinance.

“She brought a number of things to the table that we listened to, deliberated upon, and eventually put in the ordinance, most notably the payment plans,” said Meehan. “I would just hope that since the city was so fair to the industry, that those in the industry would be fair to us as well. I wouldn’t want to predetermine anything, but to me, it appears that there were two transactions here somewhere down the line, and the council will have to decide if these parties were trying to defraud the city.”

Ayres noted that upon the sale of a medallion, both the seller and the purchaser must sign an affidavit, which states the total sum of the transaction. Ayres hinted that the affidavit would essentially be a key piece of the puzzle if any violation of the town ordinance is determined on Monday night.

According to City Clerk Carol Jacobs, the sum on the affidavit signed by the parties in question was for “$1.”

“I was a bit surprised when I saw the sum of the transaction because the two that sold were for $1,500 and $2,800,” said Jacobs. “I know that the Mayor and City Council when they approved this bill wanted to ensure that the medallions increased in price, so I couldn’t understand why someone would sell it for that little.”

Godman called the sale of his medallion to Hovance “poetic justice” last week, saying “the city had already gotten too much money out of the cab business, and I’d rather take a loss and sell it to someone I trust, than give those greedy bastards at City Hall anymore money.”

Hovance, who had hoped to grow his fleet by at least one car, through the medallion auction process, said last week that he “was just happy to get an additional medallion at all.”

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