15 thoughts on “Medallion Financial Officers Charged with Fraud”

  1. Probably worth everyone’s time to read the full SEC court filing. Several implications not only for Seeking Alpha but potentially all of us that post anywhere regarding a stock/preferred. One interesting fact is that SEC had the accused signed “tolling agreements” in 2019, 2020 and 2021 to extend the statute of limitations until this Friday 12/31/21. Clearly the SEC was investing MFIN at a minimum in 2019 and the company knew it, yet here it is two years later and the case just gets filed.

    I have not read any of MFIN’s financial filings, but wonder if they disclosed they were under investigation by the SEC?

    Like Justin mentioned, the SEC does not file criminal charges, so it will be interesting to see if they come. Might show up on “Law and Order” someday since this is a NYC case.

    We do not own MFIN or MBNKP in any account, nor have any open orders. And we have never worked for MFIN as employees and/or contractors.

    Link to SEC court filing that Justin posted:
    https://www.sec.gov/litigation/complaints/2021/comp-pr2021-269.pdf

    1. Yes of course–probably not in this manner though. I suspect they had a secondary coming–or maybe they wanted to firm up the price so they could dump some shares.

      1. Tim – I believe you always had a “D” III rating on this one.
        Thanks and nice call.

  2. I owned MBNKP from its IPO until Jan 2020 (about a month) for about a dollar flip. Glad I didn’t hold on to that one.

  3. The MFIN preferred (MBNKP) is noncumulative as well as perpetual…a bad combination for investors if there are underlying financial problems.

  4. Given what happened to TAXI share price….I guess most people will try to avoid their preferred shares….

  5. Just to remind everyone, the SEC can’t charge people criminally. They sued him in civil court for fraud and to recover money and stop what he was doing.
    Criminal indictments may be just around the corner if they referred this to the FBI to present to a Grand Jury.

    here is the SEC press release. They should have had a link to the complaint filed in court instead of making everyone get it through PACER.
    https://www.sec.gov/news/press-release/2021-269

      1. Oof..hahaha. Yeah, that one.
        https://www.sec.gov/litigation/complaints/2021/comp-pr2021-269.pdf

        One thing that has escaped scrutiny is how Medallions soared in price between 2008 and 2015.
        a chart showing it can be found here:
        https://www.aei.org/carpe-diem/chart-of-the-day-nyc-taxi-medallion-prices/

        See that rapid increase from 2008 and then that spike in 2012?
        Those were not because of the increase in taxi rides in NYC.
        it was due to two changes in loan underwriting practices in 2007 and 2011.
        I don’t remember all the changes, but one change was to classify them as commercial loans and get them out of the most strict rules of the Truth in Lending Act.
        It was a ticking time bomb even without rideshares coming on the scene.

  6. more info
    According to a complaint filed on Wednesday in Manhattan federal court, Medallion and COO Andrew Murstein paid a California media strategist to place positive stories about Medallion on various websites and create fake identities to make the opinion pieces appear credible to investors.

    The SEC said Medallion and Murstein separately and fraudulently inflated the value of the company’s banking unit to offset losses from taxicab loans, and that Murstein fired a valuation firm when it refused to vet the scheme

    1. Wow thank you for posting this addendum… and what a great and poignant reminder to us all to do hard due diligence (although w fraud involved that becomes harder.) I would love to know what sites these fake promotional articles were placed on and the implications for those..I can think of one where many ‘promotional’ articles and suspicious authors turn up all the time.
      Some even have the hubris to reveal their cozy relationships in their articles on the regular. I can think of one prominent REIT author for sure. The only real protection we seem to have is diversification imo. We can also get clues from how competitors perform if things seem out of line. Sad…Bea

  7. Oops
    Zacks Equity Research
    Mon, December 27, 2021, 6:56 AM

    Medallion Financial has risen about 4% over the past month and carries a Zacks Rank #1. Medallion Financial belongs to a top industry rank (in the top 39%) and has a Momentum Score of B.

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