State Attorney General Letitia James plans to sue New York City if it does not fork over $810 million for taxi drivers burdened by debts from medallions purchased at inflated costs at city-sponsored auctions, she said Thursday.
James’ intent to sue — announced in a letter to city Comptroller Scott Stringer — comes after an investigation by her office accused the city of willfully marketing artificially-inflated medallions to immigrant drivers and others as a path to financial success.
“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 [Taxi and Limousine Commission’s] unlawful practices,” James said in a statement.
“The very government that was supposed to ensure fair practices in the marketplace engaged in a scheme that defrauded hundreds of medallion owners, leaving many with no choice but to work day and night to pay off their overpriced medallions.”
All told, the city made “over $855 million” off medallion auctions between 2002 and 2014, the attorney general’s investigation concluded, including $359 million from just three auctions held when prices were highest in 2013 and 2014.
According to James, drivers were drawn to purchase medallions in part because the city overstated their costs.
City officials knew as early as 2011 that medallion market prices exceeded their actual value, her investigation found.
If the city doesn’t agree to pay the money within 30 days, James plans to sue, her office said.
“This is the potentially the first substantial financial restitution owed to owner-drivers devastated by the city’s recklessness throughout the Bloomberg tenure,” said New York Taxi Workers Alliance Executive Director Bhairavi Desai. “It is long overdue and we hope just the beginning as we continue our fight for debt forgiveness and lesser monthly mortgages.
City Hall spokeswoman Freddi Goldstein claimed Mayor Bill de Blasio inherited the crisis from his predecessor, presidential candidate Mike Bloomberg, and called James’ lawsuit threat “frivolous.”
“This crisis has been ours to solve — working tirelessly to clean up the carelessness and greed of others,” Goldstein said. “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.”