When FBI agents raided the home and office of President Donald Trump’s personal lawyer Michael Cohen on Monday, they were after documents related to the hush agreement Cohen cut with porn star Stormy Daniels 11 days before the 2016 presidential election.
But, they were also in search of documents tied to Cohen’s ownership of New York City taxi medallions, according to CNN’s Pamela Brown and Gloria Borger. Cohen has held numerous New York City medallions in his portfolio, according to records.
Which is totally fascinating. And totally New York City.
If you don’t live in the Big Apple, you almost certainly have no idea a) what a taxi medallion is b) why they are valuable and c) why Cohen owned several of them. (SPOILER ALERT: The answers to questions “b” and “c” are related.)
Let’s start from the beginning.
Way back when – think 1937 – New York City officials made the decision that in order to operate a taxicab in the city, you needed to own (or lease) a taxi medallion. And they set a ceiling on the number of total medallions. (That cap is now north of 13,000.)
Writes Katie Challans on Taxi Intelligence (yes, of course there is a site dedicated to taxi news):
“The medallion program, dating back to the 1930s, arose thanks to an enormous number of taxi cabs flooding the streets, inducing congestion, intense fare competition, and reckless driving. Limiting the number of cabs on the street, of course, meant that the market was supplying fewer taxis than it would have absent the action by the city.”
Limiting the number of medallions made each one extremely valuable – particularly as the number of people in New York City grew and the vast majority of them didn’t drive. The only way to get a medallion was to buy one from someone who had one or to purchase a new one whenever the New York City Taxi & Limousine Commission decided to auction them off.
The value of medallions – driven by their scarcity – went through the roof. In 1937, the medallions were sold for $10 (or roughly $160 in today’s dollars). By June 2013, when medallion prices peaked, each one was estimated to be worth $1.05 million. (Two medallions were sold for $1 million each in 2011.) According to New York Times’ Upshot, the value of the medallions quadrupled in the decade leading up to 2013.
The cost was so exorbitant that many people leased a portion of a cab/medallion, sharing it with several other people and driving 24 hours a day to recoup their investment. (If you’ve seen HBO’s “The Night Of,” you know what I’m talking about.)
Then Uber and Lyft happened. Those ride-transport services flooded the New York city streets with supply, making the demand for cabs – and medallions – far less urgent.
In a September 2017 New York Times piece headlined “Taxi Medallions, Once a Safe Investment, Now Drag Owners Into Debt,” Winnie Hu wrote:
“Taxi ownership once seemed a guaranteed route to financial security, something that was more tangible and reliable than the stock market since people hailed cabs in good times and bad. Generations of new immigrants toiled away for years to earn enough to buy a coveted medallion. Those who had them took pride in them, and viewed them as their retirement fund.
Uber and other ride-hail apps have upended all that.
Just as homeowners faced ruin when housing markets sank, struggling cab owners in Chicago, Boston, San Francisco and other cities are now facing foreclosure and bankruptcy. … Nowhere is the crisis more dire than in New York, which has the largest taxi fleet in the country. Medallions now sell for a fraction of the record $1.3 million price in 2014, and in many cases, are worth far less than what their owners borrowed to buy them.”
Early this year, two medallions sold for less than $200,000 each.
It’s not clear what, specifically, the FBI was interested in as it relates to Cohen’s medallions. Last year, Cohen reportedly owed more than $40,000 in back taxes related to the medallions. (The man charged with managing Cohen’s medallions – “Taxi King” Gene Friedman – was arrested in June 2017 for allegedly defrauding the state on taxi fees. Friedman’s arrest was cited by Cohen as the reason for the unpaid taxes.)
But, for a very New York president in Donald Trump, the fact that taxi medallions are playing a role in the raid of his personal attorney/fixer is remarkably poetic. It’s as New York as getting a slice at Famous Famiglia!