Wednesday, October 03, 2018

Crain's New York Business: Taxi lender Lomto Federal Credit Union picked up for scrap

Aaron Elstein

Lomto Federal Credit Union of Queens, which failed last year after taxi loans unleashed a shower of red ink, was acquired today by Teachers Federal Credit Union.

The acquisition comes exactly a month after Teachers Federal acquired another Queens institution done in by dud taxi loans: Melrose Credit Union.

Lomto and Melrose, along with the failed Montauk Credit Union and First Jersey Credit Union, were specialists in lending to buyers and owners of taxi medallions, the metal plates that confer the right to drive a cab. Before the rise of ride-hailing apps in 2014, the value of a taxi medallion soared to more than $1 million, and lenders came to see the loans as virtually risk-free. New York taxi medallions now sell for less than $200,000, often in foreclosure auctions.

Signature Bank and Medallion Financial also have reported big losses from taxi lending. The unraveling of the business has taken a toll on cabbies and medallion owners.

The city's leading medallion owner, Evgeny "Gene" Freidman, pleaded guilty in May to tax fraud related to his taxi business.

And on Sept. 18 Michael Cohen, President Donald Trump's former attorney, divested 10 medallions he controlled. The city forced the sale after Cohen pleaded guilty in August to eight criminal charges, including tax evasion related in part to the concealment of income generated by his medallions.

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