How New York’s ‘Taxi King’ Gene Friedman brought down the city’s cab industry

Gene Friedman, 49, went from mingling with Mayor Bill de Blasio and other city elites to facing the full force of the law, following the collapse of the city’s taxi industry

A damning New York Times profile is shedding new light on the spectacular downfall of the businessman who was once known as the Big Apple’s ‘Taxi King’. 

Gene Friedman, 49, went from mingling with Mayor Bill de Blasio and other city elites to facing the full force of the law following the collapse of the city’s taxi industry.  

According to the article, published on Thursday, Friedman was instrumental in artificially inflating the price of medallions – the official permits that allow drivers to operate the city’s famous yellow cabs. 

Friedman, whose father owned a fleet of cabs, had managed to acquire around 100 medallions between 1997 and 2004. 

Medallion prices had been slowly rising since the 1960s, and by the year 2005 an  individual medallion cost around $300,000.  

But in 2006, Friedman helped create a bubble in the market by paying $477,666 for each of each of the 54 medallions that came up for government auction that year.  

Friedman, whose father owned a fleet of cabs, had managed to acquire around 100 medallions between 1997 and 2004 - before artificially inflating the prices in 2006

Friedman, whose father owned a fleet of cabs, had managed to acquire around 100 medallions between 1997 and 2004 – before artificially inflating the prices in 2006 

By 2014, the cost of a medallion had skyrocketed to more than $1.3 million. Drivers, who made around $32,000 a year, signed seven figure loans in order to obtain one

By 2014, the cost of a medallion had skyrocketed to more than $1.3 million. Drivers, who made around $32,000 a year, signed seven figure loans in order to obtain one

By overpaying for the 54 medallions in 2006, Freidman inflated the value of the 100 medallions he already owned, and he used their increased worth to persuade lenders to loan him more money so he could purchase other assets.

Meanwhile, new cab drivers – many of whom were vulnerable immigrants – were forced to take out large loans in order to obtain the medallions to begin work. 

From 2006 on, the medallion price spiked dramatically. By 2010, a medallion was worth around $600,000.

By 2014, the cost had skyrocketed to more than $1.3 million. 

As there were a cap on the number of medallions available, many drivers believed them to be lucrative investment and took out huge loans in order to acquire one . 

In 2014, some drivers were taking out loans in the high six figures, despite the fact that the average New York City cab driver only made around $32,000 a year. 

According to the Times, ‘Freidman’s success emboldened others, and helped encourage lenders to push low-income drivers to take on massive loans to buy medallions’. 

By 2014, ‘the medallion bubble had turned Freidman into a remarkably rich man’, and he boasted more than $525 million in assets. 

Friedman became a Big Apple identity, and hobnobbed with stars and political figures, including Michael Bloomberg. Friedman and Bloomberg are pictured second and third from right

Friedman became a Big Apple identity, and hobnobbed with stars and political figures, including Michael Bloomberg. Friedman and Bloomberg are pictured second and third from right

He had bought a Manhattan townhouse, an estate in the Hamptons, several French villas and drove a $384,000 Ferrari. 

He also hobnobbed with celebrities and politicians, including Mayor Bill de Blasio.

But in 2015, the bubble burst as ridesharing apps like Uber took off in popularity, causing the medallion costs to plummet. 

According to Wikipedia, sixteen medallions were auctioned up in July of this year.   Three sold for less than $140,000, while the other thirteen others had no bidders.

Now, desperate cab drivers find themselves in enormous debt, and in 2018 alone, at least eight drivers committed suicide. 

Meanwhile, Friedman had been busy creating offshore trusts in which to syphon his remaining money, according to The Times.   

The one-time ‘Taxi King’ has also been  accused of failing ‘to fully pay his drivers, employees, clients, partners, lawyers, contractors, landlords, lenders, an accountant and a car dealer as well as child support payments, association dues, insurance premiums and taxes’, the publication reports. 

He was also charged with tax evasion earlier this year. 

As medallion prices have plummeted, desperate cab drivers find themselves in enormous debt. In 2018 alone, at least eight drivers committed suicide

As medallion prices have plummeted, desperate cab drivers find themselves in enormous debt. In 2018 alone, at least eight drivers committed suicide

However, Friedman escaped prison time in that case by agreeing to cooperate against  his one-time business partner Michael Cohen, who worked as Trump’s personal lawyer. 

Friedman also agreed to pay back $5 million in taxes. 

Speaking to The New York Times, he stated: I’m trying to be remorseful and understanding for anybody I might have harmed.

‘I’m very humbled by what has happened.’ 

Friedman escaped prison time in that case by agreeing to cooperate against his one-time business partner Michael Cohen (pictured), who worked as Trump's personal lawyer

Friedman escaped prison time in that case by agreeing to cooperate against his one-time business partner Michael Cohen (pictured), who worked as Trump’s personal lawyer

 

Read more at DailyMail.co.uk