Federal prosecutors target possible NYC taxi loan fraud
NEW YORK (AP) — Federal prosecutors have opened an investigation into possible lending fraud in New York City’s troubled yellow taxi industry.
The New York Times reports the U.S. attorney’s office in Manhattan is investigating the lending practices that led thousands of cab drivers to take out high-risk loans that left them buried in debt.
Drivers who took out large loans to buy the medallions that allow a person to operate a yellow taxi were crushed by debt when the value of a medallion plunged from more than $1 million in 2014 to less than $200,000 today.
More than taxi 950 medallion owners have filed for bankruptcy, and the crisis has been blamed for a string of driver suicides.
The emergence of Uber and other ride-hail services has been a major cause of the medallions’ drop in value. But critics say the credit unions and other lenders that encouraged immigrant drivers with little command of English to take out risky loans are partly to blame for the crisis.
Federal prosecutors have not commented on the investigation, but two drivers told the Times they had been interviewed by federal agents as part of the probe.
“I told them everything,” said driver Mohammed Hoque, an immigrant from Bangladesh who said he drove six days a week, 12 hours a day, but still fell behind on his payments.
Taxi industry leaders including the lenders who provided the loans have denied any wrongdoing and blamed the medallion owners for taking on too much debt.