 NEWS
DOI INVESTIGATION OF TAXI AND LIMOUSINE COMMISSION MEDALLION AUCTION
FINDS LOOPHOLES IN RULES
FRIDAY,
MAY 4, 2007
TLC
agrees with DOI's findings and recommendations and has revised its auction
rules
ROSE
GILL HEARN, Commissioner of the New York City Department of Investigation
(DOI), announced today the findings and recommendations from DOI's investigation
into the Taxi and Limousine Commission (TLC'S) medallion auctions.
The
DOI report found that the TLC rules were not consistently applied and
that they conflicted with the TLC auction bid form. As a result, the
TLC has proposed revisions to its auction rules in an effort to clarify
its regulations regarding collusion among bidders, the relationship
between brokers and bidders, and the policies governing reserve status
bids.
Commissioner
Rose Gill Hearn said, DOI examined the TLC rules and regulations for
its medallion auctions and found several inconsistencies and concerns.
DOI shared its findings with the TLC which, to its credit, prepared
a set of revised auction rules. Because the auctions generate great
interest from potential buyers it is important that the TLC rules are
clear, consistent and fair.
TLC
medallion auctions do not occur on a regular basis. As a result, when
they do occur they present a revenue opportunity for the City and a
rare chance for people to obtain the coveted taxi medallions.
The
New York City Law Department requested that DOI look into whether identical
bids made by three bidders during a June 2006 auction were the result
of illegal collusion or violation of any other law, rule or regulation
that governs the auctions.
The
request came after a representative from the New York City Office of
Management and Budget (OMB) observed that three bidders made multiple
identical bids for medallions and collectively won all 54 medallions
that were auctioned.
As
a part of its investigation, DOI reviewed TLC records, interviewed people
from the TLC and the public involved in the auctions and consulted with
the Law Department and lawyers employed by the TLC. As a result of its
investigation, DOI found:
- The
Non-Collusion Clause in the auction bid form is unclear and should
be revised. The TLC's practice of permitting licensed TLC brokers
to assist bidders in determining the amount they should bid for a
medallion is inconsistent with the requirements of the Non-Collusion
Clause if the broker is also bidding for medallions at the same auction.
- The
TLC has proposed a new rule that would prohibit brokers and their
principals, employees, etc., from bidding in an auction if they have
provided advice to other bidders. DOI and the TLC believe that this
proposed change will reduce the ability of bidders to collude with
each other or misuse bid information.
- The
TLC's rules governing reserve status bids need to be clarified. A
reserve status bid is a non-winning bid which is lower than the winning
bids and held in reserve in case a winning bidder fails to complete
the purchase of a medallion.
Currently,
a bidder may be able to default on a winning bid in favor of a lower
reserve status bid. This creates the possibility for bidders to place
multiple bids in an attempt to manipulate the auction and thereby result
in a loss of revenue to the City.
The
TLC agrees that the rules regarding reserve status bids need to be clarified
and has proposed rules that would specify the circumstances in which
a bidder would and would not be able to close on a reserve status bid.
Commissioner
Gill Hearn thanked the Taxi and Limousine Commissioner Matthew W. Daus
and members of his staff for their assistance in this investigation.
Commissioner Gill Hearn also thanked Corporation Counsel Michael A.
Cardozo and members of his office for their assistance on this matter.
The
investigation was conducted by the Taxi and Limousine Inspector General's
Office under the supervision of Inspector General Julie Block.
ATTN:
REPORT EXHIBITS AVAILABLE UPON REQUEST
CONTACT:
DIANE STRUZZI (212) 825-5931
Release
#31-2007
nyc.gov/html/doi
The
City of New York Department of Investigation
ROSE
GILL HEARN, COMMISSIONER
80 MAIDEN LANE
NEW YORK, NY 10038
212-825-5900
DOI
is one of the oldest law-enforcement agencies in the country. The agency
investigates and refers for prosecution City employees and contractors
engaged in corrupt or fraudulent activities or unethical conduct. Investigations
may involve any agency, officer, elected official or employee of the
City, as well as those who do business with or receive benefits from
the City.
To
report someone ripping off the city, call DOI at (212) 825-5959.
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