Medallion Financial’s Inflated “Fair Value” Of Boston Medallions Drives Predatory Lending And Securities Fraud

10 of the 60 Medallion Financial (NASDAQ:MFIN) loans outstanding on September 30, 2016 are collateralized by only one medallion each and are considered non-income producing being on nonaccrual status, or past due on contractual payments. It can therefore be seen that MFIN is assuming a vastly inflated fair value of $360,000 per medallion to value their Boston portfolio.

They use this inflated value to exaggerate the health of their Boston medallion loan portfolio in their SEC filings. Other lenders follow suit.

Inflated publicly assumed values allow MFIN and other lenders to make predatory new and refinanced loans for amounts double arm’s length values.

Between March 10, 2015 and September 6, 2016, after deducting two stock transfers, out of a total of 33 transfers, 24 were valued at $330,000 or above.

An unnamed Hackney official supported this fiction of an arm’s length price in the mid-$300,000 range in an article in the Boston Globe on May 24, 2016.

First Name Last Name Medallion Number Principal Outstanding 9/30/2016 Fair Value Assumed 9/30/2016
SERGE VILDROVIN 993 $500,000 $361,000
CHANDO SOUFFRANT 292 $486,000 $359,000
JEAN ARIGUE CINEUS 1386 $486,000 $360,000
SIVENY AUGUSTIN 1716 $486,000 $361,000
CHANDO SOUFFRANT 1592 $485,000 $360,000
PIERRE LEROY 1453 $483,000 $360,000
PIERRE LEROY 1748 $468,000 $360,000
SIVENY AUGUSTIN 988 $467,000 $359,000
CHANDO SOUFFRANT 1653 $463,000 $359,000
ANTOINE BELLAMY 1393 $397,000 $360,000
TOTAL $4,721,000 $3,599,000

 

Assumed fair value per medallion on 9/30/2016 $360,000
Principal outstanding on 9/30/2016 $4,721,000
Total assumed fair value on 9/30/2016 $3,600,000
Claimed Loan To Value Ratio (LTV) 131%

 

Actual arm’s length value per medallion on 9/30/2016 $154,000
Principal outstanding on 9/30/2016 $4,721,000
Total arm’s length value on 9/30/2016 $1,540,000
Actual Loan To Value Ratio (LTV) 307%
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