“On April 30, 2015, John M. Taggart notified the Company of his intention to retire from his positions as Chief Executive Officer and President of Medallion Bank effective May 15, 2015.”
Medallion Bank is a wholly owned subsidiary of Medallion Financial.
After 13 years Taggart gives two weeks notice and he’s outta there today May 15, 2015.
Senior management describes Taggart’s rush out the door as “retiring”.
At 62, it might be credible he would retire early. However long-planned retirement is rarely announced with a two-week notice and without an orderly succession plan.
I believe it’s a best practice for a public company to perform a nationwide executive search to replace the CEO before he retires. Certainly the board has a fiduciary responsibility to stockholders to make a considered choice.
Unable to follow this best practice with only two weeks notice, Donald Poulton was catapulted into the CEO chair. Poulton has served as the Chief Lending Officer of Medallion Bank since August 2002.
Poulton is 61, so I guess he’s ready for retirement next year.
It’s hard to believe that Don was absolutely the best candidate in the country for a public company’s CEO. However Poulton worked for Taggart previously at American Investment Bank, so Taggart’s stewardship style of depositor funds will continue.
John Taggart and Jessica Poulton live at the same address in Taylorsville, Utah. Is Donald Poulton the brother-in-law of John Taggart?
Another reason Poulton might be the best guy in the country to succeed Taggart as CEO!
His departure “announcement” was only made in the legally required 8-K on 5/5/2015. http://biz.yahoo.com/e/150505/taxi8-k.html
Taggart’s departure follows the sudden announcement of the departure on February 19, 2015 of Brian O’Leary, EVP and Chief Operating Officer of Medallion Financial.
O’Leary’s departure was also only briefly described in an 8-K. http://biz.yahoo.com/e/150225/taxi8-k.html
Once again, a non-existent succession plan had O’Leary’s credit responsibilities assumed on an interim basis by Marc Adelson, President of the Company’s Medallion Business Credit division. O’Leary’s operating responsibilities were allocated on an interim basis between Adelson and Andrew Murstein.
On April 1, Adelson succeeded O’Leary as Chief Credit Officer and Chief Operating Officer of the Company. Murstein was able to wriggle out of that interim problem
O’Leary loyally served Murstein for 16 years at TAXI.
What happened to the standard press release in the style below?
“Long time serving [insert name of senior executive] contributed so much [at least insert something] to our success. He’s moving on to pursue [insert anything, credibility not important]”.
I know the gold watch is dead, but how about at least an attaboy press release?
Let’s see how Taggart’s attaboy reads in the coming days.
Until his rapid run out of TAXI today, Taggart was the third ranking executive after Andrew Murstein and his father Alvin.
As of February 13, 2015, Taggart owned 111,724 TAXI shares, worth $1,179,000 on the day of his resignation. Between December 3, 2013, the day of TAXI’s last secondary financing and April 30, 2015, the price dropped 34%.
Taggart’s contribution included helping to achieve the 26% plunge in Total Return over this time. Total Return is your return on investment including price appreciation with reinvested dividends. During that period the Total Return of the S&P 500 was up 19%.
Negative 26% vs. Positive 19%.
After only a two-week notice, today May 15, 2015, John Taggart departs TAXI. He was the Chief Executive Officer and President of Medallion Bank.
Before joining Medallion Financial in 2002, Taggart held positions at:
- American Investment Bank, CFO and EVP
- Copper State Thrift & Loan, CFO
The savings and loan scandal of the 1980s and 1990s was the most extensive financial fraud before the events of 2008 unfolded.
Copper State Thrift was a glistening example.
Copper State’s fraud is described in an article in Deseret News 1/31/1987:
49 Depositors File Suit Against Ex-Owners of Copper State
“…filed a $57 million lawsuit…against former owners and directors of the thrift…
…accused of securities violations, fraud and racketeering are Copper State…. Robert B. Beckstead…Lorin L. Moench…Snell Olsen, Richard Moench, John M. Taggart…
…state regulators have seized the assets…at Copper State…
…the 38-page complaint alleges the defendants made misrepresentations to depositors…
…officers and agents of Copper State ‘engaged in extremely poor and self-serving management and accounting practices’…
…the complaint spelled out a long list of allegedly illegal actions including: lending to uncreditworthy persons and entities, resulting in Copper State having a higher than average of classified loans and leases…
…permitting loans and credit extensions to directors, officers and employees…
…allegations of violating federal and state securities laws…
… depositors claim officers of Copper State [including John Taggart] are guilty of federal Racketeering Influenced and Corrupt Organizations [RICO] provisions…
…under the federal racketeering claims…$2.4 million in damages and under state claims $32.4 million. Treble damages can be rewarded…one securities violation claim asks for punitive damages of $25 million…
…maximum amount of requested damages is $57.4 million…
…Copper State has been singled out of the five failed thrifts as the one in the worst financial condition…
…a recent proposal…offered depositors 28 cents on the dollar because of the thrift’s poor loan portfolio…”
A very detailed 10/26/1992 description of the suit against Taggart and others is
BRADFORD v. MOENCH NO. 87-C-0078-S.
After his executive performance as CFO at Copper State, Taggart became CFO at American Investment Bank, a lender that specialized in making subprime automobile loans. The bank stopped originating new subprime automobile loans in September 2001. Taggart left to join TAXI in 2002. They liquidated their assets and closed in 2005.
A decade before, the bank was lauded for its success including being ranked the 25th most profitable bank in the U.S. in 1993. In an eerie echo of statements consistently made by TAXI in recent years, Taggart said:
“…we are pleased with the recognition for long-term performance . . .. If we stick to what we do best, we are confident the profitable performance will continue…our record earnings have come from an excellent credit performance…”
American Investment Bank operated as “nonbank bank” based in Utah, a state notorious for it’s lax regulation of banks.
A 5/16/2003 article in Salt Lake City’s Daily Herald states:
“…the company stopped originating new subprime automobile loans in September 2001 and stopped writing any new consumer loans in January …American Investment Bank, which reported deposits of $306 million as of March 31, 2003, operates as Utah’s only “nonbank bank.”
A number of such banks were organized in the early 1980s by insurance conglomerates, stock brokerages and other financial companies that ordinarily under federal law would have been forbidden from owning an FDIC-insured commercial bank.
Taking advantage of a loophole in federal law that defined banks as institutions that offer commercial loans and demand deposits, that is, checking accounts, “nonbank bank” proponents successfully argued they should be able to operate a bank-like financial institution provided it only offered one or the other — commercial loans or demand deposits.
Leucadia’s American Investment Bank shied away from commercial lending in favor of offering certificates of deposit and subprime automobile and consumer financing. Subprime loans are made to people with problematic credit histories who cannot qualify for standard, lower interest rate financing.
The company’s subprime portfolio, however, grew problematic in recent years.
American Investment Bank stopped originating such loans in late 2001 after suffering increasing losses and what it described as a “difficult competitive environment”…as of February 2003, it entered into a formal agreement with the Office of the Comptroller of the Currency to develop a written strategic plan for the bank’s continued operations. The plan included agreements to maintain risk-weighted capital levels…”
As noted above, American Investment Banks liquidated their assets and closed in 2005.
Like American Investment Bank, Medallion Bank is a Utah-based non-bank bank. TAXI formed Medallion Bank in May 2002. Taggart was hired and the bank commenced operations in October 2003 with Medallion Financial as the parent company.
For a standard commercial bank, there is a federal act that says the parent company can only be engaged in activities that are closely related to banking.
However Andrew Murstein revealed his strategy:
“We chose Utah because their regulations are the most flexible.”
Taggart’s track record during the period between Copper State and American Investment Bank are not described in his bio online at TAXI. His track record during this period is also unknown to me at this time. If you have any information, please contact me by private message.
Why would Andrew Murstein hire John Taggart, an expert in this specific style of banking?