New York has to pay $ 810 million to its indebted taxi drivers, the Attorney General said on Thursday, accusing the city of fraudulently increasing the value of the permits required to drive its famous yellow taxis.
Letitia James, New York state attorney general, said an investigation by her office found that the auction price of thousands of permits, called medallions, had been artificially increased by hundreds of millions of dollars between 2004 and 2017.
The attorney general said that the taxi and limousine commission knew in 2011 that the price of medallions had exceeded actual value.
However, the government agency has "published false and misleading medallion prices in several cases," said James & Bureau, causing the price of a single medallion to rise from $ 283,300 in 2004 to $ 965,000 in 2014 at an auction ,
The city allowed brokers and top players to negotiate prices, the prosecutor said when the TLC encouraged drivers to use the medallions as collateral for loans.
The prosecutor said the medallion prices were fraudulently set so high that drivers could not pay them out of the income from the city's regulated taxi company.
"These taxi medallions were marketed as a path to the American dream, but became a trap door of despair for medallion owners who were harmed by the TLC's illegal practices," James said in a statement.
"The government, which was supposed to ensure fair practices in the market, participated in a program that defrauded hundreds of medallion owners and left many with no choice but to work day and night to pay out their overpriced medallions."
The New York taxi industry was stirred up by the arrival of platforms like Uber and Lyft.
According to a New York Times investigation into court records released last year, more than 950 licensed taxi drivers have filed for bankruptcy since 2016.
There has also been a flood of suicide by taxi drivers suffering from debt in recent years.
The $ 810 million sum, according to the attorney general, corresponds to the city's revenue from medallion sales and resale taxes, and must be paid within 30 days, or James' office intends to sue.
The New York City Hall contacted by AFP did not respond immediately.
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