The City of New York faces serious allegations of fraud and collusion with a new lawsuit accusing it of artificially inflating taxi medallion prices to maximize profits. The complaint was filed by Richard Chipman and other plaintiffs in the United States District Court for the Eastern District of New York on August 21, 2024.
The plaintiffs, including various taxi companies and individual owners, accuse the City of New York and its Taxi and Limousine Commission (TLC) of engaging in a scheme to inflate medallion prices through fraudulent means during auctions held between 2013 and 2014. They allege that this misconduct has caused significant financial harm to medallion owners, many of whom are now facing bankruptcy or severe financial distress.
According to the complaint, the fraudulent scheme involved several key components: setting artificially high minimum bid prices for medallions at TLC auctions, allowing collusive bidding among participants to further drive up prices, manipulating average monthly sales data to present inflated values, concealing an internal report warning about the overvaluation of medallions, and launching misleading advertising campaigns touting medallions as solid investments. The plaintiffs argue that these actions were driven by greed and resulted in substantial revenue for the city while leaving medallion owners financially devastated.
One significant piece of evidence cited in the complaint is an internal report by TLC policy analyst Gary Roth from 2010. The "Roth Report" warned that medallion prices had become irrationally high compared to their actual value and predicted a potential market collapse. Despite this warning, the city continued its practices without disclosing these risks to prospective buyers.
Former Councilman Ritchie Torres is quoted in the complaint stating that "the central culprit of the medallion crisis is the Taxi and Limousine Commission," which prioritized revenue generation over regulatory responsibilities. The lawsuit also references findings from New York State Attorney General Letitia James' investigation into similar allegations against the city.
The plaintiffs seek various forms of relief from the court, including compensatory damages for their financial losses, punitive damages to deter future misconduct, and injunctive relief to prevent further fraudulent activities by the defendants.
Representing the plaintiffs is attorney Jon L. Norinsberg, Cohen & Fitch LLP, and Burns Charest LLP. Case ID 1:24-cv-05839.