NEW YORK–Credit unions could find themselves dragged into investigation into the business dealings of Michael D. Cohen, President Trump’s attorney.
While there has been no suggestion of wrongdoing by any credit union, the early investigation has revealed that Cohen owns several-dozen taxi cab medallions in New York and Chicago, running up several millions of dollars in debt in the process, according to the New York Times.
The Times reported that several credit unions, in addition to banks, made loans on the medallions. As CUToday.info has reported, NCUA has to date placed three taxi medallion-lending credit unions into conservatorship as the result of a sharp decline in the value of the collateral. Among those CUs is Melrose Credit Union, which the Times identified as being among the lenders to Cohen.
In 2016, Mr. Cohen went so far as to dabble in financial engineering,” the Times reported. “He spoke to investors about pooling distressed loans that financed taxi medallion purchases, repackaging them and selling them to investors, according to a person with direct knowledge of the discussions. He also explored buying up such loans at a bargain price in anticipation that their value would recover, the person said. The outcome of those discussions was not clear.”
The Times said Cohen was introduced to the taxi medallion business by his father-in-law, Fima Shusterman, an immigrant from the Ukraine who owned at least nine medallions.
“Cohen borrowed from a half-dozen banks and credit unions to buy taxi medallions. Then he used the medallions as collateral to borrow more money to buy more medallions, former colleagues said,” according to the Times. “He quickly amassed 30 medallions, each then worth about $250,000, but racked up millions in debt.
By the early 2000s, Cohen and a partner controlled 260 cabs, the Times said.
Also Owns Medallions In Chicago
From 2009 to 2014, Cohen also spent $5.7 million on 22 Chicago taxi medallions, records show, the Times found. But as the value of those medallions has plummeted, the Times said “Cohen’s companies have been falling behind on taxes. Overall, his taxi businesses in New York and Chicago owe more than $375,000 for a variety of tax, insurance and inspection problems, according to records. Fourteen of his 54 cabs were suspended.”
The Times further reported that even in the downturn Cohen has continued to use his medallions as collateral. In December 2014, with his medallions worth $35 million, he took out loans totaling at least $20 million from Sterling National Bank and Melrose Credit Union, according to a banker who reviewed the transactions, the Times reported.