Brian M. Rosenthal

The battle claimed a casualty late Monday: de Blasio withdrew his nominee for the next leader of the agency overseeing the industry. The move came just days after a contentious Council hearing in which some members accused the nominee, Jeffrey D. Roth, of sidestepping tough questions about the city’s role in the crisis.

A mayoral spokesman described the delay as temporary, saying the administration planned to build support among Council members, who must approve the appointment, before resubmitting the nomination.

But it is extremely rare for a mayor to shelve an appointment, and opponents quickly declared victory.

“The stakes are too high, and the status quo is no longer acceptable,” said Councilman Ritchie Torres, a Democrat from the Bronx who has been critical of the nomination.

The fight marked a sharp escalation in a debate that began after a New York Times series, published in May, detailed the financial devastation among drivers who took on massive debt under exploitative terms to buy taxi medallions, the city permits that allow drivers to own their own yellow cab.

Between 2002 and 2014, The Times reported, a handful of industry leaders artificially inflated medallion prices — driving them up to more than $1 million — and made huge profits by channeling thousands of purchasers into loans they could not afford. Prices then crashed, along with the life savings and futures of thousands of medallion owners.

Industry leaders denied any wrongdoing and blamed problems on the unexpected emergence of ride-hailing apps, such as Uber and Lyft.

The investigation also found that the city officials at the Taxi and Limousine Commission, the agency that oversees the industry, fed the frenzy by selling medallions at auctions and running advertisements saying medallions were “better than the stock market.”

Some City Council members have called on the TLC to acknowledge a role in the crisis and for the city to help bail out drivers. But the mayor does not support a bailout, saying it would be too expensive.

De Blasio’s administration has begun enforcement proceedings against some of the taxi brokers who arranged medallion loans, arrested a debt collector, written new regulations, strengthened oversight of the industry, and waived up to $10 million in fees owed by drivers.

The mayor nominated Roth as Taxi and Limousine Commission chairman last month, citing his experience in the Army National Guard and in government, including two years as deputy commissioner for policy and external affairs at the TLC, after the crash in medallion prices.

“His depth of experience in city government will serve New Yorkers well as we continue to root out practices that prey on medallion owners, and help hardworking drivers feed their families,” the mayor said.

The nomination got off to a good start when the Taxi Workers Alliance, a prominent group representing medallion owners as well as drivers for taxi fleets, issued a statement praising Roth as sharp and engaging.

But at the confirmation hearing last week, problems quickly emerged during questioning about the possibility of a bailout, among other topics.

The council speaker, Corey Johnson, began the questioning by asking Roth to apologize, on behalf of the TLC, to medallion owners for the inflation of medallion values.

Roth turned to medallion owners in the audience and said, “My pledge to you is knowing there is suffering, I will work every single day to work with you, to work with the City Council, to find ways to alleviate suffering wherever possible.”

“But do you think that the TLC leadership should apologize?” Johnson asked.

“Whether or not the TLC leadership should apologize, I don’t know,” Roth said. “I know moving forward, I look forward to working with driver groups to see how we can rectify this.”

“I think the TLC should apologize,” Johnson said.

Later, Johnson asked four times if the TLC had properly regulated the medallion market before Roth conceded it had not. Then, after the nominee sidestepped multiple questions about legislation that the Council had drafted in response to the crisis, the speaker paused, dropped his head in his hands and groaned into his microphone.

“We need more specifics here today,” he said. “We need to be more specific, given the crisis that we’re facing.”

After the hearing, another councilman, Mark Treyger, a Democrat from Brooklyn, said the day had left more questions than answers.

Even Bhairavi Desai, founder of the Taxi Workers Alliance, which had praised Roth, criticized his appearance, saying the mayor should have let him speak more freely.

The Council then scrapped a vote that had been planned for Tuesday, leaving little time before the nomination was going to expire on Friday.

The mayor’s decision means the acting director of the TLC, Bill Heinzen, will remain in place for now. Heinzen also has a rocky relationship with the City Council after a contentious hearing last month.

On Tuesday, the mayor’s office declined to say when it would resubmit Roth’s nomination, and the City Council declined to say whether it would consider the nomination. Still, a spokeswoman for de Blasio expressed confidence in the selection.

“We still believe this is the best man for the job,” said the spokeswoman, Freddi Goldstein. “And I think if we work with the Council a bit longer, then they will see that.”

This article originally appeared in <a href="https://www.nytimes.com/2019/07/23/nyregion/bill-de-blasio-taxi-commissioner.html" id="e6c43b8f-b58f-30ce-ae03-ef1e23839ee3">The New York Times</a>.

New York Needs a New Taxi Chief. A Battle Is Getting in the Way.

NEW YORK — For months, tensions have mounted between Mayor Bill de Blasio and the City Council over how to respond to a crisis in the taxi industry that has bankrupted hundreds of drivers and led thousands more to the brink of ruin.

But behind the scenes, federal prosecutors in Manhattan said, they orchestrated a bribery scheme to enrich themselves at the expense of their clients. On Thursday, authorities arrested both men, accusing Kaufman of accepting bribes in return for lending money to Georgiton under sweetheart terms.

“Lavish vacations, rent-free housing and even naming rights to a ballroom were among the high-ticket items Kaufman received in this alleged scheme,” William F. Sweeney Jr., an assistant director of the FBI, said in a statement. “Today’s charges highlight a series of fraudulent behaviors that raised red flags along the way.”

Kaufman, 60, the former chief executive of Melrose Credit Union, and Georgiton, 61, the president of Queens Medallion Leasing, did not respond to requests for comment; Kaufman’s lawyer also did not respond to a request for comment. Kaufman denied similar charges during an interview last year with The New York Times, saying he was being used as a scapegoat for problems in the taxi industry.

The men were among the politically connected leaders of the taxi industry who were highlighted in a recent Times investigation. The investigation, published in May, found that the leaders made hundreds of millions of dollars by artificially inflating the price of the permit that allows a driver to own a cab — called a taxi medallion. At the same time, they channeled thousands of immigrant buyers into reckless loans to buy the medallions.

The price of a medallion skyrocketed to more than $1 million in 2014, from $200,000 in 2002, before crashing, leaving thousands struggling to pay off their loans, the investigation found. More than 950 medallion owners have filed for bankruptcy.

Industry leaders have long denied any wrongdoing and blamed problems in the taxi industry on the unexpected emergence of ride-hailing apps, such as Uber and Lyft.

In the wake of The Times’ series, New York Attorney General Letitia James opened an inquiry into the lending practices, and Mayor Bill de Blasio launched an investigation of taxi brokers. Last week, the city arrested a notorious industry debt collector and promised more enforcement action.

Thursday’s charges mirrored allegations that had long been known to at least some authorities. Melrose fired Kaufman in 2016, and last August, the National Credit Union Administration, the federal agency that oversees the nation’s credit unions, closed Melrose and brought civil charges against Kaufman, saying that he accepted bribes and demanding that he pay $3.5 million.

Before that, Kaufman was one of the largest players in the taxi industry. His grandfather founded Melrose in 1922, and for decades thereafter, the nonprofit credit union was among the biggest lenders to New York taxi drivers and medallion owners.

At its height, Melrose’s books included more than $1.5 billion in loans collateralized by thousands of medallions — including some owned by Michael Cohen, President Donald Trump’s former personal lawyer. In 2015, when Melrose made $80 million in interest and fees, Kaufman took home $2.3 million, more than virtually any other credit union leader, financial disclosures show.

Georgiton’s fleet, which he co-owns with Basil Messados, a fellow Greek immigrant, is the third-biggest fleet in the city, according to the latest available government records. In addition to operating cabs, the company provides insurance to drivers and loans that allow some drivers to buy their own medallions. In 2015, Georgiton had a net worth of about $26 million, according to records filed as part of a legal case.

The co-owner of the fleet, Messados, did not respond to requests for comment.

Both Kaufman and Georgiton have had wide connections in the world of New York City politics and contributed to campaigns. Georgiton’s Instagram account features photos of him with de Blasio at four events as well as photos of him posing with Hillary Clinton, a former presidential candidate and secretary of state, and the Queens borough president, Melinda Katz, among others. After The New York Times posted an Instagram post from Georgiton showing him and Kaufman flanking de Blasio, the picture was removed late Thursday.

The indictment accused Georgiton of allowing Kaufman to live rent-free at a home in Jericho, on Long Island, between 2010 and 2012. During that time, the charges claimed, Kaufman personally approved the refinancing of more than $60 million of loans for Georgiton’s firm at terms that were so favorable that the head of the credit union’s lending department refused to sign off on them.

According to the indictment, Kaufman also directed Melrose to spend about $2 million to obtain naming rights to a ballroom owned by Georgiton. While Kaufman sought approval from the credit union’s board of directors for that move, he did not disclose that he was living rent-free in a house owned by Georgiton, the indictment said.

Later, prosecutors claim, Kaufman purchased the home from Georgiton, using an unsecured personal loan provided by Georgiton.

The indictment accused Kaufman of accepting free spa treatments, rounds of golf and trips to Paris, Hawaii and the Super Bowl in exchange for leading Melrose to increase its advertising spending with an unidentified media company. The NCUA charges had identified the company as CBS Radio.

Both men were charged with bribery of a financial institution officer, which carries a maximum sentence of 30 years in prison, and conspiracy to commit bribery, which carries a maximum sentence of five years in prison.

This article originally appeared in <a href="https://www.nytimes.com/2019/07/11/nyregion/taxi-bribes-arrests-nyc.html" id="032e35c3-e39c-3fd4-adc8-8288fe942fbf">The New York Times</a>.

Prosecutors Claim Lavish Bribes Oiled Taxi Industry Corruption

NEW YORK — For decades, Alan S. Kaufman and Tony Georgiton held immense power in New York City’s taxi industry. Kaufman led a major credit union that lent money to thousands of drivers. Georgiton co-owned a fleet that operated 550 cabs. Together, they controlled the fortunes of more cabbies than almost anybody else in the business.

Prosecutors claim lavish bribes oiled taxi industry corruption

<h1>NEW YORK — After it emerged that thousands of taxi drivers had been lured into reckless loans that left them with overwhelming debt, city leaders took steps to keep it from happening again. They have begun enforcement proceedings against brokers who arranged the loans, arrested a debt collector, strengthened oversight and written new rules.</h1>

But there is one thing they have not offered: a bailout for the cabbies who are still struggling.

“It’s great to say ‘never again,’ but it’s not enough,” said Mark D. Levine, one of 10 members of the City Council who, along with the city’s comptroller, Scott M. Stringer, have said they support at least a partial bailout of affected drivers. “It’s just incredibly frustrating that all of the response has been about trying to prevent further fraud and abuse going forward without doing anything about the fraud and abuse that has already occurred.”

The tension is expected to increase Monday, when Mayor Bill de Blasio is set to release the results of a 45-day review of the taxi industry he ordered after The New York Times reported on the exploitative loans.

The review — City Hall’s main response to the crisis — calls for more oversight and tighter rules, but it does not raise the idea of a bailout.

The Times’ investigation, which was published in May, found that taxi industry leaders had artificially inflated the price of the permit — called a medallion — that allows drivers to own a cab and made hundreds of millions of dollars by directing drivers into risky loans they could not afford. The price of a medallion soared to more than $1 million in 2014, from $200,000 in 2002, before crashing, leaving thousands with underwater loans, The Times found.

Industry leaders have denied wrongdoing and placed the blame on the city for allowing ride-hailing apps, such as Uber and Lyft, into the market with little regulation.

More than 950 medallion owners have filed for bankruptcy. Thousands more are struggling to survive.

In its review, the city determined that the brokers who usually arranged the medallion sales, as well as the loans, were plagued by conflicts of interest and frequently violated city rules, including by failing to explain loan terms to borrowers, according to a summary obtained by The Times. As a result, the summary says, several brokers could face fines.

The summary recommends that the city require brokers to disclose more information about themselves and their loans; translate documents into 10 languages; publish all future broker violations online; and create a city unit to more closely supervise industry leaders.

But the split over a potential bailout is the biggest dispute among city officials in response to The Times’ investigation.

Asked about a bailout, the mayor’s office noted that the city had agreed to waive $10 million in fees owed by taxi owners and had started to build a driver assistance center to give financial counseling and mental health services to drivers.

A full bailout would cost billions, the office said. City Hall has estimated that it could cost about $13 billion, although some councilmen say it could be done for less money.

The office also referred to the mayor’s comments in a recent radio interview, in which he said that a lot of people in the city are suffering and that not everybody can be bailed out.

On Sunday, de Blasio released a statement saying: “This report shines a light on many of the predatory practices of the broker industry and with this new insight, we’ll be able to do even more to help taxi drivers too long taken advantage of by those they trusted for guidance and help. If you’re a cabdriver in New York City, know we’re in your corner and that this is just a start.”

Corey Johnson, speaker of the council, declined to comment. He has sponsored legislation to prevent future problems but has not publicly said whether he supports a bailout.

In the weeks since the investigation was published, state Attorney General Letitia James has opened an inquiry into the lending practices, and political leaders in Albany and Washington have begun discussions about holding hearings and drafting legislation.

But advocates for cabdrivers said the city has the biggest obligation to respond to the crisis because of its role in causing it.

“Drivers don’t want some city official telling them they’re getting screwed over,” said Bhairavi Desai, the founder of the Taxi Workers Alliance, which represents medallion owners as well as drivers who work for taxi fleets. “They want to know how their poverty is going to end.”

For years, the investigation found, city, state and federal regulators ignored warning signs. The Taxi and Limousine Commission, the city agency that oversees the industry, went even further, choosing to sell medallions and running advertisements claiming that the permits were “better than the stock market” and a path to a “worry-free retirement.”

Some members of the City Council expressed optimism that the mayor and other officials will ultimately support a bailout. “This conversation is really just beginning, and I really hope we’re going to get there,” Councilman Stephen T. Levin said.

But others expressed deep frustration. Several said they were dismayed by City Hall’s estimate for a bailout, which is based on paying $1 million to buy back each of the city’s 13,587 medallions.

Some councilmen, including Ydanis Rodriguez, the transportation committee chairman; Ritchie Torres, the oversight committee head; and Brad Lander, the deputy leader for policy, said a bailout would target only medallions that are owned by individual drivers, not fleets. There are between 4,000 and 6,000 driver-owners, they said.

In addition, the councilmen said, the city would not need to spend $1 million per medallion. (The average borrower owes about $500,000 on a medallion.) Under one proposal, the city would provide about $100,000 per medallion, with the driver keeping a debt of about $200,000 and the lender being pressured to forgive the rest of the loan.

“We don’t have to buy it all back, but we need to do something,” Rodriguez said. “City Hall needs to work with us to figure this out.”

This article originally appeared in <a href="https://www.nytimes.com/2019/07/07/nyregion/nyc-taxi-medallion-bailout.html" link="null" target="_blank">The New York Times</a>.

A Bailout for Taxi Drivers? The Mayor Says No, but Others Keep Pushing

The tension is expected to increase Monday, when Mayor Bill de Blasio is set to release the results of a 45-day review of the taxi industry he ordered after The New York Times reported on the exploitative loans.

A bailout for taxi drivers? The mayor says no, but others keep pushing

<h1>NEW YORK — The New York City Council excoriated the city officials who oversee the taxi industry Monday, blaming them for a financial crisis that has ruined drivers and releasing a document that lawmakers said showed the officials knew for years that a disaster was looming.</h1>

The document, a memo written by a city employee in late 2010 or early 2011, described how the price of the city permit that allows a driver to own their cab — called a medallion — had skyrocketed to unsustainable levels. It also warned that in order to buy the permit, some drivers were taking out loans they could not afford.

A few years after the memo was written, the reckless loans helped cause medallion prices to crash, leaving thousands of immigrant drivers deeply in debt.

The New York Times first revealed the existence of the memo last month in an investigation on the crisis in the industry, but the city had refused to release it, claiming it did not exist.

On Monday, it became a key talking point in an emotional hearing at City Hall. The City Council’s oversight and transportation committees sharply questioned the leaders of the city Taxi and Limousine Commission about the Times’ findings.

Councilman Ritchie Torres, D-Bronx, who leads the oversight committee, said the investigation and newly obtained records showed that city officials turned a blind eye to artificial inflation of medallion prices and predatory lending practices because they were focused on making money by selling overpriced medallions for up to $1 million apiece.

“The collapse of the medallion market, properly understood, should be remembered as one of the greatest government scandals in the history of New York City,” Torres said in his opening statement. “The medallion market collapse is a cautionary tale of what happens when both government and markets are governed not by laws but by greed.”

Taxi industry leaders have denied wrongdoing, saying regulators approved their practices. They have blamed the crisis on unforeseen competition from ride-hailing companies like Uber and Lyft.

The outgoing acting leader of the city taxi commission, Bill Heinzen, apologized to a group of several dozen cabbies who attended the hearing and testified about their financial difficulties. But he insisted the city was not as responsible as the lenders and the banking regulators who supervised them.

“I accept responsibility for what the TLC has done, for what I have done, to make this crisis worse,” Heinzen said. “I have tried to explain today my belief that other people are also responsible.”

Heinzen deflected the council’s questions about the memo, saying that he was not leading the commission when it was written.

The hearing marked the first time that city officials have acknowledged the city’s role in the financial crisis, which has rocked the industry amid a series of suicides by drivers. It also was the first time city lawmakers have asked commission officials about their oversight failures.

The Times investigation found that a handful of taxi industry leaders artificially inflated medallion prices and made hundreds of millions of dollars by channeling immigrant buyers into reckless loans. Prices rose to $1 million in 2014 from $200,000 in 2002, while lenders adopted tactics similar to those in the housing crash, issuing loans with exploitative terms to low-income drivers who could not afford them.

After the bubble burst and medallion prices crashed starting in late 2014, more than 950 medallion owners filed for bankruptcy. Thousands more are struggling to survive.

In the weeks since The Times investigation, the state attorney general has opened an inquiry into the lending practices; the mayor has launched an investigation of the brokers who arranged medallion loans; and the city has agreed to waive up to $10 million in fees owed by taxi drivers and to establish a driver assistance center to help struggling cabbies.

Several members of the City Council also have proposed four pieces of legislation to strengthen regulations and to attempt to stop a medallion bubble from happening again. Monday’s hearing was scheduled in part to discuss those bills, but it quickly turned into a heated interrogation.

Torres set up a projector and posted images of advertisements that the city had produced when it was selling medallions at auctions. In one, the city said medallions were “better than the stock market.” In another, it said medallions were a path to a “worry-free retirement.”

“Was that misleading?” Torres asked.

Heinzen repeatedly declined to answer questions.

“I can’t speak to the past,” he said. He joined the commission in 2015.

Councilman Ydanis Rodriguez, D-Manhattan, who leads the transportation committee, asked about the city’s enforcement actions against unscrupulous brokers, leading Heinzen to acknowledge the city had not revoked the license of any brokers in recent history.

“This is a moral outrage,” said Rodriguez, who pledged to hold many more hearings on the issue. “We need to fix it now.”

The taxi drivers in attendance echoed similar themes in testimonies. Some of the drivers were allowed to testify before the city officials, and they used their time to share horror stories about their loans and struggles.

One driver, Mouhamadou Aliyu, said he emigrated from the Ivory Coast to New York in 1993, started driving a taxi and eventually bought a medallion. Now, he said, he is $700,000 in debt.

Aliyu said he contemplated suicide every day.

“What’s happening in the industry is not American,” he said. “It’s not New York. I can even say it’s not humane. It’s brutal.”

This article originally appeared in <a href="https://www.nytimes.com/2019/06/24/nyregion/taxi-medallion-investigation.html" link="null" target="_blank">The New York Times</a>.

Taxi Officials Are Grilled Over Lending Crisis: 'This Is a Moral Outrage'

A few years after the memo was written, the reckless loans helped cause medallion prices to crash, leaving thousands of immigrant drivers deeply in debt.

Taxi officials are grilled over lending crisis: 'This is a moral outrage'

<h1>NEW YORK — For more than a decade, New York City officials stood by while thousands of cabdrivers became mired in reckless loans that saddled them with debt they could not afford and helped lead to a near-collapse of the industry.</h1>

On Wednesday, Corey Johnson, speaker of the City Council, unveiled a package of bills aimed at preventing that from happening again. The council, responding to an investigation in The New York Times, also plans to hold a hearing later this month to examine the city’s role in the crisis that devastated a generation of cabbies.

“It’s clear that we need to take legislative action to protect medallion owners and drivers from predatory actors, including lenders, medallion brokers and fleet managers,” said Johnson, a Democrat.

At the same time, Mayor Bill de Blasio announced a separate set of initiatives: The city is eliminating as much as $10 million in fees to taxi medallion owners, and drivers will be able to obtain financial counseling from a new “driver assistance center.”

The mayor, a Democrat who is running for president, also said Wednesday that he would extend the city moratorium on approving additional vehicles from ride-hailing services such as Uber and Lyft for another year. The city would also impose limits on how long the for-hire cars can linger in Manhattan without passengers.

Taken together, the efforts represent the city’s first concrete steps to address a lending crisis that has led to financial ruin for drivers. But they did little to rescue the thousands of taxi drivers struggling with deep debt after buying a medallion, the city permit that allows drivers to operate a cab.

“We need to do much more,” said Bhairavi Desai, leader of the Taxi Workers Alliance, which represents individual medallion owners as well as fleet drivers. “There’s a recognition that it will take some time to get there. But that process needs to begin immediately.”

Desai said she appreciated the efforts but urged the city to take more drastic action, such as bailing out drivers already in debt or pressuring banks to soften loan terms.

The announcements came after The Times’ two-part investigation revealed that over more than a decade, taxi industry leaders had created a financial bubble in the medallion market.

In practices similar to those in the housing market bubble, the taxi industry leaders helped to artificially inflate medallion prices to $1 million in 2014 from $200,000 in 2002 and made hundreds of millions of dollars by channeling purchasers into loans that many could not afford under exploitative terms.

The investigation also found government regulators ignored warnings from their own staffers, while the city went even further, selling taxi medallions and running ads promoting them as “better than the stock market.”

When the bubble burst and prices crashed in late 2014, the government largely abandoned cabbies; more than 950 have filed for bankruptcy and thousands more struggle to survive, The Times found.

Desai said her group has resorted to setting up fundraising pages for the public to donate to some of the drivers affected by the crisis.

The city Taxi and Limousine Commission, which regulates yellow cabs, declined to comment on the council’s plan. Agency officials have previously said that they did not have the power to regulate lending practices and that they could not have foreseen that Uber and Lyft would emerge to undercut the industry.

Lenders, which included small, nonprofit credit unions and big banks, denied wrongdoing, saying regulators approved their practices. They also blamed the city for allowing Uber and Lyft to enter the market with little regulation.

A spokeswoman for Uber, Alix Anfang, criticized de Blasio’s proposal to extend the moratorium, which was set to end in August. The TLC will review the cap each year and have the option to adjust it, the mayor said.

“The mayor’s cap will create another medallion system, the same kind that bankrupted drivers and enriched lenders,” Anfang said.

Uber sued the city in February to overturn the cap. The suit is pending.

The day after the investigation appeared in The Times, New York Attorney General Letitia James opened an inquiry into the lending practices, and de Blasio ordered an investigation of medallion brokers. Those reviews are ongoing.

The City Council legislation is being spearheaded by Johnson, the speaker, as well as Councilman Ritchie Torres of the Bronx, who leads the council’s oversight and investigations committee. That committee will hold a joint hearing with the council’s transportation committee June 24, officials said.

“I look forward to questioning the Taxi and Limousine Commission about its role in the crisis,” Torres said. “Not only did it fail to protect medallion owners from predatory forces, it was one of the predatory forces. There’s a sense in which the TLC was a speculator masquerading as a regulator.”

One of the measures before the council requires TLC officials to scrutinize the financial resources of medallion buyers and block sales that involve unaffordable loans. The city would also ban the use of so-called confessions of judgment in medallion loans. Many drivers had signed those documents, in which borrowers admit defaulting on a loan and authorize a bank to do whatever it wants to collect.

The city legislation would also direct the TLC to create an Office of Financial Stability to monitor the health of the industry, collect disclosures from medallion owners and assess the integrity of medallion brokers and fleet owners.

Several members of the council said they supported the legislation but wanted the city to find a way to bail out the owners already in debt. Three councilmen — Mark Levine, Stephen Levin and Brad Lander, all Democrats — said they were researching a bill to do that.

A spokeswoman for the mayor said he was supportive of Torres’ legislation.

The “driver assistance center,” which was first proposed by the council last year but was never created, would connect cabbies with counseling and food stamps and other benefits, according to the people familiar with the plans.

The fee waiver would aid all owners of the city’s 13,500 taxi medallions, including large fleets, which operate about half of cabs. It would exempt them from paying $1,100 renewal fees due this year or next. The council is already pushing to make the waiver permanent.

In Albany, the articles in The Times have also led to renewed interest in three pieces of long-stalled legislation that would address protections for business loans.

One of the bills would improve disclosure rules for those types of loans, while another would outlaw deceptive business practices. A third would ban confessions of judgment.

Proponents are hoping to pass the bills before the legislative session ends next week, although none have yet been passed by either chamber of the Legislature.

“Well, we have to give everything we’ve got for the next two weeks,” said Assemblywoman Yuh-Line Niou of Manhattan, a sponsor of two of the bills.

This article originally appeared in <a href="https://www.nytimes.com/2019/06/12/nyregion/nyc-taxi-medallions.html" target="_blank">The New York Times</a>.

Facing Ruin, Taxi Drivers to Get $10 Million Break and Loan Safeguards

“It’s clear that we need to take legislative action to protect medallion owners and drivers from predatory actors, including lenders, medallion brokers and fleet managers,” said Johnson, a Democrat.

Facing ruin, taxi drivers to get $10 million break and loan safeguards

<h1>NEW YORK — The New York attorney general’s office said Monday that it had opened an inquiry into more than a decade of lending practices that left thousands of immigrant taxi drivers in crushing debt, while Mayor Bill de Blasio ordered a separate investigation into the brokers who helped arrange the loans.</h1>

The efforts marked the government’s first steps toward addressing a crisis that has engulfed the city’s yellow cab industry. They came a day after The New York Times published a two-part investigation revealing that a handful of taxi industry leaders artificially inflated the price of medallions — the coveted permit that allows a driver to own and operate a cab — and made hundreds of millions of dollars by issuing reckless loans to low-income buyers.

The investigation also found that regulators at every level of government ignored warning signs, and the city fed the frenzy by selling medallions and promoting them in ads as being “better than the stock market.”

The price of a medallion rose to more than $1 million before crashing in late 2014, which left borrowers with debt they had little hope of repaying. More than 950 medallion owners have filed for bankruptcy, and thousands more are struggling to stay afloat.

The findings also drew a quick response from other elected officials. The chairman of the Assembly’s banking committee, Kenneth Zebrowski, a Democrat, said his committee would hold a hearing on the issue; the City Council speaker, Corey Johnson, said he was drafting legislation; and several other officials in New York and Albany called for the government to pressure lenders to soften loan terms.

The biggest threat to the industry leaders appeared to be the inquiry by the attorney general, Letitia James, which will aim to determine if the lenders engaged in any illegal activity.

“Our office is beginning an inquiry into the disturbing reports regarding the lending and business practices that may have created the taxi medallion crisis,” an office spokeswoman said in a statement. “These allegations are serious and must be thoroughly scrutinized.”

Gov. Andrew M. Cuomo said through a spokesman that he supported the inquiry. “If any of these businesses or lenders did something wrong, they deserve to be held fully accountable,” the spokesman said in a statement.

Lenders did not respond to requests for comment. Previously, they denied wrongdoing, saying that regulators had approved all of their practices and that some borrowers had made poor decisions and assumed too much debt. Lenders blamed the crisis on the city for allowing ride-hailing companies like Uber and Lyft to enter without regulation, which they said led medallion values to plummet.

De Blasio’s office said the city’s investigation will focus on the brokers who arranged the loans for drivers and sometimes lent money themselves.

“The 45-day review will identify and penalize brokers who have taken advantage of buyers and misled city authorities,” the mayor said in a statement. The review will set down strict new rules that prevent broker practices that hurt hardworking drivers.”

Four of the city’s biggest taxi brokers did not respond to requests for comment.

Bhairavi Desai, founder of the Taxi Workers Alliance, which represents drivers and independent owners, said the city should not get to investigate the business practices because it was complicit in many of them.

The government has already closed or merged all of the nonprofit credit unions that were involved in the industry, saying they participated in “unsafe and unsound banking practices.” At least one credit union leader, Alan Kaufman, the former chief executive of Melrose Credit Union, a major medallion lender, is facing civil charges.

The other lenders in the industry include Medallion Financial, a specialty finance company; some major banks, including Capital One and Signature Bank; and several loosely regulated taxi fleet owners and brokers who entered the lending business.

At City Hall, officials said they were focused on how to help the roughly 4,000 drivers who bought medallions during the bubble, as well as thousands of longtime owners who were encouraged to refinance their loans to take out more money during that period.

One city councilman, Mark Levine, said he was drafting a bill that would allow the city to buy medallion loans from lenders and then forgive much of the debt owed by the borrowers. He said lenders likely would agree because they are eager to exit the business. But he added that his bill would force lenders to sell at discounted prices.

“The city made hundreds of millions by pumping up sales of wildly overpriced medallions — as late as 2014 when it was clear that these assets were poised to decline,” said Levine, a Democrat. “We have an obligation now to find some way to offer relief to the driver-owners whose lives have been ruined.”

Scott M. Stringer, the city comptroller, proposed a similar solution in a letter to the mayor.

He said the city should convene all of the lenders and pressure them to partially forgive loans.

“These lenders too often dealt in bad faith with a group of hardworking, unsuspecting workers who deserved much better and have yet to receive any measure of justice,” said Stringer, who added that the state should close a loophole that allowed the lenders to classify their loans as business deals, which have looser regulations.

Last November, amid a spate of suicides by taxi drivers, including three medallion owners with overwhelming debt, the council created a task force to study the taxi industry. On Monday, a spokesman for Johnson said the members of the task force would be appointed very soon.

In a statement, Johnson harshly criticized the Taxi and Limousine Commission, the agency that sold the medallions at auctions.

“We will explore every tool we have to ensure that moving forward, the TLC protects medallion owners and drivers from predatory actors including lenders, medallion brokers, and fleet managers,” Johnson said in a statement.

Another councilman, Ritchie Torres, who heads the council’s oversight committee, disclosed Monday for the first time that he had been trying to launch his own probe since last year, but had been stymied by the taxi commission. “The TLC hasn’t just been asleep at the wheel, they have been actively stonewalling,” he said.

A TLC spokesman declined to comment.

In the state capital, Albany, several lawmakers also said they were researching potential bills.

One of them, Assemblywoman Yuh-Line Niou of Manhattan, a member of the committee on banks, said she hoped to pass legislation before the end of the year. She said the state agencies involved in the crisis, including the Department of Financial Services, should be examined.

“My world has been shaken right now, to be honest,” Niou said.

This article originally appeared in <a id="e1a76c62-5400-4865-84ae-cbbea52c8283" href="https://www.nytimes.com/2019/05/20/nyregion/nyc-taxi-medallion-loans-attorney-general.html">The New York Times</a>.

New York's Top Lawyer Launches Inquiry Into Reckless Taxi Loans

The investigation also found that regulators at every level of government ignored warning signs, and the city fed the frenzy by selling medallions and promoting them in ads as being “better than the stock market.”

New York's top lawyer launches inquiry into reckless taxi loans

<h1>The call came from a prominent businessman who was selling a medallion, the coveted city permit that allows a driver to own a yellow cab instead of working for someone else. If Hoque gave him $50,000 that day, he promised to arrange a loan for the purchase.</h1>

After years chafing under bosses he hated, Hoque thought his dreams of wealth and independence were coming true. He emptied his bank account, borrowed from friends and hurried to the man’s office in Astoria, Queens. Hoque handed over a check and received a stack of papers. He signed his name and left, eager to tell his wife.

Hoque made about $30,000 that year. He had no idea, he said later, that he had just signed a contract that required him to pay $1.7 million.

Over the past year, a spate of suicides by taxi drivers in New York City has highlighted in brutal terms the overwhelming debt and financial plight of medallion owners. All along, officials have blamed the crisis on competition from ride-hailing companies such as Uber and Lyft.

But a New York Times investigation found much of the devastation can be traced to a handful of powerful industry leaders who steadily and artificially drove up the price of taxi medallions, creating a bubble that eventually burst. Over more than a decade, they channeled thousands of drivers into reckless loans and extracted hundreds of millions of dollars before the market collapsed.

These business practices generated huge profits for bankers, brokers, lawyers, investors, fleet owners and debt collectors. The leaders of nonprofit credit unions became multimillionaires. Medallion brokers grew rich enough to buy yachts and waterfront properties. One of the most successful bankers hired rap star Nicki Minaj to perform at a family party.

But the methods stripped immigrant families of their life savings, crushed drivers under debt they could not repay and engulfed an industry that has long defined New York. More than 950 medallion owners have filed for bankruptcy, according to a Times analysis of court records. Thousands more are barely hanging on.

The practices were strikingly similar to those behind the housing market crash that led to the 2008 global economic meltdown: Banks and loosely regulated private lenders wrote risky loans and encouraged frequent refinancing; drivers took on debt they could not afford, under terms they often did not understand.

Some big banks even entered the taxi industry in the aftermath of the housing crash, seeking a new market, with new borrowers.

The combination of easy money, eager borrowers and the lure of a rare asset helped prices soar far above what medallions were really worth. Some industry leaders fed the frenzy by purposefully overpaying for medallions to inflate prices, The Times found.

From 2002 to 2014, the price of a medallion rose to more than $1 million from $200,000, even though city records showed that driver incomes barely changed.

About 4,000 drivers bought medallions in that period, records show. They were excited to buy, but they were enticed by a dubious premise.

“The whole thing was like a Ponzi scheme because it totally depended on the value going up,” said Haywood Miller, a debt specialist who has consulted for both borrowers and lenders. “The part that wasn’t fair was the guy who’s buying is an immigrant, maybe someone who couldn’t speak English. They were conned.”

As in the housing crash, government officials ignored warning signs and exempted lenders from regulations. The city Taxi and Limousine Commission went the furthest of all, turning into a cheerleader for medallion sales. It was tasked with regulating the industry, but as prices skyrocketed, it sold new medallions and began declaring they were “better than the stock market.”

After the medallion market collapsed, Mayor Bill de Blasio opted not to fund a bailout, and this year, the City Council speaker, Corey Johnson, shut down the committee overseeing the taxi industry, saying it had completed most of its work.

Over 10 months, The Times interviewed 450 people, built a database of every medallion sale since 1995 and reviewed thousands of individual loans and other documents, including internal bank records and confidential profit-sharing agreements.

The investigation found example after example of drivers trapped in exploitative loans, including hundreds who signed interest-only loans that required them to pay exorbitant fees, forfeit their legal rights and give up almost all their monthly income, indefinitely.

A Pakistani immigrant who thought he was just buying a car ended up with a $780,000 medallion loan that left him unable to pay rent. A Bangladeshi immigrant said he was told to lie about his income on his loan application; he eventually lost his medallion. A Haitian immigrant who worked to exhaustion to make his monthly payments discovered he had been paying only interest and went bankrupt.

It is unclear if the practices violated any laws. But after reviewing The Times’ findings, experts said the methods were among the worst that have been used since the housing crash.

“I don’t think I could concoct a more predatory scheme if I tried,” said Roger Bertling, senior instructor at Harvard Law School’s clinic on predatory lending and consumer protection. “This was modern-day indentured servitude.”

Lenders developed their techniques in New York but spread them to Chicago, Boston, San Francisco and elsewhere, transforming taxi industries across the United States.

NEW YORK — The phone call that ruined Mohammed Hoque’s life came in April 2014 as he began another long day driving a New York City taxi, a job he had held since emigrating from Bangladesh nine years earlier.