Security & Fraud

NYC Taxi Commission Accused Of $810 Million Fraud

New York Attorney General Letitia James announced plans to sue New York City for allegedly fraudulent practices by its Taxi and Limousine Commission (TLC), according to reports on Thursday (Feb. 20).

James accused the agency of running a scheme on taxi drivers that created a “trapdoor of despair” and is asking for $810 million.

“Government should be a source of justice, not a vehicle for fraudulent practices,” James said in a statement, announcing a notice of claim for $810 million. She’s alleging the city profited by that same amount selling medallions and by collecting a 5% tax on third-party transfers.

“These taxi medallions were marketed as a pathway to the American Dream, but instead became a trapdoor of despair for medallion owners harmed by the TLC’s unlawful practices,” she added.  

A taxicab medallion is a numbered plate required to operate a yellow cab. James is alleging that the TLC had a hand in inflating the price of thousands of medallions over a 14-year period, 2004 to 2017, sometimes by more than 200 percent.

The TLC had said medallions were investments “with greater returns than the stock market,” a statement from the attorney general’s office alleges. It also set up an artificial floor for bids and permitted taxicab brokers and large owners to “bid up” medallion prices.

The price of an individual taxi medallion sold at an auction skyrocketed 240 percent from 2004 to 2014, from $283,300 to $965,000.

Freddi Goldstein, a spokeswoman for Mayor Bill de Blasio, said his administration didn’t play a role in the medallion crisis.

“This crisis has been ours to solve — working tirelessly to clean up the carelessness and greed of others,” Goldstein said. ”If the attorney general wants to launch a frivolous investigation into the very administration that has done nothing but work to improve the situation, this is what she’ll find.”

Marblegate Asset Management, known for buying up distressed assets, now holds the largest lot of New York’s taxi-medallion loans.

 

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