AG Demands $810M for Inflating NYC Taxi Medallions

MANHATTAN (CN) — New York Attorney General Letitia James accused the New York Taxi and Limousine Commission on Thursday of a 14-year fraud on license medallions that cost hundreds of cabbies some $810 million.

“Government should be a source of justice, not a vehicle for fraudulent practices,” James said in a statement announcing the results of her investigation. “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 TLCs unlawful practices.”

Medallions refer to the numbered metal plate that allows New York City taxi drivers to ply their trade. James accused the city of auctioning off these medallions at inflated prices, forcing the drivers who bought them to clock obscene hours if they wanted to make ends meet.

“What’s worse is that the TLC knew their actions were affecting some of the city’s most financially exposed immigrant families,” the attorney general continued.

New York City Mayor Bill de Blasio’s press secretary Freddi Goldstein defended the city’s record in a statement attacking the attorney general.

“We have spent the last six years putting money back into the pockets of drivers and attempting to curb the harm from Uber years before anyone else wanted to recognize the threat,” Goldstein said. “This crisis has been ours to solve – working tirelessly to clean up the carelessness and greed of others.”

Goldstein added: “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.”

James revealed the results of her investigation in a notice of claim to New York City Comptroller Scott Stringer.

“Beginning no later than 2004, the TLC marketed taxicab licenses to purchasers, prospective purchasers, brokers and financial institutions as investments and conducted auctions of taxicab licenses in a manner that artificially inflated the price of taxicab licenses,” the 2-page letter states, abbreviating the name of the commission.

James asserts that this practice continued until at least 2017, but that the harm New York City has known about for years is ongoing.

“By and through its wrongful conduct, the city knew, no later than 2011, but failed to disclose that the price of taxicab licenses had ‘outstripped’ the ‘underlying value’ of the asset,” a 3-page addendum to the letter states. “The city nonetheless continued to sell taxicab licenses by public auction, to approve the transfer of taxicab licenses in third-party transactions at inflated prices, and to encourage purchasers of taxicab licenses to borrow money to pay for their purchases in furtherance of its scheme to ensure the price of taxicab licenses remained artificially high.”

The sale of the medallions proved lucrative for the city.

“According to the city’s own data, the city received approximately $359 million in revenue in the three auctions held in November 2013, February 2014 and March 2014, and more than $855 million in revenue from auctions and transfer taxes between 2002 and 2014, which were tainted by the city’s false and misleading representations and other wrongful conduct,” according to James’ report.

The attorney general’s senior enforcement counsel Shamise Maswoswe signed the letter to the comptroller, who issued a brief statement vowing to look into the matter.

“The attorney general’s notice of claim makes significant allegations about the Taxi and Limousine Commission’s actions in the medallion crisis that impacted thousands of hardworking New Yorkers,” Stringer wrote.

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