The advantages and efficiency brought by the taxi industry are unfathomable – it mobilizes the entire region that it serves, and helps too many families to make ends meet and put food on the table. For many cab drivers, this is their entire life. But for ‘Taxi King’ Gene Friedman, this is all just one big game of monopoly.
The 49-year-old Russian-American businessman once ran more than 1,000 cabs in New York and elsewhere, owning hundreds of medallions and even managing medallions for others. This earned him the nickname New York’s ‘Taxi King’.
Indeed, Gene’s influence on the taxi industry is unlike any other. He single-handedly reshaped the taxi medallion market by artificially inflating the prices of medallions – the official permits that allow drivers to operate the city’s famous yellow cabs.
During a 2006 auction, Gene and his fellow investors allegedly won 54 by bidding $477,66.50 apiece. This is over $100,000 from the original price of $350,000 each.
For the following years, Gene repeated the strategy for three more auctions. By intentionally overpaying for the 54 medallions in 2006, Freidman inflated the value of the 100 medallions he already owned. Consequently, this helped him amass a fortune once valued at $525 million and used the increased worth to persuade lenders to loan him more money so he could purchase other assets.
Meanwhile, aspiring taxi drivers – many of whom were vulnerable immigrants – were forced to take out large loans to obtain the medallion and start working. Some of them even whipped out a six-figure loan, despite earning around $32,000 a year. However, with the astounding market value and the direction it is heading, surely a few thousand-dollar loan would be worth the risk for a lucrative investment, right?
Well, at that time, it seemed correct to assume that. 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 each piece.
But eventually, this unfair play took a toll on the industry. Ride-hailing apps such as Uber and Lyft quickly rose to fame, posing a significant threat to the taxi market.
Sure enough, his medallion bubble burst, the market collapsed. The results were devastating – Friedman’s wealth was completely wiped out, desperate cab drivers find themselves in enormous debt, and in 2018 alone, at least eight drivers committed suicide.
Eventually, Friedman tangled himself with several conflicts with the law. This includes taxi evasion, child support issues, association dues, and insurance premiums and taxes.
However, Gene is far from over. In order to escape jail time, he did what he does best: cheating.
Friedman agreed to cooperate against his one-time business partner Michael Cohen, who worked as Trump’s personal lawyer. In return? Freedom from imprisonment.
Moreover, he also paid $1 million in restitution and $5 million in taxes to avoid jail.
“I’m trying to be remorseful and understanding for anybody I might have harmed,” Friedman said. “I’m very humbled by what has happened.”
Well, after ruining thousands of cab drivers’ lives and putting an industry to dirt, you’re gonna have to do more than that, pal.