Former NASCAR team owner charged in Taxi Medallion Scam

Andrew Murstein has been charged with fraud in U.S. Securities and Exchange Commission release

Andrew Murstein is a former co-owner of Richard Pretty Motorsports after purchasing his share in the race team back in 2010. He is the president of the Medallion Financial Corporation (NASDAQ: MFIN:US).

The U.S. Securities and Exchange Commission released a press release noting Murstein has been charged with antifraud, books and records, internal controls, and anti-touting provisions of the federal securities laws. The medallion company is registered in Delaware and based out of New York.

GMS Racing Owner Maury Gallagher purchased Murstein’s majority stake in the NASCAR team earlier this month. The team is now known as Pretty GMS Motorsports and will field two full-time cars in the NASCAR Cup Series.

Related: GMS Racing buys controlling interest in Richard Petty Motorsports

The Murstein family has been active in the taxi cab business, specifically in New York. In 1937, Leon Murstein purchased one of the first medallion’s available. The family later became an owner of 500 medallions.

Medallions are essentially a taxi permit. The company was unable to sell them but instead formed a medallion leasing business. They’ve since lent over $3 billion to the taxi cab industry.

Several hundred medallions are leased. They’ve also financed the purchase of thousands more.

Business operations: New York City; Newark, NJ; Chicago, IL; Boston, MA; Cambridge, MA and Philadelphia, PA

These medallions were formerly worth millions. However, with the recent popularity of Uber, Lyft and other ride share companies, the value of medallions have drastically decreased. For those ride share companies who essentially offer the same service, a medallion isn’t required.

Two schemes

Medallion Financial Corp stock valuation was at risk. Murstein is charged with taking on two schemes in an attempt to save the stock price. He’s accused of violating antifraud, books and records, internal controls, and anti-touting provisions of federal securities laws, along with making false statements to Medallion’s auditor.

The U.S. Securities and Exchange Commission notes two schemes in the charge. They note, “Medallion’s core business was making loans backed by taxicab medallions to taxicab owners and operators.”

The scheme was formed with help from Ichabod’s Cranium, Inc., and its owner, Lawrence Meyers. He has also been charged.

Scheme 1: “Murstein and Medallion engaged in illegal touting by paying Ichabod’s Cranium and others to place positive stories about the company on various websites, including Huffington Post, Seeking Alpha, and”

– Meyers created fake identities for opinion pieces that were published. Murstein is accused is being aware of the false identities. The fluff pieces were designed to create a better image of the campany to stockholders.

Scheme 2: “The complaint further alleges that Medallion and Murstein fraudulently increased the carrying value of Medallion Bank (the Bank), a wholly owned subsidiary of Medallion, to offset losses relating to the taxicab medallion loans. The complaint alleges that when the existing valuation firm refused to cave to Murstein’s pressure to increase the Bank’s valuation, Murstein fired the firm and hired a new firm to provide an inflated valuation of the Bank.”

Penalty: “The SEC seeks permanent injunctions, disgorgement plus prejudgment interest, and civil penalties. In addition, the SEC seeks an officer-and-director bar against Murstein.”

SEC Comments

“Murstein allegedly paid for more than 50 articles and hundreds of positive comments, which were really paid advertisements placed across the web in an effort to deceive investors about the value of Medallion’s stock,” said Richard Best, Director of the New York Regional Office. “Companies also cannot shop for higher valuations when there is no evidence to support them.”

The SEC’s investigation was conducted by Olivia Zach, Kenneth Gottlieb, and David Stoelting, and supervised by Celeste Chase and Richard Best of the New York Regional Office. The litigation will be handled by Mr. Stoelting.

Update: Medallion Financial Corp statement

“We intend to vigorously defend against the SEC’s unfounded charges and are confident we will be completely vindicated. In the interim, we will continue to focus on growing our business, building on our recent record financial performance, and doing right by our shareholders and those with whom we do business,” a statement from Medallion Financial Corp read.

“We believe that none of the allegations in the SEC complaint gives rise to a securities violation and are confident that the full record will show that Medallion Financial Corp. and Andrew Murstein complied with the law.”

“The actions in question occurred five or more years ago at a time when short sellers were engaged in an online campaign to drive down the Company’s stock price for their personal profit by spreading misleading and disparaging information and misrepresenting its business. Medallion sought only to provide the market with an accurate understanding of its financial position and prospects and an appropriate and transparent valuation of Medallion Bank and its other assets.”

“The SEC’s attempt to mischaracterize Medallion’s good-faith efforts defies logic when the SEC does not even allege that the Company’s actions had any market impact whatsoever on the price of Medallion stock and Mr. Murstein has never sold a single share of Medallion stock.”

“Medallion and the Murstein family that founded it have provided life-changing opportunities over the past 50- plus years to underserved communities through loans to thousands of borrowers that other financial institutions turned away.”

“Mr. Murstein has successfully led Medallion through numerous challenges, from the devastation of 9/11 through the continuing pandemic, and significantly diversified its business. The remarkable success of Medallion Bank since its formation in 2002 is a testament to Mr. Murstein’s ability to navigate the rapidly changing market for financial services.”


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