After buying hundreds of medallions from 2002 to 2005, the partners began the price inflation at the fall 2006 auction, The Times found. Mr. Garber and his partners won 20 of the 50 medallions at the auction because they offered to pay about $80,000 per permit, even though the median price on the private market that month was $51,000, records show.
By paying higher prices for a few medallions, they effectively raised the value of the many medallions they had already bought. Then, according to the former employees, they used the increased valuations to convince banks to lend them money.
After the auction, Mr. Garber and his partners expanded the strategy, records show.
In one instance, Mary Frances Wilkens, who bought a medallion at the 2006 auction through a company connected to Mr. Garber’s brother-in-law, sold the asset a few years later to a friend of Mr. Garber for $375,000, even though the median price during that month was $300,000, records show.
In another case, a company whose registered agent was Alexander Igolnikov, a Chicago Carriage co-owner, sold multiple medallions to a business partner for $150,000 each, even though the median price that month was $129,000.
In all, individuals associated with Chicago Carriage and Mr. Garber sold more than 100 medallions to other individuals associated with the company and him between 2006 and 2013, records show. The majority of sales were between one co-owner of the company and another; some sales were among members of Mr. Garber’s family.
There are legitimate reasons for friends and co-workers to sell assets to each other, especially if prices are rising and some want to cash out. But the transactions usually increased medallion values, even though the cabs hardly ever moved from their spots in the fleet.
“They knew there was no more money coming out of it. They just wanted the price to go up,” said Khaled Mahmoud, who managed medallions for several New Yorkers and worked with Chicago Carriage. “They knew exactly what they were doing.”