industryterm:banking

  • Inquiries Into Reckless Loans to Taxi Drivers Ordered by State Attorney General and Mayor - The New York Times
    https://www.nytimes.com/2019/05/20/nyregion/nyc-taxi-medallion-loans-attorney-general.html

    May 20, 2019 - The investigations come after The New York Times found that thousands of drivers were crushed under debt they could not repay.

    The New York attorney general’s office said Monday it had opened an inquiry into more than a decade of lending practices that left thousands of immigrant taxi drivers in crushing debt, while Mayor Bill de Blasio ordered a separate investigation into the brokers who helped arrange the loans.

    The efforts marked the government’s first steps toward addressing a crisis that has engulfed the city’s yellow cab industry. They came a day after The New York Times published a two-part investigation revealing that a handful of taxi industry leaders artificially inflated the price of a medallion — the coveted permit that allows a driver to own and operate a cab — and made hundreds of millions of dollars by issuing reckless loans to low-income buyers.

    The investigation also found that regulators at every level of government ignored warning signs, and the city fed the frenzy by selling medallions and promoting them in ads as being “better than the stock market.”

    The price of a medallion rose to more than $1 million before crashing in late 2014, which left borrowers with debt they had little hope of repaying. More than 950 medallion owners have filed for bankruptcy, and thousands more are struggling to stay afloat.

    The findings also drew a quick response from other elected officials. The chairman of the Assembly’s banking committee, Kenneth Zebrowski, a Democrat, said his committee would hold a hearing on the issue; the City Council speaker, Corey Johnson, said he was drafting legislation; and several other officials in New York and Albany called for the government to pressure lenders to soften loan terms.

    The biggest threat to the industry leaders appeared to be the inquiry by the attorney general, Letitia James, which will aim to determine if the lenders engaged in any illegal activity.

    “Our office is beginning an inquiry into the disturbing reports regarding the lending and business practices that may have created the taxi medallion crisis,” an office spokeswoman said in a statement. “These allegations are serious and must be thoroughly scrutinized.”

    Gov. Andrew M. Cuomo said through a spokesman that he supported the inquiry. “If any of these businesses or lenders did something wrong, they deserve to be held fully accountable,” the spokesman said in a statement.

    Lenders did not respond to requests for comment. Previously, they denied wrongdoing, saying regulators had approved all of their practices and some borrowers had made poor decisions and assumed too much debt. Lenders blamed the crisis on the city for allowing ride-hailing companies like Uber and Lyft to enter without regulation, which they said led medallion values to plummet.

    Mr. de Blasio said the city’s investigation will focus on the brokers who arranged the loans for drivers and sometimes lent money themselves.

    “The 45-day review will identify and penalize brokers who have taken advantage of buyers and misled city authorities,” the mayor said in a statement. “The review will set down strict new rules that prevent broker practices that hurt hard-working drivers.”

    Four of the city’s biggest taxi brokers did not respond to requests for comment.

    Bhairavi Desai, founder of the Taxi Workers Alliance, which represents drivers and independent owners, said the city should not get to investigate the business practices because it was complicit in many of them.

    The government has already closed or merged all of the nonprofit credit unions that were involved in the industry, saying they participated in “unsafe and unsound banking practices.” At least one credit union leader, Alan Kaufman, the former chief executive of Melrose Credit Union, a major medallion lender, is facing civil charges.

    The other lenders in the industry include Medallion Financial, a specialty finance company; some major banks, including Capital One and Signature Bank; and several loosely regulated taxi fleet owners and brokers who entered the lending business.

    At City Hall, officials said Monday they were focused on how to help the roughly 4,000 drivers who bought medallions during the bubble, as well as thousands of longtime owners who were encouraged to refinance their loans to take out more money during that period.

    One city councilman, Mark Levine, said he was drafting a bill that would allow the city to buy medallion loans from lenders and then forgive much of the debt owed by the borrowers. He said lenders likely would agree because they are eager to exit the business. But he added that his bill would force lenders to sell at discounted prices.

    “The city made hundreds of millions by pumping up sales of wildly overpriced medallions — as late as 2014 when it was clear that these assets were poised to decline,” said Mr. Levine, a Democrat. “We have an obligation now to find some way to offer relief to the driver-owners whose lives have been ruined.”

    Scott M. Stringer, the city comptroller, proposed a similar solution in a letter to the mayor. He said the city should convene the lenders and pressure them to partially forgive loans.

    “These lenders too often dealt in bad faith with a group of hard-working, unsuspecting workers who deserved much better and have yet to receive any measure of justice,” wrote Mr. Stringer, who added that the state should close a loophole that allowed the lenders to classify their loans as business deals, which have looser regulations.

    Last November, amid a spate of suicides by taxi drivers, including three medallion owners with overwhelming debt, the Council created a task force to study the taxi industry.

    On Monday, a spokesman for the speaker, Mr. Johnson, said that members of the task force would be appointed very soon. He also criticized the Taxi and Limousine Commission, the city agency that sold the medallions.

    “We will explore every tool we have to ensure that moving forward, the T.L.C. protects medallion owners and drivers from predatory actors including lenders, medallion brokers, and fleet managers,” Mr. Johnson said in a statement.

    Another councilman, Ritchie Torres, who heads the Council’s oversight committee, disclosed Monday for the first time that he had been trying to launch his own probe since last year, but had been stymied by the taxi commission. “The T.L.C. hasn’t just been asleep at the wheel, they have been actively stonewalling,” he said.

    A T.L.C. spokesman declined to comment.

    In Albany, several lawmakers also said they were researching potential bills.

    One of them, Assemblywoman Yuh-Line Niou of Manhattan, a member of the committee on banks, said she hoped to pass legislation before the end of the year. She said the state agencies involved in the crisis, including the Department of Financial Services, should be examined.

    “My world has been shaken right now, to be honest,” Ms. Niou said.

    Brian M. Rosenthal is an investigative reporter on the Metro Desk. Previously, he covered state government for the Houston Chronicle and for The Seattle Times. @brianmrosenthal

    #USA #New_York #Taxi #Betrug #Ausbeutung

  • As Thousands of Taxi Drivers Were Trapped in Loans, Top Officials Counted the Money - The New York Times
    https://www.nytimes.com/2019/05/19/nyregion/taxi-medallions.html

    [Read Part 1 of The Times’s investigation: How Reckless Loans Devastated a Generation of Taxi Drivers]

    At a cramped desk on the 22nd floor of a downtown Manhattan office building, Gary Roth spotted a looming disaster.

    An urban planner with two master’s degrees, Mr. Roth had a new job in 2010 analyzing taxi policy for the New York City government. But almost immediately, he noticed something disturbing: The price of a taxi medallion — the permit that lets a driver own a cab — had soared to nearly $700,000 from $200,000. In order to buy medallions, drivers were taking out loans they could not afford.

    Mr. Roth compiled his concerns in a report, and he and several colleagues warned that if the city did not take action, the loans would become unsustainable and the market could collapse.

    They were not the only ones worried about taxi medallions. In Albany, state inspectors gave a presentation to top officials showing that medallion owners were not making enough money to support their loans. And in Washington, D.C., federal examiners repeatedly noted that banks were increasing profits by steering cabbies into risky loans.

    They were all ignored.

    Medallion prices rose above $1 million before crashing in late 2014, wiping out the futures of thousands of immigrant drivers and creating a crisis that has continued to ravage the industry today. Despite years of warning signs, at least seven government agencies did little to stop the collapse, The New York Times found.

    Instead, eager to profit off medallions or blinded by the taxi industry’s political connections, the agencies that were supposed to police the industry helped a small group of bankers and brokers to reshape it into their own moneymaking machine, according to internal records and interviews with more than 50 former government employees.

    For more than a decade, the agencies reduced oversight of the taxi trade, exempted it from regulations, subsidized its operations and promoted its practices, records and interviews showed.

    Their actions turned one of the best-known symbols of New York — its signature yellow cabs — into a financial trap for thousands of immigrant drivers. More than 950 have filed for bankruptcy, according to a Times analysis of court records, and many more struggle to stay afloat.

    Remember the ‘10,000 Hours’ Rule for Success? Forget About It
    “Nobody wanted to upset the industry,” said David Klahr, who from 2007 to 2016 held several management posts at the Taxi and Limousine Commission, the city agency that oversees cabs. “Nobody wanted to kill the golden goose.”

    New York City in particular failed the taxi industry, The Times found. Two former mayors, Rudolph W. Giuliani and Michael R. Bloomberg, placed political allies inside the Taxi and Limousine Commission and directed it to sell medallions to help them balance budgets and fund priorities. Mayor Bill de Blasio continued the policies.

    Under Mr. Bloomberg and Mr. de Blasio, the city made more than $855 million by selling taxi medallions and collecting taxes on private sales, according to the city.

    But during that period, much like in the mortgage lending crisis, a group of industry leaders enriched themselves by artificially inflating medallion prices. They encouraged medallion buyers to borrow as much as possible and ensnared them in interest-only loans and other one-sided deals that often required them to pay hefty fees, forfeit their legal rights and give up most of their monthly incomes.

    When the medallion market collapsed, the government largely abandoned the drivers who bore the brunt of the crisis. Officials did not bail out borrowers or persuade banks to soften loan terms.

    “They sell us medallions, and they knew it wasn’t worth price. They knew,” said Wael Ghobrayal, 42, an Egyptian immigrant who bought a medallion at a city auction for $890,000 and now cannot make his loan payments and support his three children.

    “They lost nothing. I lost everything,” he said.

    The Times conducted hundreds of interviews, reviewed thousands of records and built several databases to unravel the story of the downfall of the taxi industry in New York and across the United States. The investigation unearthed a collapse that was years in the making, aided almost as much by regulators as by taxi tycoons.

    Publicly, government officials have blamed the crisis on competition from ride-hailing firms such as Uber and Lyft.

    In interviews with The Times, they blamed each other.

    The officials who ran the city Taxi and Limousine Commission in the run-up to the crash said it was the job of bank examiners, not the commission, to control lending practices.

    The New York Department of Financial Services said that while it supervised some of the banks involved in the taxi industry, it deferred to federal inspectors in many cases.

    The federal agency that oversaw many of the largest lenders in the industry, the National Credit Union Administration, said those lenders were meeting the needs of borrowers.

    The N.C.U.A. released a March 2019 internal audit that scolded its regulators for not aggressively enforcing rules in medallion lending. But even that audit partially absolved the government. The lenders, it said, all had boards of directors that were supposed to prevent reckless practices.

    And several officials criticized Congress, which two decades ago excepted credit unions in the taxi industry from some rules that applied to other credit unions. After that, the officials said, government agencies had to treat those lenders differently.

    Ultimately, former employees said, the regulatory system was set up to ensure that lenders were financially stable, and medallions were sold. But almost nothing protected the drivers.

    Matthew W. Daus, far right, at a hearing of the New York City Taxi and Limousine Commission in 2004. CreditMarilynn K. Yee/The New York Times
    Matthew W. Daus was an unconventional choice to regulate New York’s taxi industry. He was a lawyer from Brooklyn and a leader of a political club that backed Mr. Giuliani for mayor.

    The Giuliani administration hired him as a lawyer for the Taxi and Limousine Commission before appointing him chairman in 2001, a leadership post he kept after Mr. Bloomberg became mayor in 2002.

    The commission oversaw the drivers and fleets that owned the medallions for the city’s 12,000 cabs. It licensed all participants and decided what cabs could charge, where they could go and which type of vehicle they could use.

    And under Mr. Bloomberg, it also began selling 1,000 new medallions.

    At the time, the mayor said the growing city needed more yellow cabs. But he also was eager for revenue. He had a $3.8 billion hole in his budget.

    The sales put the taxi commission in an unusual position.

    It had a long history of being entangled with the industry. Its first chairman, appointed in 1971, was convicted of a bribery scheme involving an industry lobbyist. Four other leaders since then had worked in the business.

    It often sent staffers to conferences where companies involved in the taxi business paid for liquor, meals and tickets to shows, and at least one past member of its board had run for office in a campaign financed by the industry.

    Still, the agency had never been asked to generate so much money from the business it was supposed to be regulating.

    Former staffers said officials chose to sell medallions with the method they thought would bring in the most revenue: a series of limited auctions that required participants to submit sealed bids above ever-increasing minimums.

    Ahead of the sales, the city placed ads on television and radio, and in newspapers and newsletters, and held seminars promoting the “once-in-a-lifetime opportunity.”

    “Medallions have a long history as a solid investment with steady growth,” Mr. Daus wrote in one newsletter. In addition to guaranteed employment, he wrote, “a medallion is collateral that can assist in home financing, college tuition or even ‘worry-free’ retirement.”

    At the first auctions under Mr. Bloomberg in 2004, bids topped $300,000, surprising experts.

    Some former staffers said in interviews they believed the ad campaign inappropriately inflated prices by implying medallions would make buyers rich, no matter the cost. Seven said they complained.

    The city eventually added a disclaimer to ads, saying past performance did not guarantee future results. But it kept advertising.

    During the same period, the city also posted information on its website that said that medallion prices were, on average, 13 percent higher than they really were, according to a Times data analysis.

    In several interviews, Mr. Daus defended the ad campaigns, saying they reached people who had been unable to break into the tight market. The ads were true at the time, he said. He added he had never heard internal complaints about the ads.

    In all, the city held 16 auctions between 2004 and 2014.

    “People don’t realize how organized it is,” Andrew Murstein, president of Medallion Financial, a lender to medallion buyers, said in a 2011 interview with Tearsheet Podcast. “The City of New York, more or less, is our partner because they want to see prices go as high as possible.”

    Help from a federal agency

    New York City made more than $855 million from taxi medallion sales under Mayor Bill de Blasio and his predecessor, Michael R. Bloomberg.

    For decades, a niche banking system had grown up around the taxi industry, and at its center were about half a dozen nonprofit credit unions that specialized in medallion loans. But as the auctions continued, the families that ran the credit unions began to grow frustrated.

    Around them, they saw other lenders making money by issuing loans that they could not because of the rules governing credit unions. They recognized a business opportunity, and they wanted in.

    They found a receptive audience at the National Credit Union Administration.

    The N.C.U.A. was the small federal agency that regulated the nation’s credit unions. It set the rules, examined their books and insured their accounts.

    Like the city taxi commission, the N.C.U.A. had long had ties to the industry that it regulated. One judge had called it a “rogue federal agency” focused on promoting the industry.

    In 2004, its chairman was Dennis Dollar, a former Mississippi state representative who had previously worked as the chief executive of a credit union. He had just been inducted into the Mississippi Credit Union Hall of Fame, and he had said one of his top priorities was streamlining regulation.

    Dennis Dollar, the former chairman of the National Credit Union Administration, is now a consultant in the industry. 

    Under Mr. Dollar and others, the N.C.U.A. issued waivers that exempted medallion loans from longstanding rules, including a regulation requiring each loan to have a down payment of at least 20 percent. The waivers allowed the lenders to keep up with competitors and to write more profitable loans.

    Mr. Dollar, who left government to become a consultant for credit unions, said the agency was following the lead of Congress, which passed a law in 1998 exempting credit unions specializing in medallion loans from some regulations. The law signaled that those lenders needed leeway, such as the waivers, he said.

    “If we did not do so, the average cabdriver couldn’t get a medallion loan,” Mr. Dollar said.

    The federal law and the N.C.U.A. waivers were not the only benefits the industry received. The federal government also provided many medallion lenders with financial assistance and guaranteed a portion of their taxi loans, assuring that if those loans failed, they would still be partially paid, according to records and interviews.

    As lenders wrote increasingly risky loans, medallion prices neared $500,000 in 2006.

    ‘Snoozing and napping’

    Under Mr. Bloomberg, the New York City Taxi and Limousine Commission began selling 1,000 new medallions.

    Another agency was also supposed to be keeping an eye on lending practices. New York State banking regulators are required to inspect all financial institutions chartered in the state. But after 2008, they were forced to focus their attention on the banks most affected by the global economic meltdown, according to former employees.

    As a result, some industry veterans said, the state stopped examining medallion loans closely.

    “The state banking department would come in, and they’d be doing the exam in one room, and the N.C.U.A. would be in another room,” said Larry Fisher, who was then the medallion lending supervisor at Melrose Credit Union, one of the biggest lenders. “And you could catch the state banking department snoozing and napping and going on the internet and not doing much at all.”

    The state banking department, which is now called the New York Department of Financial Services, disputed that characterization and said it had acted consistently and appropriately.

    Former federal regulators described a similar trend at their agencies after the recession.

    Some former employees of the N.C.U.A., the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency said that as medallion prices climbed, they tried to raise issues with loans and were told not to worry. The Securities and Exchange Commission and the Federal Reserve Board also oversaw some lenders and did not intervene.

    A spokesman for the Federal Reserve said the agency was not a primary regulator of the taxi lending industry. The rest of the agencies declined to comment.

    “It was obvious that the loans were unusual and risky,” said Patrick Collins, a former N.C.U.A. examiner. But, he said, there was a belief inside his agency that the loans would be fine because the industry had been stable for decades.

    Meanwhile, in New York City, the taxi commission reduced oversight.

    For years, it had made medallion purchasers file forms describing how they came up with the money, including details on all loans. It also had required industry participants to submit annual disclosures on their finances, loans and conflicts of interest.

    But officials never analyzed the forms filed by buyers, and in the 2000s, they stopped requiring the annual disclosures altogether.

    “Reviewing these disclosures was an onerous lift for us,” the commission’s communications office said in a recent email.

    By 2008, the price of a medallion rose to $600,000.

    At around the same time, the commission began focusing on new priorities. It started developing the “Taxi of Tomorrow,” a model for future cabs.

    The agency’s main enforcement activities targeted drivers who cheated passengers or discriminated against people of color. “Nobody really scrutinized medallion transfers,” said Charles Tortorici, a former commission lawyer.

    A spokesman for Mr. Bloomberg said in a statement that during the mayor’s tenure, the city improved the industry by installing credit card machines and GPS devices, making fleets more environmentally efficient and creating green taxis for boroughs outside Manhattan.

    “The industry was always its own worst enemy, fighting every reform tooth and nail,” said the spokesman, Marc La Vorgna. “We put our energy and political capital into the reforms that most directly and immediately impacted the riding public.”

    Records show that since 2008, the taxi commission has not taken a single enforcement action against brokers, the powerful players who arrange medallion sales and loans.

    Alex Korenkov, a broker, suggested in an interview that he and other brokers took notice of the city’s hands-off approach.

    “Let’s put it this way,” he said. “If governing body does not care, then free-for-all.”

    By the time that Mr. Roth wrote his report at the Taxi and Limousine Commission in 2010, it was clear that something strange was happening in the medallion market.

    Mr. Daus gave a speech that year that mentioned the unusual lending practices. During the speech, he said banks were letting medallion buyers obtain loans without any down payment. Experts have since said that should have raised red flags. But at the time, Mr. Daus seemed pleased.

    “Some of these folks were offering zero percent down,” he said. “You tell me what bank walks around asking for zero percent down on a loan? It’s just really amazing.”

    In interviews, Mr. Daus acknowledged that the practice was unusual but said the taxi commission had no authority over lending.

    Inside the commission, at least four employees raised concerns about the medallion prices and lending practices, according to the employees, who described their own unease as well as Mr. Roth’s report.

    David S. Yassky, a former city councilman who succeeded Mr. Daus as commission chairman in 2010, said in an interview that he never saw Mr. Roth’s report.

    Mr. Yassky said the medallion prices puzzled him, but he could not determine if they were inflated, in part because people were still eager to buy. Medallions may have been undervalued for decades, and the price spike could have been the market recognizing the true value, he suggested.

    Meera Joshi, who became chairwoman in 2014, said in an interview that she was worried about medallion costs and lending practices but was pushed to prioritize other responsibilities. Dominic Williams, Mr. de Blasio’s chief policy adviser, said the city focused on initiatives such as improving accessibility because no one was complaining about loans.

    Worries about the taxi industry also emerged at the National Credit Union Administration. In late 2011, as the price of some medallions reached $800,000, a group of agency examiners wrote a paper on the risks in the industry, according to a recent report by the agency’s inspector general.

    In 2012, 2013 and 2014, inspectors routinely documented instances of credit unions violating lending rules, the inspector general’s report said.

    David S. Yassky, the former chairman of the New York City Taxi and Limousine Commission.

    The N.C.U.A. chose not to penalize medallion lenders or impose extra oversight. It did not take any wide industry action until April 2014, when it sent a letter reminding the credit unions in the taxi market to act responsibly.

    Former staffers said the agency was still focused on the fallout from the recession.

    A spokesman for the N.C.U.A. disputed that characterization and said the agency conducted appropriate enforcement.

    He added the agency took actions to ensure the credit unions remained solvent, which was its mission. He said Congress allowed the lenders to concentrate heavily on medallion loans, which left them vulnerable when Uber and Lyft arrived.

    At the New York Department of Financial Services, bank examiners noticed risky practices and interest-only loans and repeatedly wrote warnings starting in 2010, according to the state. At least one report expressed concern of a potential market bubble, the state said.

    Eventually, examiners became so concerned that they made a PowerPoint presentation and called a meeting in 2014 to show it to a dozen top officials.

    “Since 2001, individual medallion has risen 455%,” the presentation warned, according to a copy obtained by The Times. The presentation suggested state action, such as sending a letter to the industry or revoking charters from some lenders.

    The state did neither. The department had recently merged with the insurance department, and former employees said it was finding its footing.

    The department superintendent at the time, Benjamin M. Lawsky, a former aide to Gov. Andrew M. Cuomo, said he did not, as a rule, discuss his tenure at the department.

    In an emailed statement, the department denied it struggled after the merger and said it took action to stop the collapse of the medallion market. A department spokesman provided a long list of warnings, suggestions and guidelines that it said examiners had issued to lenders. He said that starting in 2012, the department downgraded some of its own internal ratings of the lenders.

    The list did not include any instances of the department formally penalizing a medallion lender, or making any public statement about the industry before it collapsed.

    Between 2010 and 2014, as officials at every level of government failed to rein in the risky lending practices, records show that roughly 1,500 people bought taxi medallions. Over all, including refinancings of old loans and extensions required by banks, medallion owners signed at least 10,000 loans in that time.

    Several regulators who tried to raise alarms said they believed the government stood aside because of the industry’s connections.

    Many pointed to one company — Medallion Financial, run by the Murstein family. Former Gov. Mario M. Cuomo, the current governor’s father, was a paid member of its board from 1996 until he died in 2015.

    Others noted that Mr. de Blasio has long been close to the industry. When he ran for mayor in 2013, an industry lobbyist, Michael Woloz, was a top fund-raiser, records show. And Evgeny Freidman, a major fleet owner who has admitted to artificially inflating medallion prices, has said he is close to the mayor.

    Some people, including Mr. Dollar, the former N.C.U.A. chairman, said Congress excepted the taxi trade from rules because the industry was supported by former United States Senator Alfonse D’Amato of New York, who was then the chairman of the Senate Banking Committee.

    “The taxi industry is one of the most politically connected industries in the city,” said Fidel Del Valle, who was the chairman of the taxi commission from 1991 to 1994. He later worked as a lawyer for drivers and a consultant to an owner association run by Mr. Freidman. “It’s been that way for decades, and they’ve used that influence to push back on regulation, with a lot of success.”

    A spokesman for Mr. Cuomo said Medallion Financial was not regulated by the state, so the elder Mr. Cuomo’s position on the board was irrelevant. A spokeswoman for Mr. de Blasio said the industry’s connections did not influence the city.

    Mr. Murstein, Mr. Woloz, Mr. Freidman and Mr. D’Amato all declined to comment.

    The aftermath
    “I think city will help me,” Mohammad Hossain, who is in deep debt from a taxi medallion loan, said at his family’s home in the Bronx.

    New York held its final independent medallion auction in February 2014. By then, concerns about medallion prices were common in the news media and government offices, and Uber had established itself. Still, the city sold medallions to more than 150 bidders. (“It’s better than the stock market,” one ad said.)

    Forty percent of the people who bought medallions at that auction have filed for bankruptcy, according to a Times analysis of court records.

    Mohammad Hossain, 47, from Bangladesh, who purchased a medallion for $853,000 at the auction, said he could barely make his monthly payments and was getting squeezed by his lender. “I bought medallion from the city,” he said through tears. “I think city will help me, you know. I assume that.”

    The de Blasio administration’s only major response to the crisis has been to push for a cap on ride-hail cars. The City Council at first rejected a cap in 2015 before approving it last year.

    Taxi industry veterans said the cap did not address the cause of the crisis: the lending practices.

    Richard Weinberg, a taxi commission hearing officer from 1988 to 2002 and a lawyer for drivers since then, said that when the medallion bubble began to burst, the city should have frozen prices, adjusted fares and fees and convinced banks to be flexible with drivers. That could have allowed prices to fall slowly. “That could’ve saved a lot of people,” he said.

    In an interview, Dean Fuleihan, the first deputy mayor, said the city did help taxi owners, including by reducing some fees, taxes and inspection mandates, and by talking to banks about loans. He said that if the City Council had passed the cap in 2015, it would have helped.

    “We do care about those drivers, we care about those families. We attempted throughout this period to take actions,” he said.

    Federal regulators also have not significantly helped medallion owners.

    In 2017 and 2018, the N.C.U.A. closed or merged several credit unions for “unsafe business practices” in medallion lending. It took over many of the loans, but did not soften terms, according to borrowers. Instead, it tried to get money out as quickly as possible.

    The failure of the credit unions has cost the national credit union insurance fund more than $750 million, which will hurt all credit union members.

    In August 2018, the N.C.U.A. closed Melrose in what it said was the biggest credit union liquidation in United States history. The agency barred Melrose’s general counsel from working for credit unions and brought civil charges against its former C.E.O., Alan Kaufman, saying he used company funds to help industry partners in exchange for gifts.

    The general counsel, Mitchell Reiver, declined to answer questions but said he did nothing wrong. Mr. Kaufman said in an interview that the N.C.U.A. made up the charges to distract from its role in the crisis.

    “I’m definitely a scapegoat,” Mr. Kaufman said. “There’s no doubt about it.”

    Glamour, then poverty
    After he struggled to repay his taxi medallion loan, Abel Vela left his family in New York and moved back to Peru, where living costs were cheaper. 

    During the medallion bubble, the city produced a television commercial to promote the permits. In the ad, which aired in 2004, four cabbies stood around a taxi discussing the perks of the job. One said buying a medallion was the best decision he had ever made. They all smiled. Then Mr. Daus appeared on screen to announce an auction.

    Fifteen years later, the cabbies remember the ad with scorn. Three of the four were eventually enticed to refinance their original loans under far riskier terms that left them in heavy debt.

    One of the cabbies, Abel Vela, had to leave his wife and children and return to his home country, Peru, because living costs were lower there. He is now 74 and still working to survive.

    The city aired a commercial in 2004 to promote an upcoming auction of taxi medallions. The ad featured real cab drivers, but three of them eventually took on risky loans and suffered financial blows.
    The only woman in the ad, Marie Applyrs, a Haitian immigrant, fell behind on her loan payments and filed for bankruptcy in November 2017. She lost her cab, and her home. She now lives with her children, switching from home to home every few months.

    “When the ad happened, the taxi was in vogue. I think I still have the tape somewhere. It was glamorous,” she said. “Now, I’m in the poorhouse.”

    Today, the only person from the television commercial still active in the industry is Mr. Daus. He works as a lawyer for lenders.

    [Read Part 1 of The Times’s investigation: How Reckless Loans Devastated a Generation of Taxi Drivers]

    Madeline Rosenberg contributed reporting. Doris Burke contributed research. Produced by Jeffrey Furticella and Meghan Louttit.

    #USA #New_York #Taxi #Betrug #Ausbeutung

  • ‘They Were Conned’: How Reckless Loans Devastated a Generation of Taxi Drivers - The New York Times
    https://www.nytimes.com/2019/05/19/nyregion/nyc-taxis-medallions-suicides.html


    Mohammed Hoque with his three children in their studio apartment in Jamaica, Queens.

    May 19, 2019 - The phone call that ruined Mohammed Hoque’s life came in April 2014 as he began another long day driving a New York City taxi, a job he had held since emigrating from Bangladesh nine years earlier.

    The call came from a prominent businessman who was selling a medallion, the coveted city permit that allows a driver to own a yellow cab instead of working for someone else. If Mr. Hoque gave him $50,000 that day, he promised to arrange a loan for the purchase.

    After years chafing under bosses he hated, Mr. Hoque thought his dreams of wealth and independence were coming true. He emptied his bank account, borrowed from friends and hurried to the man’s office in Astoria, Queens. Mr. Hoque handed over a check and received a stack of papers. He signed his name and left, eager to tell his wife.

    Mr. Hoque made about $30,000 that year. He had no idea, he said later, that he had just signed a contract that required him to pay $1.7 million.

    Over the past year, a spate of suicides by taxi drivers in New York City has highlighted in brutal terms the overwhelming debt and financial plight of medallion owners. All along, officials have blamed the crisis on competition from ride-hailing companies such as Uber and Lyft.

    But a New York Times investigation found much of the devastation can be traced to a handful of powerful industry leaders who steadily and artificially drove up the price of taxi medallions, creating a bubble that eventually burst. Over more than a decade, they channeled thousands of drivers into reckless loans and extracted hundreds of millions of dollars before the market collapsed.

    These business practices generated huge profits for bankers, brokers, lawyers, investors, fleet owners and debt collectors. The leaders of nonprofit credit unions became multimillionaires. Medallion brokers grew rich enough to buy yachts and waterfront properties. One of the most successful bankers hired the rap star Nicki Minaj to perform at a family party.

    But the methods stripped immigrant families of their life savings, crushed drivers under debt they could not repay and engulfed an industry that has long defined New York. More than 950 medallion owners have filed for bankruptcy, according to a Times analysis of court records. Thousands more are barely hanging on.

    The practices were strikingly similar to those behind the housing market crash that led to the 2008 global economic meltdown: Banks and loosely regulated private lenders wrote risky loans and encouraged frequent refinancing; drivers took on debt they could not afford, under terms they often did not understand.

    Some big banks even entered the taxi industry in the aftermath of the housing crash, seeking a new market, with new borrowers.

    The combination of easy money, eager borrowers and the lure of a rare asset helped prices soar far above what medallions were really worth. Some industry leaders fed the frenzy by purposefully overpaying for medallions in order to inflate prices, The Times found.

    Between 2002 and 2014, the price of a medallion rose to more than $1 million from $200,000, even though city records showed that driver incomes barely changed.

    About 4,000 drivers bought medallions in that period, records show. They were excited to buy, but they were enticed by a dubious premise.

    What Actually Happened to New York’s Taxi DriversMay 28, 2019

    After the medallion market collapsed, Mayor Bill de Blasio opted not to fund a bailout, and earlier this year, the City Council speaker, Corey Johnson, shut down the committee overseeing the taxi industry, saying it had completed most of its work.

    Over 10 months, The Times interviewed 450 people, built a database of every medallion sale since 1995 and reviewed thousands of individual loans and other documents, including internal bank records and confidential profit-sharing agreements.

    The investigation found example after example of drivers trapped in exploitative loans, including hundreds who signed interest-only loans that required them to pay exorbitant fees, forfeit their legal rights and give up almost all their monthly income, indefinitely.

    A Pakistani immigrant who thought he was just buying a car ended up with a $780,000 medallion loan that left him unable to pay rent. A Bangladeshi immigrant said he was told to lie about his income on his loan application; he eventually lost his medallion. A Haitian immigrant who worked to exhaustion to make his monthly payments discovered he had been paying only interest and went bankrupt.

    Abdur Rahim, who is from Bangladesh, is one of several cab drivers who allege they were duped into signing exploitative loans. 
    It is unclear if the practices violated any laws. But after reviewing The Times’s findings, experts said the methods were among the worst that have been used since the housing crash.

    “I don’t think I could concoct a more predatory scheme if I tried,” said Roger Bertling, the senior instructor at Harvard Law School’s clinic on predatory lending and consumer protection. “This was modern-day indentured servitude.”

    Lenders developed their techniques in New York but spread them to Chicago, Boston, San Francisco and elsewhere, transforming taxi industries across the United States.

    In interviews, lenders denied wrongdoing. They noted that regulators approved their practices, and said some borrowers made poor decisions and assumed too much debt. They said some drivers were happy to use climbing medallion values as collateral to take out cash, and that those who sold their medallions at the height of the market made money.

    The lenders said they believed medallion values would keep increasing, as they almost always had. No one, they said, could have predicted Uber and Lyft would emerge to undercut the business.

    “People love to blame banks for things that happen because they’re big bad banks,” said Robert Familant, the former head of Progressive Credit Union, a small nonprofit that specialized in medallion loans. “We didn’t do anything, in my opinion, other than try to help small businesspeople become successful.”

    Mr. Familant made about $30 million in salary and deferred payouts during the bubble, including $4.8 million in bonuses and incentives in 2014, the year it burst, according to disclosure forms.

    Meera Joshi, who joined the Taxi and Limousine Commission in 2011 and became chairwoman in 2014, said it was not the city’s job to regulate lending. But she acknowledged that officials saw red flags and could have done something.

    “There were lots of players, and lots of people just watched it happen. So the T.L.C. watched it happen. The lenders watched it happen. The borrowers watched it happen as their investment went up, and it wasn’t until it started falling apart that people started taking action and pointing fingers,” said Ms. Joshi, who left the commission in March. “It was a party. Why stop it?”

    Every day, about 250,000 people hail a New York City yellow taxi. Most probably do not know they are participating in an unconventional economic system about as old as the Empire State Building.

    The city created taxi medallions in 1937. Unlicensed cabs crowded city streets, so officials designed about 12,000 specialized tin plates and made it illegal to operate a taxi without one bolted to the hood of the car. The city sold each medallion for $10.

    People who bought medallions could sell them, just like any other asset. The only restriction: Officials designated roughly half as “independent medallions” and eventually required that those always be owned by whoever was driving that cab.

    Over time, as yellow taxis became symbols of New York, a cutthroat industry grew around them. A few entrepreneurs obtained most of the nonindependent medallions and built fleets that controlled the market. They were family operations largely based in the industrial neighborhoods of Hell’s Kitchen in Manhattan and Long Island City in Queens.

    Allegations of corruption, racism and exploitation dogged the industry. Some fleet bosses were accused of cheating drivers. Some drivers refused to go outside Manhattan or pick up black and Latino passengers. Fleet drivers typically worked 60 hours a week, made less than minimum wage and received no benefits, according to city studies.

    Still, driving could serve as a path to the middle class. Drivers could save to buy an independent medallion, which would increase their earnings and give them an asset they could someday sell for a retirement nest egg.

    Those who borrowed money to buy a medallion typically had to submit a large down payment and repay within five to 10 years.

    The conservative lending strategy produced modest returns. The city did not release new medallions for almost 60 years, and values slowly climbed, hitting $100,000 in 1985 and $200,000 in 1997.

    “It was a safe and stable asset, and it provided a good life for those of us who were lucky enough to buy them,” said Guy Roberts, who began driving in 1979 and eventually bought medallions and formed a fleet. “Not an easy life, but a good life.”

    “And then,” he said, “everything changed.”

    – Before coming to America, Mohammed Hoque lived comfortably in Chittagong, a city on Bangladesh’s southern coast. He was a serious student and a gifted runner, despite a small and stocky frame. His father and grandfather were teachers; he said he surpassed them, becoming an education official with a master’s degree in management. He supervised dozens of schools and traveled on a government-issued motorcycle. In 2004, when he was 33, he married Fouzia Mahabub. -

    That same year, several of his friends signed up for the green card lottery, and their thirst for opportunity was contagious. He applied, and won.

    His wife had an uncle in Jamaica, Queens, so they went there. They found a studio apartment. Mr. Hoque wanted to work in education, but he did not speak enough English. A friend recommended the taxi industry.

    It was an increasingly common move for South Asian immigrants. In 2005, about 40 percent of New York cabbies were born in Bangladesh, India or Pakistan, according to the United States Census Bureau. Over all, just 9 percent were born in the United States.

    Mr. Hoque and his wife emigrated from Bangladesh, and have rented the same apartment in Queens since 2005.

    Mr. Hoque joined Taxifleet Management, a large fleet run by the Weingartens, a Russian immigrant family whose patriarchs called themselves the “Three Wise Men.”

    He worked 5 a.m. to 5 p.m., six days a week. On a good day, he said, he brought home $100. He often felt lonely on the road, and he developed back pain from sitting all day and diabetes, medical records show.

    He could have worked fewer shifts. He also could have moved out of the studio. But he drove as much as feasible and spent as little as possible. He had heard the city would soon be auctioning off new medallions. He was saving to buy one.

    Andrew Murstein, left, with his father, Alvin.CreditChester Higgins Jr./The New York Times
    In the early 2000s, a new generation took power in New York’s cab industry. They were the sons of longtime industry leaders, and they had new ideas for making money.

    Few people represented the shift better than Andrew Murstein.

    Mr. Murstein was the grandson of a Polish immigrant who bought one of the first medallions, built one of the city’s biggest fleets and began informally lending to other buyers in the 1970s. Mr. Murstein attended business school and started his career at Bear Stearns and Salomon Brothers, the investment banks.

    When he joined the taxi business, he has said, he pushed his family to sell off many medallions and to establish a bank to focus on lending. Medallion Financial went public in 1996. Its motto was, “In niches, there are riches.”

    Dozens of industry veterans said Mr. Murstein and his father, Alvin, were among those who helped to move the industry to less conservative lending practices. The industry veterans said the Mursteins, as well as others, started saying medallion values would always rise and used that idea to focus on lending to lower-income drivers, which was riskier but more profitable.

    The strategy began to be used by the industry’s other major lenders — Progressive Credit Union, Melrose Credit Union and Lomto Credit Union, all family-run nonprofits that made essentially all their money from medallion loans, according to financial disclosures.

    “We didn’t want to be the one left behind,” said Monte Silberger, Lomto’s controller and then chief financial officer from 1999 to 2017.

    The lenders began accepting smaller down payments. By 2013, many medallion buyers were not handing over any down payment at all, according to an analysis of buyer applications submitted to the city.

    “It got to a point where we didn’t even check their income or credit score,” Mr. Silberger said. “It didn’t matter.”

    Lenders also encouraged existing borrowers to refinance and take out more money when medallion prices rose, according to interviews with dozens of borrowers and loan officers. There is no comprehensive data, but bank disclosures suggest that thousands of owners refinanced.

    Industry veterans said it became common for owners to refinance to buy a house or to put children through college. “You’d walk into the bank and walk out 30 minutes later with an extra $200,000,” said Lou Bakalar, a broker who arranged loans.

    Yvon Augustin has been living with help from his children ever since he declared bankruptcy and lost his taxi medallion.

    Some pointed to the refinancing to argue that irresponsible borrowers fueled the crisis. “Medallion owners were misusing it,” said Aleksey Medvedovskiy, a fleet owner who also worked as a broker. “They used it as an A.T.M.”

    As lenders loosened standards, they increased returns. Rather than raising interest rates, they made borrowers pay a mix of costs — origination fees, legal fees, financing fees, refinancing fees, filing fees, fees for paying too late and fees for paying too early, according to a Times review of more than 500 loans included in legal cases. Many lenders also made borrowers split their loan and pay a much higher rate on the second loan, documents show.

    Lenders also extended loan lengths. Instead of requiring repayment in five or 10 years, they developed deals that lasted as long as 50 years, locking in decades of interest payments. And some wrote interest-only loans that could continue forever.

    “We couldn’t figure out why the company was doing so many interest-only loans,” said Michelle Pirritano, a Medallion Financial loan analyst from 2007 to 2011. “It was a good revenue stream, but it didn’t really make sense as a loan. I mean, it wasn’t really a loan, because it wasn’t being repaid.”

    Almost every loan reviewed by The Times included a clause that spiked the interest rate to as high as 24 percent if it was not repaid in three years. Lenders included the clause — called a “balloon” — so that borrowers almost always had to extend the loan, possibly at a higher rate than in the original terms, and with additional fees.

    Yvon Augustin was caught in one of those loans. He bought a medallion in 2006, a decade after emigrating from Haiti. He said he paid $2,275 every month — more than half his income, he said — and thought he was paying off the loan. But last year, his bank used the balloon to demand that he repay everything. That is when he learned he had been paying only the interest, he said.

    Mr. Augustin, 69, declared bankruptcy and lost his medallion. He lives off assistance from his children.

    During the global financial crisis, Eugene Haber, a lawyer for the taxi industry, started getting calls from bankers he had never met.

    Mr. Haber had written a template for medallion loans in the 1970s. By 2008, his thick mustache had turned white, and he thought he knew everybody in the industry. Suddenly, new bankers began calling his suite in a Long Island office park. Capital One, Signature Bank, New York Commercial Bank and others wanted to issue medallion loans, he said.

    Some of the banks were looking for new borrowers after the housing market collapsed, Mr. Haber said. “They needed somewhere else to invest,” he said. He said he represented some banks at loan signings but eventually became embittered because he believed banks were knowingly lending to people who could not repay.

    Instead of lending directly, the big banks worked through powerful industry players. They enlisted large fleet owners and brokers — especially Neil Greenbaum, Richard Chipman, Savas Konstantinides, Roman Sapino and Basil Messados — to use the banks’ money to lend to medallion buyers. In return, the owners and brokers received a cut of the monthly payments and sometimes an additional fee.

    The fleet owners and brokers, who technically issued the loans, did not face the same scrutiny as banks.

    “They did loans that were frankly insane,” said Larry Fisher, who from 2003 to 2016 oversaw medallion lending at Melrose Credit Union, one of the biggest lenders originally in the industry. “It contributed to the price increases and put a lot of pressure on the rest of us to keep up.”

    Evgeny Freidman, a fleet owner, has said he purposely overbid for taxi medallions in order to drive up their value.CreditSasha Maslov
    Still, Mr. Fisher said, Melrose followed lending rules. “A lot of people tend to blame others for their own misfortune,” he said. “If they want to blame the lender for the medallion going down the tubes the way it has, I think they’re misplaced.”

    Mr. Konstantinides, a fleet owner and the broker and lender who arranged Mr. Hoque’s loans, said every loan issued by his company abided by federal and state banking guidelines. “I am very sympathetic to the plight of immigrant families who are seeking a better life in this country and in this city,” said Mr. Konstantinides, who added that he was also an immigrant.

    Walter Rabin, who led Capital One’s medallion lending division between 2007 and 2012 and has led Signature Bank’s medallion lending division since, said he was one of the industry’s most conservative lenders. He said he could not speak for the brokers and fleet owners with whom he worked.

    Mr. Rabin and other Signature executives denied fault for the market collapse and blamed the city for allowing ride-hail companies to enter with little regulation. “It’s the City of New York that took the biggest advantage of the drivers,” said Joseph J. DePaolo, the president and chief executive of Signature. “It’s not the banks.”

    New York Commercial Bank said in a statement that it began issuing medallion loans before the housing crisis and that they were a very small part of its business. The bank did not engage in risky lending practices, a spokesman said.

    Mr. Messados said in an interview that he disagreed with interest-only loans and other one-sided terms. But he said he was caught between banks developing the loans and drivers clamoring for them. “They were insisting on this,” he said. “What are you supposed to do? Say, ‘I’m not doing the sale?’”

    Several lenders challenged the idea that borrowers were unsophisticated. They said that some got better deals by negotiating with multiple lenders at once.

    Mr. Greenbaum, Mr. Chipman and Mr. Sapino declined to comment, as did Capital One.

    Some fleet owners worked to manipulate prices. In the most prominent example, Evgeny Freidman, a brash Russian immigrant who owned so many medallions that some called him “The Taxi King,” said he purposefully overpaid for medallions sold at city auctions. He reasoned that the higher prices would become the industry standard, making the medallions he already owned worth more. Mr. Freidman, who was partners with Michael Cohen, President Trump’s former lawyer, disclosed the plan in a 2012 speech at Yeshiva University. He recently pleaded guilty to felony tax fraud. He declined to comment.

    As medallion prices kept increasing, the industry became strained. Drivers had to work longer hours to make monthly payments. Eventually, loan records show, many drivers had to use almost all their income on payments.

    “The prices got to be ridiculous,” said Vincent Sapone, the retired manager of the League of Mutual Taxi Owners, an owner association. “When it got close to $1 million, nobody was going to pay that amount of money, unless they came from another country. Nobody from Brooklyn was going to pay that.”

    Some drivers have alleged in court that lenders tricked them into signing loans.

    Muhammad Ashraf, who is not fluent in English, said he thought he was getting a loan to purchase a car but ended up in debt to buy a taxi medallion instead.

    Muhammad Ashraf, a Pakistani immigrant, alleged that a broker, Heath Candero, duped him into a $780,000 interest-only loan. He said in an interview in Urdu that he could not speak English fluently and thought he was just signing a loan to buy a car. He said he found out about the loan when his bank sued him for not fully repaying. The bank eventually decided not to pursue a case against Mr. Ashraf. He also filed a lawsuit against Mr. Candero. That case was dismissed. A lawyer for Mr. Candero declined to comment.

    Abdur Rahim, a Bangladeshi immigrant, alleged that his lender, Bay Ridge Credit Union, inserted hidden fees. In an interview, he added he was told to lie on his loan application. The application, reviewed by The Times, said he made $128,389, but he said his tax return showed he made about $25,000. In court, Bay Ridge has denied there were hidden fees and said Mr. Rahim was “confusing the predatory-lending statute with a mere bad investment.” The credit union declined to comment.

    Several employees of lenders said they were pushed to write loans, encouraged by bonuses and perks such as tickets to sporting events and free trips to the Bahamas.

    They also said drivers almost never had lawyers at loan closings. Borrowers instead trusted their broker to represent them, even though, unbeknown to them, the broker was often getting paid by the bank.

    Stan Zurbin, who between 2009 and 2012 did consulting work for a lender that issued medallion loans, said that as prices rose, lenders in the industry increasingly lent to immigrants.

    “They didn’t have 750 credit scores, let’s just say,” he said. “A lot of them had just come into the country. A lot of them just had no idea what they were signing.”

    The $1 million medallion
    Video
    Mrs. Hoque did not want her husband to buy a medallion. She wanted to use their savings to buy a house. They had their first child in 2008, and they planned to have more. They needed to leave the studio apartment, and she thought a home would be a safer investment.

    But Mr. Hoque could not shake the idea, especially after several friends bought medallions at the city’s February 2014 auction.

    One friend introduced him to a man called “Big Savas.” It was Mr. Konstantinides, a fleet owner who also had a brokerage and a lending company, Mega Funding.

    The call came a few weeks later. A medallion owner had died, and the family was selling for $1 million.

    Mr. Hoque said he later learned the $50,000 he paid up front was just for taxes. Mega eventually requested twice that amount for fees and a down payment, records show. Mr. Hoque said he maxed out credit cards and borrowed from a dozen friends and relatives.

    Fees and interest would bring the total repayment to more than $1.7 million, documents show. It was split into two loans, both issued by Mega with New York Commercial Bank. The loans made him pay $5,000 a month — most of the $6,400 he could earn as a medallion owner.

    Mohammed Hoque’s Medallion Loans Consumed Most of His Taxi Revenue
    After paying his two medallion loans and business costs, Mr. Hoque had about $1,400 left over each month to pay the rent on his studio apartment in Queens and cover his living expenses.

    Estimated monthly revenue $11,845

    Gas $1,500

    Income after expenses $1,400

    Vehicle maintenance $1,300

    Medallion loan 1 $4,114

    Insurance $1,200

    Car loan $650

    Credit card fees $400

    Medallion loan 2 $881

    Other work-related expenses $400

    By the time the deal closed in July 2014, Mr. Hoque had heard of a new company called Uber. He wondered if it would hurt the business, but nobody seemed to be worried.

    As Mr. Hoque drove to the Taxi and Limousine Commission’s downtown office for final approval of the purchase, he fantasized about becoming rich, buying a big house and bringing his siblings to America. After a commission official reviewed his application and loan records, he said he was ushered into the elegant “Taxi of Tomorrow” room. An official pointed a camera. Mr. Hoque smiled.

    “These are little cash cows running around the city spitting out money,” Mr. Murstein said, beaming in a navy suit and pink tie.

    He did not mention he was quietly leaving the business, a move that would benefit him when the market collapsed.

    By the time of the appearance, Medallion Financial had been cutting the number of medallion loans on its books for years, according to disclosures it filed with the Securities and Exchange Commission. Mr. Murstein later said the company started exiting the business and focusing on other ventures before 2010.

    Mr. Murstein declined numerous interview requests. He also declined to answer some written questions, including why he promoted medallions while exiting the business. In emails and through a spokesman, he acknowledged that Medallion Financial reduced down payments but said it rarely issued interest-only loans or charged borrowers for repaying loans too early.

    “Many times, we did not match what our competitors were willing to do and in retrospect, thankfully, we lost the business,” he wrote to The Times.

    Interviews with three former staffers, and a Times review of loan documents that were filed as part of lawsuits brought by Medallion Financial against borrowers, indicate the company issued many interest-only loans and routinely included a provision allowing it to charge borrowers for repaying loans too early.

    Other lenders also left the taxi industry or took precautions long before the market collapsed.

    The credit unions specializing in the industry kept making new loans. But between 2010 and 2014, they sold the loans to other financial institutions more often than in the previous five years, disclosure forms show. Progressive Credit Union, run by Mr. Familant, sold loans off almost twice as often, the forms show. By 2012, that credit union was selling the majority of the loans it issued.

    In a statement, Mr. Familant said the selling of loans was a standard banking practice that did not indicate a lack of confidence in the market.

    Several banks used something called a confession of judgment. It was an obscure document in which the borrower admitted defaulting on the loan — even before taking out any money at all — and authorized the bank to do whatever it wanted to collect.

    Larry Fisher was the medallion lending supervisor at Melrose Credit Union, one of the biggest lenders originally in the industry, from 2003 to 2016.
    Congress has banned that practice in consumer loans, but not in business loans, which is how lenders classified medallion deals. Many states have barred it in business loans, too, but New York is not among them.

    Even as some lenders quietly braced for the market to fall, prices kept rising, and profits kept growing.

    By 2014, many of the people who helped create the bubble had made millions of dollars and invested it elsewhere.

    Medallion Financial started focusing on lending to R.V. buyers and bought a professional lacrosse team and a Nascar team, painting the car to look like a taxi. Mr. Murstein and his father made more than $42 million between 2002 and 2014, disclosures show. In 2015, Ms. Minaj, the rap star, performed at his son’s bar mitzvah.

    The Melrose C.E.O., Alan Kaufman, had the highest base salary of any large state-chartered credit union leader in America in 2013 and 2015, records show. His medallion lending supervisor, Mr. Fisher, also made millions.

    It is harder to tell how much fleet owners and brokers made, but in recent years news articles have featured some of them with new boats and houses.

    Mr. Messados’s bank records, filed in a legal case, show that by 2013, he had more than $50 million in non-taxi assets, including three homes and a yacht.

    The bubble bursts

    At least eight drivers have committed suicide, including three medallion owners with overwhelming loans.
    The medallion bubble burst in late 2014. Uber and Lyft may have hastened the crisis, but virtually all of the hundreds of industry veterans interviewed for this article, including many lenders, said inflated prices and risky lending practices would have caused a collapse even if ride-hailing had never been invented.

    At the market’s height, medallion buyers were typically earning about $5,000 a month and paying about $4,500 to their loans, according to an analysis by The Times of city data and loan documents. Many owners could make their payments only by refinancing when medallion values increased, which was unsustainable, some loan officers said.

    City data shows that since Uber entered New York in 2011, yellow cab revenue has decreased by about 10 percent per cab, a significant bite for low-earning drivers but a small drop compared with medallion values, which initially rose and then fell by 90 percent.

    As values fell, borrowers asked for breaks. But many lenders went the opposite direction. They decided to leave the business and called in their loans.

    They used the confessions to get hundreds of judgments that would allow them to take money from bank accounts, court records show. Some tried to get borrowers to give up homes or a relative’s assets. Others seized medallions and quickly resold them for profit, while still charging the original borrowers fees and extra interest. Several drivers have alleged in court that their lenders ordered them to buy life insurance.

    Many lenders hired a debt collector, Anthony Medina, to seize medallions from borrowers who missed payments.

    The scars left on cabs after medallions were removed.

    Mr. Medina left notes telling borrowers they had to give the lender “relief” to get their medallions back. The notes, which were reviewed by The Times, said the seizure was “authorized by vehicle apprehension unit.” Some drivers said Mr. Medina suggested he was a police officer and made them meet him at a park at night and pay $550 extra in cash.

    One man, Jean Demosthenes, a 64-year-old Haitian immigrant who could not speak English, said in an interview in Haitian Creole that Mr. Medina cornered him in Midtown, displayed a gun and took his car.

    In an interview, Mr. Medina denied threatening anyone with a gun. He said he requested cash because drivers who had defaulted could not be trusted to write good checks. He said he met drivers at parks and referred to himself as the vehicle apprehension unit because he wanted to hide his identity out of fear he could be targeted by borrowers.

    “You’re taking words from people that are deadbeats and delinquent people. Of course, they don’t want to see me,” he said. “I’m not the bad guy. I’m just the messenger from the bank.”

    Some lenders, especially Signature Bank, have let borrowers out of their loans for one-time payments of about $250,000. But to get that money, drivers have had to find new loans. Mr. Greenbaum, a fleet owner, has provided many of those loans, sometimes at interest rates of up to 15 percent, loan documents and interviews showed.

    New York Commercial Bank said in its statement it also had modified some loans.

    Other drivers lost everything. Most of the more than 950 owners who declared bankruptcy had to forfeit their medallions. Records indicate many were bought by hedge funds hoping for prices to rise. For now, cabs sit unused.

    Jean Demosthenes said his medallion was repossessed by a man with a gun. The man denied that he was armed.

    Bhairavi Desai, founder of the Taxi Workers Alliance, which represents drivers and independent owners, has asked the city to bail out owners or refund auction purchasers. Others have urged the city to pressure banks to forgive loans or soften terms.

    After reviewing The Times’s findings, Deepak Gupta, a former top official at the United States Consumer Financial Protection Bureau, said the New York Attorney General’s Office should investigate lenders.

    Mr. Gupta also said the state should close the loophole that let lenders classify medallion deals as business loans, even though borrowers had to guarantee them with everything they owned. Consumer loans have far more disclosure rules and protections.

    “These practices were indisputably predatory and would be illegal if they were considered consumer loans, rather than business loans,” he said.

    Last year, amid eight known suicides of drivers, including three medallion owners with overwhelming loans, the city passed a temporary cap on ride-hailing cars, created a task force to study the industry and directed the city taxi commission to do its own analysis of the debt crisis.

    Earlier this year, the Council eliminated the committee overseeing the industry after its chairman, Councilman Rubén Díaz Sr. of the Bronx, said the Council was “controlled by the homosexual community.” The speaker, Mr. Johnson, said, “The vast majority of the legislative work that we have been looking at has already been completed.”

    In a statement, a council spokesman said the committee’s duties had been transferred to the Committee on Transportation. “The Council is working to do as much as it can legislatively to help all drivers,” the spokesman said.

    As of last week, no one had been appointed to the task force.

    On the last day of 2018, Mr. and Mrs. Hoque brought their third child home from the hospital.

    Mr. Hoque cleared space for the boy’s crib, pushing aside his plastic bags of T-shirts and the fan that cooled the studio. He looked around. He could not believe he was still living in the same room.

    His loan had quickly faltered. He could not make the payments and afford rent, and his medallion was seized. Records show he paid more than $12,000 to Mega, and he said he paid another $550 to Mr. Medina to get it back. He borrowed from friends, promising it would not happen again. Then it happened four more times, he said.

    Mr. Konstantinides, the broker, said in his statement that he met with Mr. Hoque many times and twice modified one of his loans in order to lower his monthly payments. He also said he gave Mr. Hoque extra time to make some payments.

    In all, between the initial fees, monthly payments and penalties after the seizures, Mr. Hoque had paid about $400,000 into the medallion by the beginning of this year.

    But he still owed $915,000 more, plus interest, and he did not know what to do. Bankruptcy would cost money, ruin his credit and remove his only income source. And it would mean a shameful end to years of hard work. He believed his only choice was to keep working and to keep paying.

    His cab was supposed to be his ticket to money and freedom, but instead it seemed like a prison cell. Every day, he got in before the sun rose and stayed until the sky began to darken. Mr. Hoque, now 48, tried not to think about home, about what he had given up and what he had dreamed about.

    “It’s an unhuman life,” he said. “I drive and drive and drive. But I don’t know what my destination is.”

    [Read Part 2 of The Times’s investigation: As Thousands of Taxi Drivers Were Trapped in Loans, Top Officials Counted the Money]

    Reporting was contributed by Emma G. Fitzsimmons, Suzanne Hillinger, Derek M. Norman, Elisha Brown, Lindsey Rogers Cook, Pierre-Antoine Louis and Sameen Amin. Doris Burke and Susan Beachy contributed research. Produced by Jeffrey Furticella and Meghan Louttit.

    Follow Brian M. Rosenthal on Twitter at @brianmrosenthal

    #USA #New_York #Taxi #Betrug #Ausbeutung

  • Iran circles wagons as Trump’s B Team beats war drum
    Posted on May 9, 2019 by M. K. BHADRAKUMAR - Indian Punchline
    https://indianpunchline.com/iran-circles-wagons-as-trumps-b-team-beats-war-drum

    If there can be a lethal game of Russian roulette in international politics, this is it — what just began on May 8, the first anniversary of the United States’ withdrawal from the Iran nuclear deal of July 2015.

    Iran exercised “strategic patience” for one full year, as President Hassan Rouhani noted, upon the request from the five remaining signatories of the nuclear deal — Britain, France, Germany, Russia and China. That period has run out.

    Not only have the five powers failed to persuade the Trump administration to retract from its decision, but Washington has gone on a warpath of sanctions and deployment of a formidable strike group to the Persian Gulf.

    On the other hand, the five big powers couldn’t ensure that Iran got the full benefits out of the nuclear deal as envisaged under the nuclear deal, despite its full compliance with the terms of the deal, which has been acknowledged repeatedly by the International Atomic Energy Agency. Only Russia and China observed the commitments given to Iran as signatories, while the three European powers merely paid lip service.

    Against this sombre backdrop, Rouhani announced on Wednesday that if the remaining signatories fail to provide Iran with the merits stated under the deal in the next 60 days, Tehran will stop complying with its nuclear undertakings in consequent phases. For a start, Iran will cease to observe the capping on the volume of enriched uranium and heavy water reserves that it is permitted to hold.

    After 60 days, if Iran’s grievances are not still addressed, it will no longer observe the restrictions on the 3.6 percent level of uranium enrichment and will resume work on its heavy water reactor at Arak. Iran has underlined that it is not withdrawing from the nuclear deal but is only taking reciprocal measures as provided under articles 26 and 32 of the agreement regarding the eventuality of one or more of the six powers failing to observe the treaty. Rouhani has specified Iran’s concerns particularly in the oil industry and the banking sector, which Washington has targeted with sanctions.

    Rouhani said that after 120 days from now, even if Iran starts enriching uranium beyond the 3.6 level and resumes work in Arak, it will give yet another 60 days for negotiations before taking additional unspecified (which could be by the yearend). Meanwhile, Iran will react strongly against any move by the western powers to approach the UN Security Council for reimposition of the old UN sanctions. (...)

    #Iran

  • The Power Elite
    https://www1.udel.edu/htr/Psc105/Texts/power.html

    Thomas Dye, a political scientist, and his students have been studying the upper echelons of leadership in America since 1972. These “top positions” encompassed the posts with the authority to run programs and activities of major political, economic, legal, educational, cultural, scientific, and civic institutions. The occupants of these offices, Dye’s investigators found, control half of the nation’s industrial, communications, transportation, and banking assets, and two-thirds of all insurance assets. In addition, they direct about 40 percent of the resources of private foundations and 50 percent of university endowments. Furthermore, less than 250 people hold the most influential posts in the executive, legislative, and judicial branches of the federal government, while approximately 200 men and women run the three major television networks and most of the national newspaper chains.

    Facts like these, which have been duplicated in countless other studies, suggest to many observers that power in the United States is concentrated in the hands of a single power elite. Scores of versions of this idea exist, probably one for each person who holds it, but they all interpret government and politics very differently than pluralists. Instead of seeing hundreds of competing groups hammering out policy, the elite model perceives a pyramid of power. At the top, a tiny elite makes all of the most important decisions for everyone below. A relatively small middle level consists of the types of individuals one normally thinks of when discussing American government: senators, representatives, mayors, governors, judges, lobbyists, and party leaders. The masses occupy the bottom. They are the average men and women in the country who are powerless to hold the top level accountable.

    The power elite theory, in short, claims that a single elite, not a multiplicity of competing groups, decides the life-and-death issues for the nation as a whole, leaving relatively minor matters for the middle level and almost nothing for the common person. It thus paints a dark picture. Whereas pluralists are somewhat content with what they believe is a fair, if admittedly imperfect, system, the power elite school decries the grossly unequal and unjust distribution of power it finds everywhere.

    People living in a country that prides itself on democracy, that is surrounded by the trappings of free government, and that constantly witnesses the comings and goings of elected officials may find the idea of a power elite farfetched. Yet many very intelligent social scientists accept it and present compelling reasons for believing it to be true. Thus, before dismissing it out of hand, one ought to listen to their arguments.

    #politique #théorie_politique #USA #États_Unis #gouvernement #idéologie #impérialisme

  • 7 Successful Applications of #ai & Machine Learning in the #travel #industry
    https://hackernoon.com/successful-implications-of-ai-machine-learning-in-travel-industry-3040f3

    Owing to our increased dependency on gadgets, people today are more likely to plan trips via smart apps. They can actually spend many hours glued to the screen — finding the best place, best price, and the best itinerary. This is where Artificial Intelligence & Machine Learning come into play. This can generate super-personalized suggestions to prospective travelers, by analyzing large datasets.It is apparent that outside of chatbots, the field of AI and machine learning in the travel and tourism industry is still in its infancy. Much of the impact of artificial intelligence on the travel and tourism industry focuses on customer service and engagement.Compared to sectors such as banking, healthcare, and e-commerce, it’s clear that the travel and tourism industry does not have a very (...)

    #artificial-intelligence #machine-learning

  • #blockchain : Disruptions And Opportunities
    https://hackernoon.com/blockchain-disruptions-and-opportunities-cf97e16ca95f?source=rss----3a81

    There has been a resounding expectation by a lot of experts in the crypto community about the opportunities and gains that blockchain adoption could yield in the near future. In this post, we are going to take a look at what has changed so far in industries that have adopted it.Although it has disrupted nearly all major industries, there are five of them where this process was the most successful by this date. These are supply chain management, healthcare, banking, voting systems, and cybersecurity.Supply Chain ManagementSupply chain management for retail, logistics, and e-tail sectors has always appeared to be a more likely candidate for blockchain #disruption from the get-go. This could be because of the many parties that are involved in the chain of supply — manufacturer, exporter, (...)

    #blockchain-opportunities #infographics #blockchain-technology

  • Will #blockchain Replace Credit Cards by 2022?
    https://hackernoon.com/will-blockchain-replace-credit-cards-by-2022-36742354cb4f?source=rss----

    The possibilities for blockchain payment systems are far-reaching these days. It is now possible that Blockchain could replace credit cards in the near future. So, is it going to happen by 2022?Yes, it may happen that soon!A decade back, digital cards (debit & credit) came in the banking industry and did some changes. Honestly, it made our life easier.However, now with the help of blockchain, it is even easier and cost-effective. It uses the encrypted distributed ledgers that can work with or without banks and clearing houses.If things go as per prediction, the market is going to be ten times bigger.Yes, 10 TIMES!Adoption Of Blockchain Payment SystemsSee how the banking industry is rapidly adopting blockchain in payment transactions.According to reports, 69% of banks and financial (...)

    #blockchain-technology #bitcoin #credit-cards #blockchain-startup

  • 3 Promising cryptocurrencies under $5 to invest in for 2019–2020
    https://hackernoon.com/3-promising-cryptocurrencies-under-5-to-invest-in-for-2019-2020-36b72fa3

    From cross-blockchain transfers to a banking competitor #cryptocurrency that targets over 2 billion usersWhen investing in cryptocurrency, one overlooked but important factor to look out for is utility.Forget the flashy ICO adverts and look instead at how a cryptocurrency will be used. A high utility provides the following benefits to a cryptocurrency:Improves liquidityA cryptocurrency that is constantly being used, transferred and traded allows for investors to easily buy and sell said cryptocurrency. A cryptocurrency with a high marketcap may make you wealthy (on paper) but if it is not being traded enough, who will buy it off you?Drives demandA cryptocurrency with a legitimate use is a cryptocurrency that is needed and sought out by users who can benefit from it’s utility. It is also (...)

    #cryptocurrency-investment #cheap-crypto-coins #blockchain #altcoins

  • Stablecoins: A solution for every unbanked business out there
    https://hackernoon.com/stablecoins-a-solution-for-every-unbanked-business-out-there-d09731a65f6

    For most businesses, opening a bank account and getting access to a variety of services is a straightforward task.But this is not the case for certain businesses that operate on the fringe of what is seen as acceptable by governments and society at large.The burgeoning #cannabis industry is a case in point. The industry is legal in a number of states in America, yet many of these businesses still can’t access the most basic of banking services.It’s a big problem for an industry that is expected to grow to $16 billion in 2019. Business owners have had to think of imaginative and dangerous ways to store millions of dollars in physical cash.The problem is that while the industry is considered legal in California and other states, most banks cannot offer these businesses services due to (...)

    #cannabis-dispensary #stable-coin #cryptocurrency #crypto

  • Universal Loss of #privacy & the Bullish Case for #bitcoin Adoption
    https://hackernoon.com/universal-loss-of-privacy-the-bullish-case-for-bitcoin-5d42a2864756?sour

    It is incredible how some visionaries who lived among us were able to predict things decades in advance — the famed British author George Orwell was one such visionary. In his literary classic “1984” (which was written in 1949, by the way!), he painted the picture of a total surveillance society under “Big Brother” where humans live and function like sheeple and every person’s every action or word would have consequences.Lo and behold, enter real life in 2019, and we are looking more and more likely to descend into an #orwellian future.The internet, without doubt the greatest human invention of the modern era, changed human life as we knew it. The internet made information mobile, which led to unlimited possibilities. It granted new ideas, sights, sounds, concepts, skills, and opportunities to (...)

    #surveillance-state #offshore-banking

  • Mark Zuckerberg’s Plans to Capitalize on Facebook’s Failures | The New Yorker
    https://www.newyorker.com/tech/annals-of-technology/mark-zuckerbergs-plans-to-capitalize-on-facebooks-failures

    On Wednesday, a few hours before the C.E.O. of Facebook, Mark Zuckerberg, published a thirty-two-hundred-word post on his site titled “A privacy-focused vision for social networking,” a new study from the market research firm Edison Research revealed that Facebook had lost fifteen million users in the United States since 2017. “Fifteen million is a lot of people, no matter which way you cut it,” Larry Rosin, the president of Edison Research, said on American Public Media’s “Marketplace.” “This is the second straight year we’ve seen this number go down.” The trend is likely related to the public’s dawning recognition that Facebook has become both an unbridled surveillance tool and a platform for propaganda and misinformation. According to a recent Harris/Axios survey of the hundred most visible companies in the U.S., Facebook’s reputation has taken a precipitous dive in the last five years, with its most acute plunge in the past year, and it scores particularly low in the categories of citizenship, ethics, and trust.

    While Zuckerberg’s blog post can be read as a response to this loss of faith, it is also a strategic move to capitalize on the social-media platform’s failures. To be clear, what Zuckerberg calls “town square” Facebook, where people post updates about new jobs, and share prom pictures and erroneous information about vaccines, will continue to exist. (On Thursday, Facebook announced that it would ban anti-vaccine advertisements on the site.) His new vision is to create a separate product that merges Facebook Messenger, WhatsApp, and Instagram into an encrypted and interoperable communications platform that will be more like a “living room.” According to Zuckerberg, “We’ve worked hard to build privacy into all our products, including those for public sharing. But one great property of messaging services is that, even as your contacts list grows, your individual threads and groups remain private. As your friends evolve over time, messaging services evolve gracefully and remain intimate.”

    This new Facebook promises to store data securely in the cloud, and delete messages after a set amount of time to reduce “the risk of your messages resurfacing and embarrassing you later.” (Apparently, Zuckerberg already uses this feature, as Tech Crunch reported, in April, 2018.) Its interoperability means, for example, that users will be able to buy something from Facebook Marketplace and communicate with the seller via WhatsApp; Zuckerberg says this will enable the buyer to avoid sharing a phone number with a stranger. Just last week, however, a user discovered that phone numbers provided for two-factor authentication on Facebook can be used to track people across the Facebook universe. Zuckerberg does not address how the new product will handle this feature, since “town square” Facebook will continue to exist.

    Once Facebook has merged all of its products, the company plans to build other products on top of it, including payment portals, banking services, and, not surprisingly, advertising. In an interview with Wired’s editor-in-chief, Nicholas Thompson, Zuckerberg explained that “What I’m trying to lay out is a privacy-focused vision for this kind of platform that starts with messaging and making that as secure as possible with end-to-end encryption, and then building all of the other kinds of private and intimate ways that you would want to interact—from calling, to groups, to stories, to payments, to different forms of commerce, to sharing location, to eventually having a more open-ended system to plug in different kinds of tools for providing the interaction with people in all the ways that you would want.”

    L’innovation vient maintenant de Chine, en voici une nouvelle mention

    If this sounds familiar, it is. Zuckerberg’s concept borrows liberally from WeChat, the multiverse Chinese social-networking platform, popularly known as China’s “app for everything.” WeChat’s billion monthly active users employ the app for texting, video conferencing, broadcasting, money transfers, paying fines, and making medical appointments. Privacy, however, is not one of its attributes. According to a 2015 article in Quartz, WeChat’s “heat map” feature alerts Chinese authorities to unusual crowds of people, which the government can then surveil.

    “I believe the future of communication will increasingly shift to private, encrypted services where people can be confident what they say to each other stays secure and their messages and content won’t stick around forever,” Zuckerberg tells us. “This is the future I hope we will help bring about.” By announcing it now, and framing it in terms of privacy, he appears to be addressing the concerns of both users and regulators, while failing to acknowledge that a consolidated Facebook will provide advertisers with an even richer and more easily accessed database of users than the site currently offers. As Wired reported in January, when the merger of Facebook’s apps was floated in the press, “the move will unlock huge quantities of user information that was previously locked away in silos.”

    Le chiffrage des messages est loin d’être une panacée pour la vie privée, ni pour la responsabilité sociale des individus.

    Zuckerberg also acknowledged that an encrypted Facebook may pose problems for law enforcement and intelligence services, but promised that the company would work with authorities to root out bad guys who “misuse it for truly terrible things like child exploitation, terrorism, and extortion.” It’s unclear how, with end-to-end encryption, it will be able to do this. Facebook’s private groups have already been used to incite genocide and other acts of violence, suppress voter turnout, and disseminate misinformation. Its pivot to privacy will not only give such activities more space to operate behind the relative shelter of a digital wall but will also relieve Facebook from the responsibility of policing them. Instead of more—and more exacting—content moderation, there will be less. Instead of removing bad actors from the service, the pivot to privacy will give them a safe harbor.

    #facebook #Cryptographie #Vie_privée #Médias_sociaux #Mark_Zuckerberg

  • Mapping #trickbot and RevengeRAT with MITRE ATT&CK and AlienVault USM Anywhere
    https://hackernoon.com/mapping-trickbot-and-revengerat-with-mitre-att-ck-and-alienvault-usm-any

    MITRE ATT&CK™ (Adversarial Tactics, Techniques and Common Knowledge) is a framework for understanding attackers’ behaviors and actions.We are pleased to announce that AlienVault USM Anywhere and Open Threat Exchange (OTX) now include MITRE ATT&CK™ information. By mapping alarms to their corresponding ATT&CK techniques, we are assisting in prioritizing analysis work by understanding the context and scope of an attack.Below we’ve outlined how this new capability can help you investigate two threats — TrickBot and RevengeRat.Mapping a Trickbot infection with ATT&CKTrickbot is a #malware family that was discovered a few years ago targeting the banking industry, but following some investigations, it is still active and evolving. The malware is usually delivered using attached Office (...)

    #mitre-attack #threat-intelligence #security

  • Meet Francis Malofiy, the Philadelphia Lawyer Who Sued Led Zeppelin
    https://www.phillymag.com/news/2019/02/11/francis-malofiy-led-zeppelin

    Francis Malofiy may be the most hated man in the Philadelphia legal community. He may also be on the cusp of getting the last laugh on rock’s golden gods.

    #droit_d_auteur #musique #plagiat

    • @sandburg Voillà

      Meet Francis Malofiy, the Philadelphia Lawyer Who Sued Led Zeppelin
      https://www.phillymag.com/news/2019/02/11/francis-malofiy-led-zeppelin

      People Laughed When This Philly Lawyer Sued Led Zeppelin. Nobody’s Laughing Now.

      Francis Malofiy may be the most hated man in the Philadelphia legal community. He may also be on the cusp of getting the last laugh on rock’s golden gods.

      By Jonathan Valania· 2/11/2019


      Philadelphia-area attorney Francis Malofiy. Photograph by Bryan Sheffield.

      The fact that Philadelphia barrister Francis Alexander Malofiy, Esquire, is suing Led Zeppelin over the authorship of “Stairway to Heaven” is, by any objective measure, only the fourth most interesting thing about him. Unfortunately for the reader, and the purposes of this story, the first, second and third most interesting things about Malofiy are bound and gagged in nondisclosure agreements, those legalistic dungeons where the First Amendment goes to die. So let’s start with number four and work our way backward.

      At the risk of stating the obvious, ladies and gentlemen of the jury, let the record show that “Stairway to Heaven” is arguably the most famous song in all of rock-and-roll, perhaps in all of popular music. It’s also one of the most lucrative — it’s estimated that the song has netted north of $500 million in sales and royalties since its 1971 release. Malofiy’s lawsuit, cheekily printed in the same druidic font used for the liner notes of the album Led Zeppelin IV, alleges that Jimmy Page and Robert Plant — Zep’s elegantly wasted guitarist/producer/central songwriter and leonine, leather-lunged lead singer, respectively — stole the iconic descending acoustic-guitar arpeggios of the first two minutes of “Stairway” from “Taurus,” a song with a strikingly similar chord pattern by a long-forgotten ’60s band called Spirit. At the conclusion of a stormy, headline-grabbing trial in 2016 that peaked with testimony from Page and Plant, the jury decided in Zep’s favor.

      When the copyright infringement suit was first filed in Philadelphia by Malofiy (pronounced “MAL-uh-fee”) on behalf of the Randy Craig Wolfe Trust — which represents the estate of Randy “California” Wolfe, the now-deceased member of Spirit who wrote “Taurus” — people laughed. Mostly at Malofiy. The breathless wall-to-wall media coverage the trial garnered often painted him as a loose-cannon legal beagle, one part Charlie Sheen, one part Johnnie Cochran. “Everybody kind of dismissed me as this brash young lawyer who didn’t really understand copyright law,” he says, well into the wee hours one night back in December, sitting behind a desk stacked four feet high with legal files in the dank, subterranean bunker that is his office.

      Hidden behind an unmarked door on the basement floor of a nondescript office building in Media, the law firm of Francis Alexander LLC is a pretty punk-rock operation. The neighbors are an anger management counselor and a medical marijuana dispensary. “I think of us as pirates sinking big ships,” Malofiy, who’s 41, brags. Given the sheer number of death threats he says he’s received from apoplectic Zep fans, the fact that mysterious cars seem to follow him in the night, and his claim to have found GPS trackers stuck to the bottom of his car, the precise location of his offices remains a closely guarded secret. Failing that, he has a license to carry, and most days, he leaves the house packing a .38-caliber Smith & Wesson.

      While most lawyers are sleeping, Malofiy is working through the night to defeat them, often until sunrise, fueled by an ever-present bottle of grape-flavored Fast Twitch as he chain-chews Wrigley’s Spearmint gum and huffs a never-ending string of Marlboro menthols. We’ve been talking on the record for going on eight hours, and Malofiy shows no signs of fading; in fact, he’s just announced the arrival of his third wind.

      He has a pretty good ‘fuck you’ attitude that comes from an inner confidence. He might have had a little too much early on,” attorney Jim Beasley Jr. says of Malofiy. “If you piss the judge off with your pirate act, the judge can make it difficult for you. Sometimes you could avoid all that by not swinging your pirate sword around.

      Talk turns to the distinctly pro-Zep tenor of the media coverage of the “Stairway” trial. “I was a punch line for jokes,” he says, spitting his gum into a yellow Post-it and banking it into the trash for, like, the 42nd time. Nobody’s laughing now, least of all Page and Plant. Nor, for that matter, is Usher. Back in October, at the conclusion of a dogged seven-year legal battle marked by a bruising string of dismissals and sanctions, Malofiy won a $44 million verdict — one of the largest in Pennsylvania in 2018 — for a Philadelphia songwriter named Daniel Marino who sued his co-writers after being cut out of the songwriting credits and royalties for the song “Bad Girl” from the R&B heartthrob’s 2004 breakout album, Confessions, which sold more than 10 million copies.

      Also, in late September of last year, the U.S. Ninth Circuit Court of Appeals ruled in favor of Malofiy’s appeal of the 2016 “Stairway to Heaven” verdict and ordered a new trial on the grounds that the court “abused its discretion” when the judge refused to allow Malofiy to play a recording of “Taurus” for the jury. (Members were only allowed to hear an acoustic-guitar rendition played from sheet music.) The retrial is expected to begin in the next year, and Page and Plant, along with bassist John Paul Jones, are again anticipated to take the stand. Copyright experts say Led Zeppelin — which has a long history of ripping off the ancient riffs and carnal incantations of wizened Delta bluesmen and only giving credit when caught — should be worried.

      Malofiy, who calls Zep “the greatest cover band in all of history,” will go to trial armed with reams of expert testimony pinpointing the damning similarities between the two songs — not just the nearly identical and atypical chord pattern, but the shared melodic figurations, choice of key and distinctive voicings. He’ll also show the jury that Page and Plant had ample opportunity to hear “Taurus” when Zep opened for Spirit on their first American tour in 1968, two years before they wrote and recorded “Stairway.”

      “Most big companies rely on the concept of wearing you down, forcing you to do so much work it literally drives you broke,” says Glen Kulik, a heavy-hitter L.A.-based copyright lawyer who signed on as Malofiy’s local counsel when the Zep case was moved to federal court in California. “If you have any chance of standing up to them, it’s going to require an incredible amount of persistence, confidence, and quite a bit of skill as well, and Francis has all those things in spades.” And Kulik would know, having successfully argued a landmark copyright infringement case before the Supreme Court in 2014 that paved the way for the Zeppelin suit.


      Francis Malofiy. Photograph by Bryan Sheffield.

      Ultimately, Malofiy doesn’t have to prove Led Zeppelin stole Spirit’s song; he just has to convince a jury that’s what happened. Assuming the trial goes forward — and that this time, he’s allowed to play recordings of both songs for the jury — there will be blood. Because contrary to his hard-won rep as a bull in the china shop of civil litigation, Malofiy possesses a switchblade-sharp legal mind, an inexhaustible work ethic, and a relentless, rock-ribbed resolve to absorb more punches than his opponents can throw. He’s a ruthlessly effective courtroom tactician with a collection of six-, seven- and eight-figure verdicts, not to mention the scalps of opposing counsel who underestimated his prowess. “I don’t plink pigeons; I hunt lions and tigers and bears,” he says. The big game he’s targeted in the past decade include deep-pocketed transnational corporations like Volvo (an epic seven-year case that ended in an undisclosed settlement) and Hertz (against whom he won a $100,000 verdict).

      In the arena of civil litigation, where the odds are increasingly stacked against plaintiffs, Malofiy claims to have never lost a jury trial, and that appears to be true. “I have lost twice — in the Zeppelin case and a lawsuit against Volvo — but got both decisions reversed on appeals,” he says, unsheathing a fresh stick of Wrigley’s. “Now, the same people that were asking me for years why I’m doing it are asking me how I did it.”

      If Malofiy prevails in the coming “Stairway” retrial, he’ll completely shatter the Tolkien-esque legend of the song’s immaculate conception — that it was birthed nearly in toto during a mystical retreat at a remote Welsh mountain cottage called Bron-yr-aur, to which many a starry-eyed Zep disciple has made a pilgrimage once upon a midnight clear when the forests echo with laughter. It will be like proving that da Vinci didn’t paint the Mona Lisa, that Michelangelo didn’t sculpt David. Barring a last-minute settlement, many legal and copyright experts predict that Malofiy may well emerge victorious, and credit for the most famous rock song in the world will pass from the self-appointed Golden Gods of Led Zeppelin to some obscure, long-forgotten (and not even very good) West Coast psych band, along with tens of millions in royalties, effectively rewriting the sacred history of rock-and-roll. And the man who will have pulled off this fairly miraculous feat of judicial jujitsu is the enfant terrible of Philadelphia jurisprudence.

      Malofiy hates wearing a suit and tie. Outside the courtroom, he dresses like a rock star masquerading as a lawyer: a crushable black trilby perched at a jaunty angle atop a blue bandana, a collarless black and orange leather Harley jacket, and a pair of beat-to-fuck brown Wesco boots, unlaced. “I’m always in jeans and boots when I meet new clients,” he says. “I warn them up front: ‘If you want a fancy lawyer in a suit, you should go elsewhere.’”

      The barrier to entry for new clients at Francis Alexander LLC is steep, because Malofiy doesn’t take on new cases so much as he adopts new causes. A case has to register on a deeply personal level if he’s going to eat, sleep, and fight to the death for it for the next five to seven years.

      “Lawyers have an ethical responsibility to advocate zealously for their clients,” says attorney Max Kennerly, who’s worked with Malofiy on a number of cases. “But frankly, in this business, a lot of lawyers play the odds and just do a ‘good enough’ job on a bunch of cases. Sometimes they win, and sometimes they lose. Francis really throws himself into his cases.”

      After 10 years of struggle, things finally seem to be breaking Malofiy’s way. Fat checks from cases settled long ago are rolling in, alleviating some fairly crippling cash-flow issues, and big cases just keep falling out of the sky — more than his two-lawyer outfit can field. They need to staff up, stat. Malofiy wants to hire some young bucks fresh out of law school — preferably Temple — as force multipliers in his quest to hold the powerful accountable on behalf of the powerless. “Most kids in law school right now will never see the inside of a courtroom,” he says. “Law schools don’t want to teach you how to change the system; they want to load you up with debt so you have to go do grunt work for some corporate law firm that specializes in maintaining the status quo.”


      Francis Malofiy. Photograph by Bryan Sheffield.

      Malofiy doesn’t have a website. He doesn’t do social media. He doesn’t trawl the watering holes of the rich and powerful. He doesn’t even have a business card. Thanks to the notoriety and name recognition that came with the Zeppelin trial, new clients chase him. He just got off the phone with a Brooklyn puppet maker who wants him to sue the band Fall Out Boy for alleged misuse of two llamas — Frosty and Royal Tea — that it created. Right now, he’s on a conference call with a trio of British songwriters who want Malofiy to sue the Weeknd for allegedly lifting a key section of their song “I Need to Love” for a track called “A Lonely Night” on his 2016 Starboy album, which has sold more than three million copies to date.

      “Why are you guys calling me?” he asks.

      “We’re looking for an honest person fighting for ordinary working people,” says Billy Smith, one of the Brit songwriters in question. Malofiy clearly likes the sound of that. After thinking it over for a few moments, he tells them he’ll take their case and gives them his standard new-client spiel. “I can’t promise we’ll win, but I can promise I won’t turn yellow when things turn bad. I won’t put my tail between my legs and run,” he says. “If there is any bad news, you will hear it from me first.”

      His teeth have been bothering him for days, and near the end of the call, one of his dental caps comes loose. He spits it out, and it skitters across his desk before he traps it under his palm. Most lawyers would be mortified. Malofiy thinks it’s hilarious. “I got teeth like you people,” he says to the Brits. Everybody laughs.

      Many people mistake Malofiy’s unconventionality as a design flaw when it’s actually a feature. “I think that’s an incredibly important part of what makes him so good as an attorney,” says A.J. Fluehr, 33, Malofiy’s right-hand man, co-counsel and, though eight years his boss’s junior, voice of reason. “Because he’s so unorthodox, I believe it causes a lot of other attorneys to underestimate him and think, ‘Oh, he’s not serious; he doesn’t know what he’s doing.’ All of sudden, there’s a massively serious case against them.”

      Even some of the defense lawyers who’ve done battle with Malofiy begrudgingly acknowledge his chops. “I’ve known Francis for four years now. He is difficult to deal with but a fierce advocate for his clients and his cause,” says Rudolph “Skip” DiMassa, a partner at Duane Morris. “Calling him ‘abrasive’ would be putting it mildly. But he wears it like a badge of honor that he is not like all the other lawyers in town.”

      When I read that and similar assessments from other lawyers back to Malofiy, he chalks them up to blowback for the heresy of Robin Hooding a corrupt status quo. “I have a target on my back because I sue big corporations, politicians, big law firms. Hell, I sued DA Seth Williams,” he says one night at the Irish Pub, as he’s nursing a screwdriver he’ll chase with a root beer. “When you start stepping on toes and suing the wrong people and get a few million shifted from those who have it to those who don’t — that’s where the change happens; that’s where you make a difference. And there is a price you have to pay for that.”

      According to family lore, Francis Malofiy’s maternal grandfather was murdered by Nazis in occupied Greece; his great-grandmother had to cut the body down from a tree and carry it home on the back of a mule. Concurrently, his paternal grandfather was murdered by Nazis in Ukraine, while his father and grandmother were frog-marched to camps in Germany. Some things can never be forgotten or forgiven. That’s why Malofiy is always kicking against the pricks. A slight child, he was often bullied at school, and after a brief experiment with turning the other cheek, he started fighting back. Hard. He recalls the day that a bully was picking on a girl half his size; young Francis cold-cocked him and threw him into a closet door. The kid had to be taken out on a stretcher. After that, the bullies moved on to easier prey. “I was always fighting for the little guy, even back then,” he says.

      In the third grade, friends turned him on to Poison’s Look What the Cat Dragged In and Bon Jovi’s Slippery When Wet, indelibly imprinting the spandexed bikers-and-strippers aesthetic of ’80s hair-metal onto his psyche. He started channeling the energy he once put into beating back bullies into beating the drums. One day in the sixth grade, he came home to tell his dad about a band all the kids were into: “The Led Zeppelins.”

      “He said, ‘No, son, it’s just Led Zeppelin.’”

      “No, I’m pretty sure it’s the Led Zeppelins.”

      So his father, who’d seen the band at the Electric Factory, drove Francis to the record store at the Granite Run Mall, where the clerks set him straight. His father bought the four-cassette Zep box set that had just come out. On the way home, Malofiy heard “Whole Lotta Love” for the first time, and before the song even ended, it was official: Led Zeppelin was his favorite band. When he was in high school, his drum teacher gently broke the news that Zep didn’t exactly, um, write all their own music — that key parts of their iconic songs had been cherry-picked from old, obscure blues recordings. “I said, ‘C’mon, don’t talk shit about Jimmy Page!’” Malofiy recalls. Then his teacher played him the Willie Dixon-penned Muddy Waters track “You Need Love” — which is what “Whole Lotta Love” was called before Zep hijacked the lyrics and the riff and Frankensteined them into the gloriously scuzzy heavy-metal Viking porno movie for the ears we’ve come to know and love. It was hard for Francis to process, and even harder when he was tipped to the uncanny similarity between Spirit’s “Taurus” and “Stairway.” Still, the spell Zep cast over him remained unbroken.


      Francis Malofiy. Photograph by Bryan Sheffield.

      As a young teenager, he built go-karts, dirt bikes and small-block Chevys. To make spending money for guitars and records, he started buying beater cars, fixing them up, and flipping them for quadruple what he paid for them. He almost didn’t graduate from high school because he’d played hooky too many times, to go fishing or work on cars or play guitar. When he finally got his high-school diploma, he raced home from school to show his mother in his Chevy S-10 lowrider. Tearing ass on the backcountry roads of Media, he blew past a cop who immediately lit up his cherry top and gave pursuit. Soon, one cop car became two, then three, until there were five cars tailing him.

      Much to his parents’ dismay, his run-ins with the law became common. They were never for anything all that serious, just the usual teen-rebel monkeyshines: fighting, speeding, the occasional high-speed car chase. He got a big wake-up call in 1998 when his beloved Uncle Nick — a.k.a. Nicholas “The Greek” Vasiliades — was handed a life sentence for running a high-volume meth lab in a warehouse in Manayunk that supplied the drug networks of the Pagans and the Mafia, as well as for his 50-gun arsenal of illegal weaponry. Malofiy was devastated. “I was going down a bad path,” he says. “My uncle pulled me aside and said, ‘You’re smart enough to do it the right way. You need to step away.’”

      Malofiy took the warning to heart and focused on getting a college education, graduating from Penn State in 2000 with a degree in finance. After college, he went back home to Media and his true loves: cars, girls and heavy metal. With a revolving cast of musicians, he formed multiple go-nowhere suburban hard-rock bands with cringe-y names like Prada G and Sluts ’n Slayers. Unimpressed, his parents urged him to enroll in law school. Eventually he relented, forging this pact: He would go to law school if he: a) could do whatever he wanted with the unfinished basement of his parents’ home (i.e., build a high-end recording-studio-cum-man-cave tricked out with a kitchen, bedroom and bathroom); and b) nobody hassled him about having long hair, rocking out and chasing girls. Deal. Malofiy took the LSATs and scored just south of 160 — hardly off the charts, but good enough to get into Temple, where he found himself drawn to copyright law.

      He graduated from law school in December of 2007 and took the bar exam the following July. On the night of August 16, 2008, he stopped into the Liberty Bar at 22nd and Market with his then-girlfriend. It was crowded, but they found a table in the back. After ordering drinks, they started getting static from a group of three young men in ball caps and white t-shirts. “Three drunken jerkoffs, white privilege out the ass,” says Malofiy. According to Malofiy’s testimony, the trio mocked his bandana and called him “cunt,” “pussy” and a “dirty spic.” (It was summer; Malofiy was tan.) According to Malofiy, at some point the men apologized and the situation seemed defused, but then one of them grabbed Malofiy’s girlfriend’s ass. “I said, ‘That’s it. Follow me out,’ and made for the door,” Malofiy says, but he was blocked by a member of the group. As they stood chest-to-chest, Malofiy says, the man struck him twice. Finally, Malofiy, who boxed in college, unloaded with a right cross that landed squarely on the guy’s left cheekbone, shattering the glass still clenched in Malofiy’s fist.

      The man suffered a deep gash in his cheek that would require 150 stitches and reconstructive surgery. Malofiy nearly severed the tendons in his thumb. Bleeding profusely, he had his girlfriend drive him to the emergency room at Penn Presby to get stitched up and then to Central Detectives to file a criminal complaint.

      Two months later, in October, notice came in the mail that he had passed the bar. His mother was ecstatic and insisted on driving him to the Pittsburgh office of the Prothonotary of the Supreme Court of Pennsylvania immediately to obtain his law license rather than wait two weeks for the formal ceremony. When they got home the next day, Malofiy got a call from Central Detectives, who said they had a “body warrant” for his arrest on aggravated assault and related charges stemming from the Liberty Bar fight. The next day, he turned himself in and spent a night in jail awaiting a bail hearing. Had he not gone to Pittsburgh at his mother’s behest, it’s unlikely he’d have gotten his law license with a felony arrest on his record.

      Malofiy’s first case as a newly minted lawyer would involve defending a client staring down decades in prison if convicted: himself. Heeding the maxim that a man who is his own lawyer has a fool for a client, Malofiy hired Sam Stretton, one of the most respected criminal defense attorneys in the city. Malofiy took the stand and delivered an impassioned defense of his actions. “He had already hit me twice, blocked my exit-way,” he testified. “I was scared for my safety and my girlfriend’s safety, and his friends had just yelled ‘Fight!’ and came up to me with fists drawn. I thought I had no other option.” The jury found him not guilty on all charges.

      “Welcome to Hogwarts,” Malofiy jokes as he shows me around the vast oak and stained-glass room that houses the law library at the Beasley Firm, possibly the most fearsome and feared personal-injury law firm in the city, where he worked, in an of-counsel capacity, from 2012 to 2014.

      Fresh out of law school and still wet behind the ears, Malofiy showed up one day in search of mentoring. Granted an audience with Jim Beasley Jr., one of the most successful plaintiff’s attorney in the city, Malofiy ended up with a promise of rent-free office space, the phone extension 666, and a commitment to help finance some of the highly ambitious cases he was mounting — a product-liability suit against Volvo, and a breach-of-contract suit, against a marble manufacturer that had screwed his client out of an ownership share, that resulted in a $4.2 million verdict — not to mention the Usher case. “Jim was like, ‘I keep getting calls from defense lawyers saying That kid’s the fucking devil, so you must be doing something right,’” Malofiy recalls.

      During Malofiy’s tenure at Beasley, he took out a controversial full-page ad in this magazine that depicted him crashing through a courtroom in a hot rod, looking every bit James Dean in Rebel Without a Cause. Many members of Philadelphia’s uptight, buttoned-down legal community thought it was disrespectful. “Everyone was outraged, but I thought it was funny,” says Beasley. “He has a pretty good ‘fuck you’ attitude that comes from an inner confidence. He might have had a little too much of that early on, but I think he’s throttled back a bit. So many of a judge’s decisions are ties and jump-balls that are not reversible, and if you piss the judge off with your pirate act, the judge can make it difficult for you. Sometimes you could avoid all that by not swinging your pirate sword around.”

      Malofiy has learned this the hard way. In 2015, a three-judge panel voted to suspend his license to practice law in U.S. District Court in the Eastern District of Pennsylvania for improper conduct in the Usher case — despite the fact that the special prosecutor recommended what amounted to a slap on the wrist: a reprimand.

      “It’s highly unusual that they would disregard the disciplinary recommendations of the special prosecutor after he has heard the facts,” says Stretton. The matter is currently on appeal before the Third Circuit.

      At Malofiy’s insistence, I’ve been tailing him for the better part of a month: from a big-dollar NDA’d settlement in a judge’s quarters, to a Port Richmond dive bar called Chuckles, to a Bucks County gun shop where he plunked down $1,729 for a handsome Benelli shotgun (a gift for his right-hand man Fluehr), to a back-alley strip bar in Center City and the disused factory under the Commodore Barry Bridge that he’s purchased and plans to renovate into office space, living quarters and a beer garden. I watched him hide his $82,000 Land Rover from the repo man (“It’s all a misunderstanding”) and then, days later, saw a pile of white letter-size envelopes stacked on his desk, each containing what looked to be thousands in cash. What I have come to learn is this: When you write about lawyers, there is so much you can’t write about lawyers.

      Malofiy slowly, methodically and unflinchingly parceled out the most personal details of his backstory — the good, the bad and the ugly — as I incrementally earned his trust. But always on his timetable, not mine. It could be exasperating, but by the end, I discovered the method to his madness: He’d been pacing his revelations as he would a trial presentation. And now we’re reaching the crescendo of his closing argument — the big reveal.


      Francis Malofiy. Photograph by Bryan Sheffield.

      It’s a few clicks shy of midnight at Malofiy’s house in Media on a Sunday night shortly before Christmas. In the morning, he’s jetting off to an auction in London to bid on the Helios recording console that captured “Stairway to Heaven” for the ages. (Malofiy, true to form, won’t confirm that he won or lost the auction.) Though he’s been locked in a nasty four-year legal fight with Led Zeppelin, they’re still his favorite band.

      Malofiy called to insist that I come to his house tonight. “Why? What for?” I demanded. He said he wanted to show me something I could only see there. I begged off, explaining that this article was due in the morning and I already had more than I could use. But he insisted, promising it would be worth my while. He doesn’t disappoint. He tells me to open the freezer. There’s a bottle of Tito’s vodka, an ice tray, and half a lemon on a plate with a yellow plastic knife. “That’s the lemon Robert Plant squeezed into his tea when we deposed him in London back in 2016,” he claims. This is deeply ironic and, if you’re acquainted with the role lemons play in Plant’s legend, cosmically hilarious. One of Led Zeppelin’s most infamous tracks is “The Lemon Song,” a sultry blooze ramble from 1969’s deathless Led Zeppelin II stitched together from pieces of Howlin’ Wolf’s “Killing Floor” and Robert Johnson’s “Travelling Riverside Blues.” (Zep settled a 1972 copyright suit over the Howlin’ Wolf portion of the song.) In the fifth verse, Plant sings:

      Squeeze me baby, till the juice runs down my leg
      The way you squeeze my lemon, ah
      I’m gonna fall right out of bed

      By swiping that lemon rind at the deposition, Malofiy stole Robert Plant’s metaphoric penis the way Prometheus stole fire from the gods. Zep famously invoked the mythic “Hammer of the Gods” from Norse legend. For Jimmy Page, that hammer was his guitar, but for Plant it was his, um, mighty lemon tree.

      Incredible though it may seem, Malofiy says he’s kept the lemon on ice for the past three years and had it in his briefcase like a talisman when he gave oral arguments for what proved to be his successful appeal of the 2016 “Stairway” verdict. He has every intention of taking it to the retrial that will, barring unforeseen developments, commence in the next year.

      “Robert Plant is always going on about his lemon, and at the deposition he made a big deal out of slicing it up and squeezing it into his tea and then sucking on the rind,” he says with a cat-who-ate-the-canary grin. “Jimmy Page famously dabbled in black magic and was always going on about Aleister Crowley, and I said to myself, ‘If they are going to use black magic to try to beat me on technicalities — well, two can play at that game.’”

      Published as “The Devil’s Advocate” in the February 2019 issue of Philadelphia magazine.

  • Journey Through FinovateEurope 2019
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    Don’t keep your money siloed from the 21st century! Photo courtesy canva.comMoney has come a long way from dusty ledgers, oversized check-books and waiting in long lines at the bank.In fact, consumers are so frustrated with “Big Banks” failure to innovate that one in three of us believe traditional banks will cease to exist in 5 years.Most people don’t even use physical money anymore. The mobile-payment market has made cash a relic in Asia, with 1.4 billion monthly users on China’s two biggest platforms (or roughly 18% of the world’s population). Though mobile payments are growing, there’s something even more revolutionary to the traditional banking sector:The introduction of #cryptocurrency as a real alternative for payment.In South Korea, consumers can use crypto to pay at thousands of retail (...)

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    Dear reader, where do you hold your money? In your #wallet, in a bank, under your bed, or you go for all three options? Well, there are valid reasons for keeping the money in different places — the way we keep them. We want to buy flowers and chocolates for our significant other on Valentine’s day paying cash to a seller right away, we are saving money to buy an apartment — we keep money in a bank. Anyhow, you are the only person that has access to your funds: you know where is your wallet and you know pin code for your banking card. The story is no different in the crypto world, except the wallets are a bit more complicated.It’s hot and it’s coldDigital crypto wallets are of 2 main types. First, there are hardware wallets — physical devices that usually look like flash drives. Second, there are (...)

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    Banking or the financial side keeps the economy of a country balanced and currently, it’s too complex! The existing system is having too much of loopholes as well as the system can be manipulated easily. Blockchain is perfect to replace the existing system and the limitations shall be thrown away in the air. Here, in this article, we’ll discuss how blockchain technology is going to transform the banking/financial industry.You might be aware of the present banking system and certainly, you have faced difficulties in it. But the term “blockchain technology” might be new to you, so, let us understand the basics first.How blockchain technology will reshape the banking / financial sector?What is blockchain technology?0Blockchain technology in simple words can be defined as a distributive ledger (...)

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  • A clarification on the perpetual discussion of #bitcoin’s timestamp
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    #blockchain #bitcoin-timestamp

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    #blockchain #ethereum-reserves #makerdao #stable-coin

  • Principal Component Analysis — Unsupervised Learning Model
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    Principal Component Analysis — Unsupervised Learning ModelLearn how to train and evaluate an unsupervised machine learning model — principal component analysis in this article by Jillur Quddus, a lead technical architect, polyglot software engineer and data scientist.There are numerous real-world use cases, where the number of features available, which may potentially be used to train a model, is very large. A common example is economic data and using its constituents, stock price data, employment data, banking data, industrial data, and housing data together to predict the gross domestic product (GDP). Such types of data are said to have high dimensionality. Though they offer numerous features that can be used to model a given use case, high-dimensional datasets increase the computational (...)

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  • #bresil
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    The scandal most centrally involves President Bolsonaro’s eldest son, Flavio, who has long been a State Deputy from Rio de Janeiro but was just elected to the Federal Senate with a massive vote total in the last election. The scandal began with the discovery of highly suspicious payments into and out of the account of Flavio’s driver, a former police officer and long-time friend of President Bolsonaro’s.

    Each new discovery has escalated the scandal’s seriousness: one unexplained deposit was found going into the account of President Bolsonaro’s wife, Michelle; both the driver and Flavio himself began using highly suspicious maneuvers to try to stymie the investigation; the amounts of the suspicious transfers began rapidly increasing to $US 2 million; and then deposits were found going into Flavio’s accounts in small increments of multiple deposits in rapid succession: at times up to 10 cash deposits made within 3 minutes, the hallmark of money laundering and evading banking regulations.

  • How Libertarian theology and Trump are destroying the Internet — and America – Alternet.org
    https://www.alternet.org/2019/01/how-libertarian-theology-and-trump-are-destroying-the-internet-and-america

    With speeds up to 100 times faster than current 4G cellular data, 5G will make possible everything from driverless cars to cell-connected long-distance drones to precision remote surgery. The amount of data flowing through our cellular systems will explode, along with places it can be used and the uses to which it can be applied.

    Remote applications that are currently too difficult to wire for high-speed internet or won’t work well at 4G speeds will easily become remotely controlled, spreading the internet revolution to every device in the home, office, and even remote workplaces.

    Along with all this data will, inevitably, come hackers, both criminal and state-sponsored. The amount of data that it now takes a third of a year to harvest with 4G can be scooped up in a single day using 5G.

    Given that the U.S. government invented the internet (yes, Al Gore did co-author the legislation) and has a huge stake in its security, doesn’t it make sense that our government should provide, at least in framework and standards, for its security?

    But, no. Trump and Pence want to do to the FCC what they’ve done to the EPA, the Department of the Interior, the FDA, and to oversight of our banking systems.

    According to Trump and his billionaire libertarian owners, the safety and security of America is not the proper role of government. Not our air, our water, our public lands, or even our internet.

    “Just turn it all over to the billionaires,” they say. “What could possibly go wrong?”

    FCC Chairman Ajit Pai, the former Verizon lawyer, even went so far as to say that “the market, not government, is best positioned to drive innovation and leadership” with regard to internet security.

    Meanwhile, the President’s National Security Telecommunications Advisory Committee—after looking at how 5G will blow open data operations across the country—wrote just three months ago that “the cybersecurity threat now poses an existential threat to the future of the nation.”

    #Cybersécurité #Libertariens #Idéologie_californienne #5G #Normalisation

  • 200+ Banks & Financial Organizations will use #ripplenet in 2019
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    Including the use #ripple Software and #xrp #cryptocurrency at a Regulated UK BankEuro Exim Bank is a registered and regulated UK-based bank that has announced it will use Ripple’s xRapid software and the cryptocurrency XRP for cross-border payments. This is one of several new banking partnerships that Ripple revealed in 2019. At this point, it is working with over 200 banks and financial organizations.xRapid #blockchain Offers Fast and Transparent TransactionsRipple’s blockchain software is like other blockchain platforms in that it can provide transparent and real-time visibility of transactions to all stakeholders. For those with access to the blockchain ledger, there is no need to email queries or check confirmations. Stakeholders can simply check a link to the transaction which is (...)

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    #blockchain #smart-contracts #blockchain-technology