December 19, 2016
I’m asking taxi owner operators to unify behind a Deferment Plan to cease and defer all principal and interest payments to Medallion Financial through at least January 1, 2018 and to then negotiate as a united group with Medallion Financial to restructure or cancel all of your medallion debt.
If you cannot pay your medallion loan and want to avoid losing your medallion or going bankrupt, there is an opportunity to join together to save your medallion and restore your financial health.
Many people not familiar with Boston are reading this letter, so I’m including links in the online version to give them insight into your struggle. I realize a lot of this material is more than you need to know, however I need to include it for other readers.
Just to make it clear, I’m being paid by friends and family members. All of these payments are disclosed to federal and state agencies and are available to interested, qualified parties upon request.
I also want to share with you and other readers that my colleague, Donna Blythe-Shaw will be helping to create success. Donna is the former organizer of the Boston Taxi Drivers Association (BTDA), a United Steelworkers (USW) affiliate. Donna and I have worked on the feasibility of creating a taxi driver coop in Boston.
Jeremiah Montgomery-Thompson, Boston Regional Director for Senator Warren has agreed to support us and help us to achieve victory. Among other successful roles, Jeremiah was the campaign manager for Ayanna Pressley, re-elected in 2015 for her fourth term as an at-large Boston city councilor.
We will work with the City together with very powerful political and media supporters to make sure your medallions are not repossessed by Medallion Financial. There is also no reason the City will take away your medallions while the Deferment Plan unfolds.
There are 32 of you listed below who owe money to Medallion Financial and can join this Deferment Plan. Just so you know, borrower information is available publicly including contact information, outstanding balances and loan status. Public sources include documents filed by Medallion Financial with the Securities and Exchange Commission (SEC) because they are a publicly held company. Information on medallion ownership and transfers is publicly available from the Hackney Carriage Unit of the Boston Police Department, responsible for regulating all Boston taxis.
Together you own 43 medallions and owe $15,621,000 to Medallion Financial. Therefore, your outstanding loan balances average $363,279 per medallion.
During the 19 months between March 10, 2015 and September 30, 2016 there were a total of 35 transfers recorded by Hackney. I would not have received this information from Hackney without the intervention of Daniel Koh, Mayor Walsh’s Chief of Staff forcing them to honor my Freedom of Information requests. Hackney is required to make this information available to the public, however they know I can’t afford to sue them in court if they stonewall.
The overwhelming majority of these 35 transactions were crony transfers. Only 4 transfers appear to be arm’s length with an average value of $154,000. At best, the value of Boston medallions has dropped by a minimum of 78% over the past three years.
At the peak price of $700,000 in Spring 2014 your 43 medallions were worth a total of $30,100,000. Medallion Financial convinced you to take cash out by increasing your loan balances without using underwriting guidelines based on your ability to pay. Just like the real estate market leading up to 2008, trees don’t grow to the sky. Medallion Financial’s management knew appreciation wouldn’t continue forever, but tricked you into thinking you could always make your monthly payments by taking more cash out indefinitely. Just as in the real estate crash, even if Uber never existed, the medallion prices during the spring 2014 bubble were impossible to sustain even applying pre-Uber passenger revenue. Medallion Financial’s management makes their money no matter how much money you lose.
As of September 30, 2016 your medallions are at best worth $154,000 each for a total of $6,622,000. Your combined net worth has dropped by $23,478,000. Yet Medallion Financial management still has you on the hook for $15,621,000. Your loan balances exceed the value of your medallions by $9,000,000, for a 236% loan-to-value ratio (LTV).
In almost all cases you’ve given personal financial guarantees to lenders. Many of you have liquidated your savings accounts, drained your retirement nest eggs and mortgaged your homes at a 100% LTV ratio and beyond to make your payments. In cases where equity is available, lenders are increasingly attaching liens on your properties.
As of February 2016, Boston taxi revenue has plunged 47% from pre-Uber levels. Due to Uber competition, you have no hope of ever paying back these massively underwater loans totaling over $15 million.
For Medallion Financial to continue to demand payment from you and roll you into new three-year term loans based on inflated medallion values and ignoring your ability to pay is predatory lending. Hackney’s approval of sales well above previous arm’s length prices greases the wheels of predatory lending. Most of the 28 transfers over $300,000 since March 2015 involve predatory lending.
Lenders have made so many transfers with inflated prices because this gives them an average price they can use to trap you into taking on a loan to buy a new medallion or refinancing an existing medallion loan as your full principal balloon comes due after your three-year terms end. Using these falsely comparable prices by Medallion Financial is predatory lending, securities fraud and violates banking regulations in New York and Utah.
Medallion Financial (NASDAQ:MFIN) has continued to make money from your payments and by trading their stock on Wall Street. Please understand I can’t promise anything. Hopefully we can claw back some of the money stolen from you by Medallion Financial’s president, Andrew Murstein and the company’s board members.
No matter what, the Deferment Plan will have a whole lot higher probability of success than waiting for Uber’s triumphant power to be blocked by regulators so that your medallions go up in value beyond what you owe Medallion Financial.
Some payback can come from legal settlements and whistleblower awards. However, it will be a lot quicker to claw back money by deploying intense media pressure. Murstein makes over $3,000,000 per year. Forbes Magazine has listed Murstein’s net worth as $650,000,000.
For his son’s bar mitzvah, Murstein used over $200,000 of your money to pay Nicki Minaj to sing seven songs. She made $29,000,000 a year before the Murstein bar mitzvah. Maybe she can contribute to your reparations fund.
Many others have made money from your loan payments over the years. Medallion Financial’s board members include Lowell Weicker, former Republican Governor and United States Senator from Connecticut and Hank Aaron, ranked as the fifth greatest baseball player in history. Former New York Governor Mario Cuomo was also on the board for many years before he died. So his son Andrew Cuomo, the current Governor of New York, owes you money inherited from his father partially obtained by exploiting you.
I realize this is very frightening and discouraging.
The Deferment Plan is the best solution. We can defeat Medallion Financial if we unite.
We will meet together on Tuesday January 10, 2016 at 1:30 pm. Donna says this is the best day of the week and time for you. Donna will be in attendance to talk about the benefit of the Deferment Plan.
Please tell me if you will be able to attend.
In solidarity, Gordon
70 Perry Street #2
Brookline, MA 02446
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