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Prosecutors Target Possible NYC Taxi Loan Fraud Involving Greek-Americans

Αssociated Press

FILE - In this June 26, 2017 file photo, the medallion of taxi driver and taxi medallion owner Marcelino Hervias is affixed to the hood of his taxicab on New York's Upper West Side. Federal prosecutors have opened an investigation into possible lending fraud in the city's troubled yellow taxi industry. (AP Photo/Richard Drew, File)

NEW YORK (AP) — Federal prosecutors have opened an investigation into possible lending fraud in New York City's troubled yellow taxi industry.

The New York Times reports the U.S. attorney's office in Manhattan is investigating the lending practices that led thousands of cab drivers to take out high-risk loans that left them buried in debt.

Drivers who took out large loans to buy the medallions that allow a person to operate a yellow taxi were crushed by debt when the value of a medallion plunged from more than $1 million in 2014 to less than $200,000 today.

More than taxi 950 medallion owners have filed for bankruptcy, and the crisis has been blamed for a string of driver suicides.

The lenders in the taxi industry included several nonprofit credit unions, including Melrose Credit Union, Progressive Credit Union and Lomto Credit Union; the lending company Medallion Financial; large institutions such as Capital One, Signature Bank and New York Commercial Bank; and several large taxi fleet owners, including Neil Greenbaum, Roman Sapino, Richard Chipman and Greek-Americans Savas Konstantinides, Basil Messados and Tony Georgiton.Mr. Georgiton and the former chief executive of Melrose Credit Union, Alan Kaufman, are facing a separate federal indictment, charged with orchestrating a bribery scheme, the New York Times reported.

Mr. Georgiton and the former chief executive of Melrose Credit Union, Alan Kaufman, are facing a separate federal indictment, charged with orchestrating a bribery scheme.

Αssociated Press

FILE - In this Feb. 27, 2014 file photo, New York City taxis pass through Times Square. Federal prosecutors have opened an investigation into possible lending fraud in the city's troubled yellow taxi industry. (AP Photo/Richard Drew, File)

The emergence of Uber and other ride-hail services has been a major cause of the medallions' drop in value. But critics say the credit unions and other lenders that encouraged immigrant drivers with little command of English to take out risky loans are partly to blame for the crisis.

Federal prosecutors have not commented on the investigation, but two drivers told the Times they had been interviewed by federal agents as part of the probe.

"I told them everything," said driver Mohammed Hoque, an immigrant from Bangladesh who said he drove six days a week, 12 hours a day, but still fell behind on his payments.

Taxi industry leaders including the lenders who provided the loans have denied any wrongdoing and blamed the medallion owners for taking on too much debt.