Manhattan federal prosecutors are probing possible lending fraud in the New York City taxi industry, according to a report.
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The Southern District of New York has been investigating possible crimes, such as bank, mail and wire fraud, over the past month in the wake of a string of suicides involving cabbies who were bogged down by heavy debt related to the ever-increasing cost of taxi medallions, The New York Times reported, citing sources with knowledge of the inquiry.
A U.S. Attorney's Office representative declined to comment to the Times.
The cost of a taxi medallion rose from $200,000 in 2002 to $1 million in 2014, the report states, while industry heads or medallion brokers used questionable lending tactics or provided their clients “insufficient or unclear information,” according to an Executive Summary released this summer by the City of New York pursuant to a 45-day review into the industry’s methods.
As much as 95 percent of the city’s taxi drivers are immigrants, the summary states, many of whom speak English as a second language.
“For current drivers, the largest single issue they face is an unaffordable level of debt. The average median debt owed by surveyed drivers is approximately $500,000,” according to the city record. “[Fifty-one percent] of surveyed drivers stated they struggle to pay their monthly bills and 26% stated they are considering bankruptcy.”
In fact, over 900 livery cab drivers have declared bankruptcy, the Times reported.
The Times interviewed an immigrant from Bangladesh who bought his taxi medallion in 2014 and signed a loan that required him to pay $1.7 million, even though his annual income was only about $30,000. He told the Times that he did not understand the terms of his loan, according to the report.
New York Attorney General Letitia James announced in May she would be conducting her own review of the matter.