According to the SEC’s complaint, Medallion’s core business was making loans backed by taxicab medallions to taxicab owners and operators. However, the popularity of ride-sharing companies like Uber and Lyft led to a decline in the value of taxicab medallions and of Medallion’s stock price. Murstein and Medallion allegedly directed two separate schemes to inflate the company’s stock price, in part with the help of California-based media strategy company, Ichabod’s Cranium, Inc., and its owner, Lawrence Meyers, both of whom were also charged by the SEC with fraud.
The complaint, filed in federal district court in Manhattan, alleges that Murstein and Medallion engaged in illegal touting by paying Ichabod’s Cranium and others to place positive stories about the company on various websites, including Huffington Post, Seeking Alpha, and TheStreet.com. With Murstein’s knowledge, Meyers and others created fake identities so their opinion pieces would appear credible to potential investors. The complaint further alleges that Medallion and Murstein fraudulently increased the carrying value of Medallion Bank (the Bank), a wholly owned subsidiary of Medallion, to offset losses relating to the taxicab medallion loans. The complaint alleges that when the existing valuation firm refused to cave to Murstein’s pressure to increase the Bank’s valuation, Murstein fired the firm and hired a new firm to provide an inflated valuation of the Bank.
‘Enforcement 40’ for 2020
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