This archive report was first published on 4 October 2019.
Between 2002 and 2005, a group of New Yorkers, including Mr. Garber, purchased hundreds of Chicago taxi medallions. This set the stage for a price-fixing scheme that would have far-reaching consequences.
According to records, Mr. Garber and his partners began to artificially inflate medallion prices at the fall 2006 auction. They offered to pay approximately $80,000 per permit, despite the median price on the private market being $51,000 that month.
By paying higher prices for a select few medallions, they effectively increased the value of the many medallions they had already acquired. This, in turn, allowed them to convince banks to lend them money based on the inflated valuations.
Records show that Mr. Garber and his partners expanded this strategy after the auction. They engaged in a series of transactions that further inflated medallion prices.
For example, Mary Frances Wilkens sold a medallion she had purchased at the 2006 auction to a friend of Mr. Garber's for $375,000, despite the median price during that month being $300,000. Similarly, a company connected to Alexander Igolnikov, a co-owner of Chicago Carriage, sold multiple medallions to a business partner for $150,000 each, even though the median price that month was $129,000.
Between 2006 and 2013, individuals associated with Chicago Carriage and Mr. Garber sold over 100 medallions to other individuals associated with the company and him. The majority of these sales were between co-owners of the company, while some were among members of Mr. Garber's family.
While there are legitimate reasons for friends and co-workers to sell assets to each other, especially during periods of rising prices, the transactions in this case appear to have been motivated by a desire to artificially inflate medallion values.
As Khaled Mahmoud, a former medallion manager, noted, “They knew there was no more money coming out of it. They just wanted the price to go up.”
