SEC v. : COMPLAINT

Richard R. Best
REGIONAL DIRECTOR
Celeste Chase
David Stoelting
Olivia Zach
Attorneys for Plaintiff
U.S. SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
200 Vesey Street, Suite 400
New York, NY 10281-1022
Phone:  (212) 336-0174 (Stoelting)
Email: [email protected]

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
________________________________________________
                                    :
SECURITIES AND EXCHANGE COMMISSION,    :
                                    :    21-CV-__________ (   )
                     Plaintiff,         :
                                    :
          -against-                        :          COMPLAINT
                                        :
MEDALLION FINANCIAL CORP.,              :
ANDREW MURSTEIN,                       :    Jury Trial Demanded
LAWRENCE MEYERS,                      :
and ICHABOD’S CRANIUM, INC.,              :
                                    :
                     Defendants.       :
________________________________________________:

Plaintiff Securities and Exchange Commission (the “Commission”), for its Complaint
against Defendants Medallion Financial Corp. (“Medallion Financial”), Andrew Murstein
(“Murstein”),  Lawrence Meyers (“Meyers”), and Ichabod’s Cranium, Inc. (“Ichabod’s
Cranium”) alleges as follows:
PRELIMINARY STATEMENT
1. From late 2014 through 2017, Murstein—Medallion Financial’s President and
Chief Operating Officer—perpetuated two fraudulent schemes intended to boost Medallion

 2
Financial’s sinking stock price.  Until 2014, Medallion Financial had been on an extended run of
success, as its stock rose to an all-time high of $17 per share and the company paid cash
dividends every quarter.  Driving this success was Medallion Bank, a wholly-owned subsidiary
of Medallion Financial, which provided the majority of the company’s profits year in and year
out.  Medallion Financial’s primary business—making loans to taxi drivers secured by the
medallions—seemed impervious to challenge.
2.   By 2015, however, everything had changed.  Ridesharing apps such as Uber and
Lyft threatened the taxi industry and the value of taxi medallions—which collateralized the loan
portfolios held by Medallion Financial and Medallion Bank—dropped dramatically.  Medallion
Financial’s stock dropped to about $3 per share and the regular dividend payments stopped.  The
company, moreover, became a target of short-sellers and sharply negative discussions on
financial websites and blogs.  Under pressure to do something, Murstein violated the federal
securities laws.
3.  The first scheme involved illegal touting.  To try to silence the short-sellers and
bloggers that were writing Medallion Financial’s epitaph, Murstein hired Meyers, whose
specialty was “stealth” public relations, and paid Meyers to anonymously promote Medallion
Financial online.  Murstein approved Meyers’s pieces before publication, which did not disclose
the payments, and Meyers made hundreds of postings, many of them using pseudonyms.  In
early 2016, Murstein hired a second person to tout anonymously and, at Murstein’s request,
Meyers trained the new touter.  Murstein knew or was reckless in not knowing that the touters
did not disclose their affiliation with the company.  For Murstein, that was the point: his touters
would not be credible if they disclosed that they were being paid.
4. In late 2016, after nearly two years of recruiting, paying for, and encouraging

 3
anonymous touters, Murstein’s secret was exposed.  Journalists confronted him with the obvious
fact that hiring and paying someone to anonymously tout was a violation of the securities laws.
Murstein, however, falsely claimed that he did not know his touter posted anonymously.
Seeking to bury the controversy, Murstein had the second touter sign a non-disclosure agreement
and paid her hush money.  Neither Medallion Financial nor Murstein ever disclosed to investors
Murstein’s conduct in recruiting, paying, and instructing his touters.  Murstein acted knowingly
or recklessly in hiring and keeping touters on the Medallion Financial payroll for nearly two
years.
5. The second scheme was to increase Medallion Financial’s stock price by boosting
the carrying value, or “fair value,” of Medallion Bank.  There was no legitimate basis to do so,
however, because of the deteriorating value of the collateral securing the Bank’s medallion loan
portfolio.  And the valuation firm Medallion Financial used to determine fair value made this
clear to Murstein.
6. Murstein pressured the valuation firm to accept his inflated number. The valuation
firm, however, refused. As a result, Murstein abruptly fired the valuation firm and went opinion-
shopping for a firm that would agree to value that Bank at his targeted number of $193 million.
Murstein quickly found an investment bank that was lured by his quid pro quo offer:  provide the
requested valuation number in exchange for much more lucrative investment banking work in
the future.
7. The Bank’s reported fair value—which was $166 million as of 2
nd
 quarter of
2016)—jumped to $193 million (3
rd
 quarter 2016) and then to $280 million (4
th
 quarter 2016)
and $290 million (4
th
 quarter 2017) .
8. Investors were not told the truth.  Medallion Financial’s Forms 10-K and 10-Q for

 4
the last two quarters of 2016 and all four quarters of 2017 attributed the increases to “expressions
of interest” in the Bank from “investment bankers and interested parties”; to “a court ruling
involving a marketplace lender”; and that “a valuation specialist” had been engaged.  These
disclosures were false and misleading.
9. In fact, Medallion Financial’s sudden increases in fair value—at a time when the
collateral values of the Banks’s loans were plummeting—resulted from Murstein’s behind-the-
scenes conduct, which included firing Medallion Financial’s valuation firm, instructing the new
valuation firm on the correct value, biasing the new firm with possible incentives, and concealing
information from Medallion Financial’s Auditor (the “Auditor”).
10.   Medallion Financial’s financial statements contained other inaccuracies related
to its valuations.  In its Form 10-Q as of September 30, 2016, the Bank and Medallion Financial
valued Chicago medallions at twice their market rate.  Medallion Financial also failed to
properly value its medallion-backed loans by failing to take into account the adequacy of the
collateral and market conditions.  And Medallion Financial inaccurately reported its loan-to-
value (“LTV”) ratios for its medallion-backed loans in its Form 10-K for 2017.  As a result,
Medallion Financial’s internal accounting controls also were not properly designed to implement
appropriate valuation procedures consistent with Generally Accepted Accounting Principles
(GAAP).  Murstein, who was head of the Investment Committee and controlled Medallion
Financial’s valuation procedures and decisions, aided and abetted these violations.
11. The misconduct materially impacted Medallion Financial’s financial statements.
The reported fair value for Medallion Bank was overstated by at least $110 million at year-end
2016 and by at least $85 million at year-end 2017.  In addition, the portfolios of medallion loans
held by Medallion Financial were overvalued by more than $30 million at year-end 2016 and by

 5
the same amount at year-end 2017, which were additional material misstatements.  As a result,
Medallion Financial’s reported total assets and total shareholders’ equity were overstated by
more than $140 million at year-end 2016, and both were overstated by more than $115 million at
year-end 2017 (excluding the impact of income taxes).
VIOLATIONS
12. By engaging in the foregoing conduct and as alleged further in this Complaint:
a. Defendants Medallion Financial and Murstein violated Sections 17(a) of the
Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of
1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5];
b. Defendant Medallion Financial violated Sections 13(a) and 13(b)(2)(A) and (B) of
the Exchange Act [15 U.S.C. §§ 78m(a), 78m(b)(2)(A) and (B)] and Rules 12b-20, 13a-1, 13a-11
and 13a-13 thereunder [17 C.F.R. §§ 240.12b-20, 13a-1, 13a-11 and 13a-13], and Defendant
Murstein aided and abetted these violations by Medallion Financial;
c. Defendants Meyers and Ichabod’s Cranium violated Section 17(b) of the
Securities Act [15 U.S.C. § 77q(b)], and Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)]
and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and Defendants Medallion Financial and
Murstein aided and abetted these violations by Meyers and Ichabod’s Cranium;
d. Defendants Medallion Financial and Murstein aided and abetted uncharged
violations by others of Section 17(b) of the Securities Act [15 U.S.C. § 77q(b)]; and
e. Defendant Murstein violated Rule 13b2-2 of the Exchange Act [17 C.F.R. §
240.13b2-2].

 6
NATURE OF PROCEEDINGS AND RELIEF SOUGHT
13. The Commission brings this action pursuant to authority conferred by Section
20(b) of the Securities Act [15 U.S.C. § 77t(b)] and Section 21(d)(1) and 21(d)(5) of the
Exchange Act [15 U.S.C. §§ 78u(d)(1) and 78u(d)(5)].
14. The Commission seeks a final judgment: (a) restraining and permanently
enjoining Defendants from engaging in the acts, practices and courses of business alleged against
them herein and from committing future violations of the above provisions of the federal
securities laws; (b) ordering Defendants to disgorge any ill-gotten gains they received and to pay
prejudgment interest thereon; (c) ordering Defendants to pay civil money penalties pursuant to
Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange
Act [15 U.S.C. § 78u(d)(3)]; (d) barring Defendant Murstein from serving as an officer or
director of a public company pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)]
and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)]; and (e) ordering such other
and further relief as the Court may deem just and proper.
JURISDICTION AND VENUE
15. This Court has jurisdiction over this action pursuant to Section 22(a) of the
Securities Act [15 U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa].
16. Venue lies in the Southern District of New York pursuant to Section 22(a) of the
Securities Act [15 U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa].
Certain of the acts, practices, transactions, and courses of business alleged in this complaint
occurred within the Southern District of New York, and were effected, directly or indirectly, by
making use of means or instrumentalities of transportation or communication in interstate
commerce, or the mails, or the facilities of a national securities exchange, in that Medallion

 7
Financial’s operations were primarily located in New York, New York, and Medallion Financial
is a public company with common stock that trades on the NASDAQ exchange.
DEFENDANTS
17. Medallion Financial is a Delaware corporation with its principal place of
business in New York, New York.  Medallion Financial’s common stock is registered with the
Commission pursuant to Section 12(b) of the Exchange Act.  Medallion Financial files periodic
reports, including Forms 10-K and 10-Q, with the Commission pursuant to Section 13(a) of the
Exchange Act and the rules thereunder.  Medallion Financial traded under the stock ticker TAXI
until 2016, when it changed to MFIN.
18. Murstein, age 57, is a founder, Director, President and Chief Operating Officer of
Medallion Financial.  Murstein resides in New York, New York.  He received compensation of
approximately $3.54 million for 2014, $3.56 million for 2015, $1.92 million  for 2016, and $2.23
million for 2017.  His compensation package for those years included salary, bonus, restricted
stock awards, country club membership, a driver, a car lease, parking, car insurance and social
club memberships.  Murstein and his father Alvin Murstein, who is Medallion Financial’s Chief
Executive Officer (CEO), own or control nearly 15% of Medallion Financial’s common stock.
19. Meyers, age 55, resides in Woodland Hills, California.  Meyers is the owner,
Chief Executive Officer, Secretary, Chief Financial Officer, and sole director of Defendant
Ichabod’s Cranium which, from at least 2014 through 2016, did business under the name
Asymmetrical Media Strategies.
RELEVANT ENTITY
20. Medallion Bank (the “Bank” or “Medallion Bank”) was established by
Medallion Financial in 2003.  The Bank is regulated by the Utah Department of Financial

 8
Institutions and the Federal Deposit Insurance Corporation.  Prior to 2018, the Bank was required
to be carried at fair value on Medallion Financial’s financial statements.
FACTS

I.    Background.
21. A taxicab medallion is a license to operate a taxi and accept street hails.  In New
York City and other cities, the number of taxi medallions is restricted by municipal authorities.
Medallions are  typically financed by firms such as Medallion Financial, which focused
primarily on New York City medallions, but also loaned to purchasers of medallions in Chicago,
Boston, and Cambridge, Massachusetts.
22. For decades before 2015, the price of medallions continued to increase.  In the
mid-1990s, New York City medallions sold for approximately $200,000 each.  By 2011, taxi
medallions were selling for $1 million or more each and, by 2013, the value of a New York City
medallion had risen to $1.3 million.
23. In 1996, Alvin Murstein and his son, Andrew Murstein, established Medallion
Financial as a public company.  Medallion Financial’s Form 10-K for 1996 stated that the
company’s “principal focus is the origination and servicing of loans financing the purchase of
taxi medallions and related assets.”
II.   Medallion Financial’s Stock Price Plummets As Ridesharing Apps Proliferate.
24. As apps such as Uber and Lyft became popular in 2014, the threat to Medallion
Financial’s business model was apparent.  An internal memorandum signed by Murstein in 2016
recognized the threat posed by Uber: “The media constantly touted [Uber], and fear began to
spread about the taxi medallion industry.  The Company’s stock began to drop dramatically as
investors worried about the Company’s collateral and rising delinquencies.”

 9
25. Medallion Financial’s stock price fell from $17 per share in 2013 to $3 per share
in 2015.  Other key financial metrics underscored Medallion Financial’s distress.  For example,
the company’s net investment income before taxes was $15.1 million in 2014 and $16.8 million
in 2015, but it reported losses of $9.9 million in 2016 and $7.8 million in 2017.  Dividend
income from the Bank to Medallion Financial also dropped precipitously, from $15 million in
2014 and $18 million in 2015, to $3 million in $2016 and $0 in 2017.
26. The value of the collateral underlying the medallion loans similarly declined from
2014 through 2017, as shown by increases in the reported aggregate LTV ratio.  LTV expresses
the ratio of a loan to the value of the asset purchased.  An LTV ratio over 100%  indicates that
the value of the collateral is not sufficient to cover the loan.  The LTV ratio of Medallion
Financial loan portfolio increased dramatically from 60% as of December 2014 to 131% by
December 2017.
27. Medallion Bank, which had been the crown jewel among Medallion Financial’s
assets, was experiencing similar declines in performance.  Its net income, for example, which
was $26.3 million in 2014 and $23.7 million in 2015, plummeted to $2.0 million in 2016 and
$4.6 million in 2017.  Losses on the medallion loans were a primary cause for the precipitous
decline in net income.  In 2015, the Bank recorded less than $5 million in medallion loan losses;
in 2016, more than $56 million; and about $35 million in 2017.  The Bank had been the source of
the great majority of Medallion Financial’s earnings, and those earning had allowed the company
to pay cash dividends to its shareholders every year.  Those dividend payments stopped in late
2016.
28. Faced with a deteriorating stock price and concerned investors, Murstein
undertook two fraudulent schemes.

 10
III.   Defendants’ Illegal Touting Scheme.
A. Murstein Hires Meyers to Secretly Counter Negative Media.
29. From 2014 through 2016, Meyers did business through Asymmetrical Media
Strategies, whose web site described its “strategic crisis communications strategies” as offering
“guerilla PR tactics to deliver our clients’ messages.”  Myers’s website also stated: “[w]e will
employ any strategy or tactic you desire”; “if you are under attack from opponents seeking to
destroy you, we will launch an asymmetrical, sustained, multi-front assault on them”; and
“Anonymity—Attack opponents without client exposure—you are kept in the clear. . . .  Because
we operate without any detectable connection to you, you may engage opponents in any way you
choose, while we carry out our stealth mission to undermine their position.”
30. On December 1, 2014, Meyers emailed Murstein to say that “[t]he market clearly
does not understand your business,” and suggested “that you retain me to do some online PR for
the company via all the financial outlets I write for.”  When Murstein responded with interest,
Myers proposed “a monthly retainer where I am constantly writing about the company . . .
bashing Uber, and specifically the low risk that exists to TAXI itself even if medallion process
were to fall[.]”
31. Meyers and Murstein signed a Consulting Agreement dated December 19, 2014
(the “Agreement”) between Ichabod’s Cranium d/b/a Asymmetrical Media Strategies and
Medallion Consulting Services LLC (a subsidiary of Medallion Financial).  The Agreement
stated that Meyers was being retained to “provide[] various public relations, marketing and
communications services, such as articles, blog posts . . . in order to influence public opinion
with regard to company issues.”  For providing these services and agreeing “to partner with [the]
Company,” the Agreement stated that Myers would be paid a consulting fee of $5,000 per

 11
month.
32. The Consulting Agreement also provided that, prior to the publication of any
“articles, blog posts, etc.,” Meyers “must receive the prior written approval of both [Medallion
Financial’s] President and Legal Department,” who are required to “review and approve or
reject” any materials.
33. Just before the Agreement was executed, Murstein forwarded it to Medallion
Financial’s Chief Compliance Officer and General Counsel for review.  On December 18, 2014,
the General Counsel emailed Meyers that “we’re a public company and the SEC’s view is that if
a company engages anyone to perform social media functions the company is adopting that
person’s statements as its own.”
34. Between December 2014 and June 2016, Meyers published at least fifty to sixty
articles and hundreds of comments relating to Medallion Financial, for which the company paid
Meyers approximately $65,000.  Meyers never disclosed the compensation he received from
Medallion Financial.
35. Meyers’s articles and comments appeared on Seeking Alpha, TheStreet.com,
InvestorPlace.com, Crain’s NewYorkBusiness.com and BloggerNewsNetwork.com.  Meyers’s
articles and comments argued, consistent with what Murstein told him, that Medallion Financial
was grossly undervalued, that the threat from Uber and Lyft was overstated, that Medallion
Financial stock was an outstanding opportunity for value investors, and that the stock could
again reach the price of $15 to $17 per share.
36. For example, in an article on Seeking Alpha dated February 9, 2015, and entitled
“NYC Data Proves Taxi Medallion Resilience; Rideshare Effect Negligible,” Meyers claimed
that “[t]here is no reason why TAXI stock should be selling below $10....  TAXI stock should

 12
trade back to $15 once the market realizes it has overreacted.”
37. Meyers’s articles and comments also argued for a much higher value for
Medallion Bank.  In an article dated August 5, 2015, entitled “Medallion Financial Delivers
Again. Will the Market Ever Learn?” posted to Seeking Alpha, Meyers (using a pseudonym)
wrote that “Medallion Bank is arguably worth $595 million.  If we include realized losses, the
Bank made $27 million, and is worth $459 million.  Yet Medallion Financial Corporation carries
the Bank at around $160 million.”
38. Meyers prepared his articles and comments in close coordination with Murstein.
As Murstein was particularly angered by the posts of several individuals, Meyers frequently
targeted these individuals with vitriolic postings.
39. Murstein sent emails to Meyers on what to write and how to respond to negative
articles about Medallion Financial.  On April 9, 2016, for example, Murstein saw an article on
Seeking Alpha by “ValueSquared” titled: “Medallion Financial: Overstated Book Value With A
Significant Near-Term Downside Catylyst Starting With Chicago in 1Q ’16.”   Murstein emailed
Meyers asking him to “put out short piece tmrw and say something like...who might even be
behind that anonymous post.  You can say what I told you today . . . . [t]hat you anaylsyzed [sic]
the losses of medallions consumer division from 2003 to today... [and] losses never went very
high.”  Murstein added additional points for Myers to make is another April 9 email: “You can
also add his analysis is flawed as it makes no mention or calculations based upon the fact that
100% of taxis loans are personally guaranteed. . . . They [Medallion Financial] were prudent
lenders and it shows.  There’s a reason that they have never had a medallion loss.  They know
what they are doing far better than anyone else in that industry. They have learned well from
being in that industry for over 70 years.”  Murstein followed up with Myers two days later to ask

 13
“[d]id you publish it yet?”
40. On April 11, 2016, Myers published (under one of his aliases) in Seeking Alpha
his response, titled “Medallion Financial: Understated Book Value With A Significant Near-
Term Upside Catalyst As Shorts Rush To Cover.”  Meyers’s response repeated many of the
points from Murstein’s April 9 emails.
41. On April 12, 2016, a broker at a large financial services firm forwarded Myers’s
April 11 Seeking Alpha article to Murstein.  Murstein did not inform the broker that the article
was published by Meyers at the direction of Murstein and in exchange for compensation.
42. Meyers emailed links to Murstein of his articles.
43. Many of Meyers’s articles also included the following false statements:  “I wrote
this article myself, and it expresses my own opinions.  I am not receiving compensation for it.  I
have no business relationship with any company whose stock is mentioned in this article.”
44. Meyers’s articles, whether under his own name or an alias, never disclosed that he
was being paid by Medallion Financial.  Instead, Meyers identified himself in his articles as
“president of PDL Broker, Inc.” or as “an independent contributor.”
45. Meyers’s paid touting on behalf of Medallion Financial largely ceased after June
2016.
46. On November 17, 2016, however, when Murstein received by email a Seeking
Alpha article referring to Medallion Financial’s “imminent bankruptcy risk,” Murstein emailed
Meyers to see if Meyers was able to “get pieces published on Seeking Alpha or do you know
anyone else that can?”  Meyers declined.

 14
47. Murstein knew or recklessly disregarded that Meyers, in his articles and posts, did
not disclose the compensation he received from Medallion Financial and posted using
pseudonyms.
B.  Murstein Hires Another Contractor to Anonymously Tout.
48. In early 2016, Murstein became acquainted with a woman in her twenties (the
“Contractor”) who was looking for work.  As Murstein wanted to have another person touting on
behalf of Medallion Financial in addition to Meyers, Murstein offered her an Independent
Contractor Services Agreement, which Murstein and the Contractor signed.
49. The Contractor had little to no experience with investor relations or the financial
markets; as a result, Murstein instructed the Contractor to “speak with [Meyers] on what to do.”
Meyers then tutored the Contractor on his methods for posting anonymously.
50. Murstein knew from emails he received that Meyers was showing the Contractor
how to post anonymously and that Meyers told the Contractor “get a fake ID from the Internet”
in order to avoid having to identify herself and reveal her connection with Medallion Financial.
51. In an April 25, 2016 email, Murstein urged the Contractor to publish an article
and then asked her “What name are you using?”  The Contractor responded with her alias.
52. On April 26, 2016, the Contractor emailed Murstein that she was “[h]appy to keep
writing articles” but “it’s just how we are going to publish anonymously is the question.”
53. The day after that, on April 27, 2016, the Contractor forwarded to Murstein an
email from an editor at Seeking Alpha thanking the Contractor for “an interesting article” but
stating that “[w]e were unable to verify your ID.  Please resubmit after uploading a scan of a
valid photo ID[.]”  The Contractor asked Murstein, “What do you think I should do regarding the
ID situation?”

 15
54. On April 28, 2016, the Contractor emailed Murstein that she was “still publishing
under a pen name” and was “seeing which one of my friends will let me borrow theirs [ ID].”
55. In an April 29, 2016, email that was forwarded to Murstein, Meyers advised the
Contractor that “first you have to come up with a fake resume.”  Murstein also instructed the
Contractor through a text message to use a friend’s name to open an account on Seeking Alpha.
56. On May 2, 2016, Murstein emailed the Contractor that he was “just focused on
you getting your articles out for now.  Have you gotten any on any web sites yet or picked up by
anyone?”  The Contractor responded:  “Larry [Meyers] sent me the process I have to go through,
it’s kind of crazy.  In order to be a contributor I have to make up a whole person so I have to do a
fake resume, everything.  This goes for basically every single website I have tried to get
published on.  It’s a process.”
57. In a May 4, 2016, email, the Contractor told Murstein about her efforts to get
published on TheStreet.com:  “Larry [Meyers] sent me an email walking me through it. . . .  I
have to make up a fake resume and apply to be a contributor, can’t be anonymous but [a friend]
agreed to let me use her ID so that’s what I’m using now for everything.”  She also told Murstein
that Meyers had allowed her to rewrite some of his stories but to “just change up the wording so
that plagiarism software won’t detect anything.”  Murstein responded, “Good update.”
58. Murstein urged the Contractor to increase the frequency of her positive  postings
about Medallion.  Between May 2016 and November 2016, the Contractor published numerous
articles and comments on websites, including Seeking Alpha and Huffington Post.  The
Contractor was paid by Medallion Financial but never disclosed that compensation.
59. On August 2, 2016, Murstein texted the Contractor with numerous statements
about Medallion Bank and instructed her to “go to yahoo message board for MFIN,” the ticker

 16
symbol Medallion Financial’s stock traded under, and “[p]ost on yahoo.”
60. On August 5, 2016, Murstein instructed the Contractor to accuse two individuals
who had criticized Medallion Financial on Seeking Alpha of being “security law violators.”
61. On November 17, 2016, Murstein texted the Contractor to remind her to “[j]ust
keep blogging and commenting positive stuff on Medallion,” and five days later he texted her
“[d]on’t comment under your real name.”
62. Like Meyers’s postings, the Contractor’s articles and comments repeated
Murstein’s instructions that the Bank was undervalued and that Medallion Financial’s stock was
underpriced.
63. For example, in a May 3, 2016 article published on Huffington Post, entitled
“Safety in a Subsidiary: Untangling the Web of Perception Surrounding the Taxi Medallion
Industry, Uber, TAXI Stock, & Medallion Financial Corporation,” the Contractor wrote: “The
fact of the matter is that TAXI has a hidden gem beneath its solid and consistent stance in the
stock market in its subsidiary, Medallion Bank (‘The Bank’).”
64. The Contractor’s “Safety in a Subsidiary” article also stated:  “If the Bank is
making $25m a year, easy, the best case scenario would be that their worth is, say $500 million
and in the worst case $250 million, which is still much more than the total market cap, mind you.
If smart investors were to dig a little deeper and do a little more due diligence they will walk
away knowing that in fact, the Bank is worth double the market capital today.”  At the time of
this post, the Bank’s reported fair value was $152 million, far below the article’s “worst case”
projection of $250 million.
65. Murstein personally directed the content of the Contractor’s posts.  For example,
in an email to the Contractor sent on August 2, 2016, Murstein wrote:  “Things to blog and

 17
comment about.  Please do this today:...will be a big boost to the stock price when people figure
it out. . . predicting a huge pop in their price in the immediate future.”  The Contractor
immediately responded that she was “posting things now.”  And in an email sent on August 2,
2016, at 1:36 p.m., Murstein told the Contractor “[f]rom now until 4pm you should just put
comments on those web sites please.”
66. In another email to the Contractor on August 3, 2016, Murstein wrote:  “Say:
Look at the bank and nothing else.  $170 mil of equity and $40 mil of pre tax earnings.  It’s
worth at least $400 mil.”
67. In an audio recording, Murstein instructed the Contractor that: “I view the stock
worth at $10-$15 per share....  [T]he Bank alone is worth $20 per share....  Put this out
tomorrow.”
68. Murstein reviewed and approved many of the posts before they were published
online.  For example, on July 7, 2016, the Contractor emailed Medallion Financial’s public
relations firm (the “PR Firm”) regarding one article and wrote:  “Will forward to Andy
[Murstein] now so we can get the OK to publish.”
69. Murstein also reviewed articles relating to Medallion Financial after their
publication.  On one audio recording, Murstein asked the Contractor “How do I find your post?”
The Contractor also forwarded links or screen shots of articles and comments to Murstein after
publication.
70. In 2016, Medallion Financial’s web site (www.medallion.com) had a section
described as:  “In The News: Articles about Medallion Financial have regularly appeared in
major publications.  To view the latest Press releases, Articles and Interviews please click
below.”  During 2016, the “In The News” section contained links to at least two articles written

 18
by the Contractor:  “Melrose, Medallion and Medallions” and “Safety in a Subsidiary,” both of
which appeared in Huffington Post.  The author of both pieces was identified only as
“Contributor” on Medallion Financial’s website, and there was no disclosure that the author was
paid by Medallion Financial to write those articles.
71. Murstein acknowledged that the purpose of the touting activity was to boost
Medallion Financial’s stock price.  In an email to the Contractor on November 16, 2016, he
wrote: “All I would like you guys to do today is to write articles and post comments on message
boards to support our stock.”
72. Murstein knew or recklessly disregarded that the Contractor did not disclose the
compensation she received from Medallion Financial and that the Contractor used aliases in her
articles and comments about Medallion Financial.
C. Murstein Paid a Public Relations Firm to Anonymously Tout.
73. In 2016, the PR Firm told Meyers it was also willing to make similar anonymous
postings promoting Medallion Financial.  As a result, Murstein also paid the PR Firm to write
positive articles about Medallion Financial.  The PR Firm published at least one comment in
which it claimed that “the Bank could be worth over $300 million and the Bank stock could
easily be worth over $12 as a standalone company to MFIN.”
74. The PR Firm misrepresented its affiliation with Medallion Financial.  In an
internal email on July 7, 2016, an individual from the PR Firm acknowledged that, when
contacted by Seeking Alpha, he claimed that he was not being compensated by Medallion
Financial, which was consistent with Murstein’s instructions.  In a November 17, 2016, email,
Murstein instructed the PR Firm to “publish under an anonymous name.”  In a November 18,
2016, email, Murstein told the PR Firm that “the article shouldn’t be coming from me you or the

 19
company though. More like an anonymous blogger.”  The PR Firm also emailed Murstein on
November 16, 2016, for approval on pieces, writing “Andy, Please review the attached article for
accuracy and style.”
D. Murstein Responds Falsely to Press Inquiries About the Touting.
75. On November 26, 2016, a reporter for the New York Post emailed Murstein:
Hi Andrew, My colleague got some information about a woman who
works for your company.   [The Contractor] has been writing articles for
Huff Post touting the stock price of Medallion Financial under a pen
name.  This is not only on [sic] ethical, but experts say it is illegal.  My
colleague reached out to [the Contractor], but I wanted to reach out to you
as well.  How long has [the Contractor] been working for you?  What is
her role in the company?  Did you know that she was writing for
Huffington Post?  Did you know what kind of articles she was writing?  If
not, how do you feel to find out she was doing this?  What are the next
steps you plan to take?
76. Murstein’s emailed response to the reporter stated that “I am not aware of the
postings ‘under a pen name’ to which you are referring as potentially raising ethical and legal
issues.  Can you please send me the postings in question, and then we’ll review them and get
back to you with a response.”
77. The reporter then told Murstein that the Contractor’s “article[s] are listed on the
news section of your website as just Contributor.”  Murstein falsely responded: “I was unaware
of the below but am now looking into it.”
78. On November 27, 2016, Murstein was interviewed by the New York Post reporter,
and Medallion Financial’s General Counsel and the PR Firm attended.  According to notes of the
interview taken by the PR Firm, “[Murstein] said he didn’t know [the Contractor] was writing
stories touting Medallion for Huffington Post under [an] assumed name and posting them
without a byline on the Medallion website,” and “[Murstein] sees nothing wrong with her trying
to protect her identity, considering the viciousness of the short sellers.”

 20
79. According to the PR Firm’s notes, “the Post reporter[] said she spoke to a former
attorney general who said that paying someone to tout the stock under a pen name is illegal,” and
Murstein responded that “in his opinion it is not illegal because everything in the articles is
public information already.”
80. Murstein also falsely claimed in the interview that he knew the Contractor “had a
background in marketing and PR and was recommended by an IR firm,” and that the Contractor
had stopped working for Medallion Financial in October 2016.
81. On January 17, 2017, Murstein received by email another media inquiry stating
that “your former IR [investor relations] head . . . used a pseudonym . . . to post positive articles
on Medallion for the Huffington Post, and also posted pro-Medallion comments on financial
blogs such as Seeking Alpha and Yahoo Finance.  Doing so is a practice known as ‘stock-
touting’ which could be a potential securities law violation.”
82. On behalf of Murstein, Medallion Financial’s General Counsel again responded
falsely to the reporter that “any comments she is alleged to have posted under a pseudonym she
would have posted unbeknownst to Medallion.”  On January 27, 2017, the reporter responded
with an email stating the Contractor “was responsible for posting the Huffington Post articles
which you subsequently placed on your website.  It is obvious that you knew what she did.  This
could potentially constitute a securities law violation.”
E. Murstein Paid the Contractor Hush Money to Conceal His Scheme.
83. Although Murstein knew that the Contractor had posted under an alias, he texted
the Contractor on November 26, 2016, after he had received the media inquiries, and asked her:
“Why did you post articles under a fake name?”  The Contractor responded on the same day:
“Because you asked me to not use my name.  Do you want me to switch it to my name?”

 21
84. On December 1, 2016, Murstein texted the Contractor:  “I’m trying to get you an
agreement and get you paid extra money but it won’t be ready until tmrw or Monday.”
85. On December 5, 2016, Murstein and the Contractor signed a Confidential
Agreement and General Release (the “Release”), in which the company agreed to pay the
Contractor $15,000 in exchange for the Contractor agreeing to release Medallion Financial from
all claims.  The Release also required the Contractor to falsely affirm “that she was never
instructed by [Medallion Financial] or any other Releasee to write any articles, blogs, posts or
comments about Medallion under a pen name or false name.”
86. Fearing that the touting would be made public, on January 18, 2017, Murstein
texted the Contractor: “Our lawyers are sending you a letter that you are telling people I told you
to write under a false name.  First of all there is no reason to talk to people about that.  Plus you
signed something that says you aren’t supposed to be talking to anyone.”
87. Neither Medallion Financial nor Murstein ever disclosed to investors that for two
years Murstein had engaged and paid multiple persons to promote Medallion Financial in
numerous online forums.
IV.   Murstein’s Scheme to Increase the Bank’s Fair Value.
88. Prior to 2015, Medallion Financial measured the Bank’s fair value as the
equivalent of “book value,” which represented the bank’s assets minus its liabilities, and
Medallion Financial’s Forms 10-K represented that “Medallion Bank had little value beyond its
recorded book value.”
89. In 2015, however, Medallion Financial changed its approach to determining the
fair value of the Bank to the more subjective (and malleable) fair value determination.  This
change coincided with the rise of the ridesharing apps and the deterioration in medallion asset

 22
values,
90. To justify this change, Medallion Financial claimed the increase in the value of
the Bank was justified because the Bank had a “premium” as a Utah industrial bank that
increased its worth well beyond book value.
91. The Bank’s status as a Utah industrial bank, however, did not support a
significant premium over book value.  In a public response letter submitted to the Commission’s
Division of Investment Management in February 2016, Medallion Financial acknowledged the
many limitations inherent in the Utah bank charter:  the Bank was “not a full-service bank;
cannot offer checking accounts, which are highly profitable for commercial banks”; the Bank
“has no retail locations, no core deposits, does not provide residential mortgages, and does not
provide credit cards.”  The Bank was also required to maintain its capital at a minimum of 15%
of its average assets.  This 15% “leverage ratio” was “higher than that required by peer banks
and further limits the value of [Medallion Financial’s] investment in Medallion Bank.”  Finally,
the Bank was “prohibited from entering into new business lines” without regulatory approval,
and regulatory restrictions on transfers of the Bank’s charter also impacted the Bank’s value.
92. Murstein also knew that several peer banks had marked down their taxi medallion
loans to amounts approximating the value of the collateral.
93. In late 2016, Murstein nevertheless sought to reverse the downward slide of
Medallion Financial’s stock price by nearly doubling the purported fair value of the Bank.  At
the time, there was no basis to support a material increase in the Bank’s fair value.

 23
A. The Valuation Firm.

94. In 2015, Medallion Financial hired a third-party valuation firm (the “Valuation
Firm”) to perform a fair value analysis.  The Valuation Firm was a specialist with substantial
experience in bank valuations.
95. Under GAAP (ASC 820-20-55-1), “[t]he objective of a fair value measurement is
to estimate the price at which an orderly transaction to sell the asset or to transfer the liability
would take place between market participants at the measurement date under current market
conditions.”
96. Applying these principles, the Valuation Firm provided a fair-value opinion in
2015, which formed the basis for Medallion Financial’s disclosures in its Form 10-K for 2015.
The Form 10-K for 2015 reported Medallion Bank’s fair value at about $152.1 million, and the
Form 10-Q for the second quarter of 2016 reported Medallion Bank’s fair value at $166.4
million.  Both valuations were about 11% over book value.
B. Murstein Goads Other Financial Firms to Endorse His Valuation Number.
97. Murstein wanted to drive the Bank’s fair value even higher above book value.  He
therefore set out to manufacture market demand for Medallion Bank at the price that he
determined.  To this end, Murstein initiated contact with four financial firms hoping to generate
support for his number.  Murstein did not tell these firms that the purpose of his contact was to
generate support for an increased valuation with the Auditor and the Valuation Firm.
98. The contacts followed a similar pattern.  An email by Murstein would propose a
future transaction involving a sale of all of a piece of the Bank at a number dictated by Murstein.
Murstein would then ask for something in writing expressing support for his valuation number.
At that point, the discussions about a transaction would go no further because Murstein’s

 24
purpose was not to negotiate the transaction but rather to mislead the Valuation Firm and the
Auditor.
99. On October 17, 2016, Murstein sent Investment Bank A and Investment Bank B
identical emails stating that:  “[W]e were approached by an investment bank asking if we are
interested in selling a minority stake in our bank to their client. . . .  I think we should pursue this
or possibly sell it to another investor.  Using other potential comps our bank would be worth well
over $300 million. . . .  [C]ould you quickly put together a rough valuation for our bank. . . .
Once we review it [the valuation] we can discuss engaging your firm.”
100. Within days, Investment Banks A and B—incentivized by the prospect of
investment banking fees—both responded.  Investment Bank A  emailed Murstein a letter and
summary that stated that “it is reasonable to assume a valuation range of $185MM - $325MM”
and that $300 million was “a reasonable proxy for a control sale price” but that this view was
“tempered by regulatory uncertainty” that any transaction would receive approval.  Investment
Bank B responded with a “potential valuation analysis” listing a range of valuations of the Bank
up to $371 million.
101. Next, on October 28, 2016, Murstein emailed the president of another Utah
industrial bank and asked:  “Do you feel that you would be able to value Medallion Bank at $200
million?”  Murstein repeated his request in another email to the industrial bank on October 29,
2016:  “[S]end me an email Monday saying your [sic] interested in discussing a valuation above
$200 mill[ion] with us.  I personally think it’s worth a lot more but if I get the email saying that
we can discuss everything on the phone or in person.”
102. On October 30, 2016, the bank president emailed Murstein a one-sentence
response:  “We are good at 200.”

 25
103. The industrial bank never pursued the transaction with Murstein, but internal
emails show it was highly skeptical the Bank should be valued at $200 million.  In late
November 2016, the industrial bank prepared an offer letter to be sent to the Bank’s Board of
Directors offering $123.7 million in cash—not $200 million—to purchase the Bank.  The draft
letter, which was not sent, noted that this proposed offer was “lower than our previously
submitted indication of interest” but stated that this was appropriate given recent financial
disclosures by Medallion Financial.  In an internal email dated November 21, 2016, an employee
of the industrial bank stated:  “I think Murstein used us, when he requested we give him a $200
million value on the bank so that he could justify not writing it down[.]”
104. Murstein’s final effort at generating support for his valuation occurred in
December 2016, when Murstein tried to revive stalled negotiations with a consumer lender over
a loan participation program.  Murstein introduced a new term into the deal which would require
the consumer lender to acquire a 2% interest in the Bank, and that for this purpose “Medallion
Bank will be valued at 10 times 2017 projected earnings of $35,000,000 or $350,000,000.”
105. On December 13, 2016, Murstein emailed the consumer lender that “the
investment in the bank is a big part of the deal for us.”  As Murstein stated in an internal email
dated December 15, 2016, “[T]he valuation that the bank will receive [from the consumer lender]
is very high. . . .  [I]t should also greatly help the parent[ ]  company stock price.”
106. In late December 2016, however, the consumer lender notified Murstein that it
was ending the negotiations, but would consider revisiting the small equity investment if another
loan participation or partnership arrangement between the parties could be arranged in the future.
107. Murstein tried to use these contacts as support for his increased valuations.
Murstein never told the Auditor, however, that he initiated these contacts and provided the

 26
valuation numbers to the firms.  Murstein also did not tell the firms that he would provide their
responses to the Auditor as support for the increased valuation.
108. The Auditor, however, emailed Murstein on October 24, 2016, that Investment
Bank A’s summary was “a ‘pitch’ document with appendices rather than a valuation” and “does
not support the increase in value in the 3
rd
 quarter of 2016.”  In an October 31, 2016, email to
Murstein, the Valuation Firm dismissed Investment Bank B’s analysis as “a pitch document” not
justifying an increase in the Bank’s fair value.
109.   Regarding the industrial bank, Murstein forwarded the “good at 200” email to
his CFO and declared: “[t]his is the final clincher.  [The industrial bank] has been talking to us
about buying our bank and just sent this email of at least two hundred million dollars.  This
should be an easy valuation for us to convey to the auditors.”  Murstein then forwarded this
email chain to the Auditor.  The Auditor, however, responded that the “good at 200” email
“doesn’t offer much context” and asked for more information “that would make this a bonafide
offer.”
110. A Medallion Bank official was also skeptical of the proposed deal with the
consumer lender, and advised Murstein in a December 15, 2016, email that “it would be best to
resolve our medallion problems before we enter into the strategic partnership business,” which
he estimated would be twelve months in a best case scenario.
111. Murstein disagreed, prompting a Bank executive to be more candid to Murstein:
“Volatility is the enemy of this mission. . . .  The volatility introduced by ride-share means that,
in the best case, the bank only loses millions of dollars working through it. Worst case, we lose
hundreds of millions-and the odds of this outcome remain too high. . . .  The strategic
partnerships business adds to the volatility of the bank. . . .  [T]he

 27
reputation/regulatory/legal/operational risks remain enormous in our eyes.”
112. Murstein, however, was not primarily interested in the strategic partnerships but
rather in generating any support, however tenuous, for an increased valuation of the Bank that
would elevate Medallion Financial’s stock price.
C.   For 3Q 2016, Murstein Pressures the Valuation Firm to Increase Fair Value.
113. When the Auditor told Murstein that another fair-value opinion was needed for
the third quarter of 2016, Murstein sought to have the Valuation Firm increase the Bank’s value
to $193 million.
114. On November 1, 2016, Murstein wrote the Valuation Firm:  “I would like to give
this one more shot before we throw our long term relationship away.  I assume if we signed a
letter of intent...stating the value of Medallion Bank would be a minimum of $200 million you
would be able to sign off on our valuation.”
115. The Valuation Firm, however, told Murstein, over several emails, that the
purported transactions from the financial firms were too tenuous to form the basis of any
valuation analysis—noting specifically that any sale would first need to include due diligence,
including a review of the Bank’s loans.
116. On October 31, 2016, the Valuation Firm emailed Murstein that:
[T]here is not material information that [the Valuation Firm] can place significant weight
on in changing our prior valuation methodology to conclude with a higher value.  The
potential sale of the Bank to a third party could receive significant weight if you were far
along in a transaction in terms of diligence, vetting with the regulators, and the presence
of at least a term sheet and/or definitive agreement.

117. On November 1, 2016, Murstein responded that the Valuation Firm was “going
out of [its] way not to be reasonable” and that the Valuation Firm’s refusal to accept Murstein’s
valuation evidence “will now greatly effect [sic] our relationship going forward.”

 28
118. Despite Murstein’s pressure, the Valuation Firm refused to increase the fair value
of the Bank, and responded to Murstein that “we have prior valuations that have been reviewed
and approved by the Board . . . based on lower earnings . . . and there does not appear to be
rationale to change the multiple, such as lower perceived risk . . .”  The Valuation Firm also told
Murstein that a valuation analysis had to “consider that the recent trajectory of asset quality and
earnings is negative.”
119. In internal email dated November 1, 2016, an executive at the Valuation Firm was
more explicit:  “[W]e have ample recent evidence that medallion loans are souring (Signature
Bank, BankUnited, etc.)....  Noncurrent loans have increased 101 basis points in one quarter
alone since your last valuation....  This is a strong argument for value of the bank declining, not
increasing.”  In another internal email dated November 2, 2016, an executive at the Valuation
Firm wrote:  “Unfortunately at this point, if you have not done so already, you have to let him
[Murstein] know that unless he is agreeable to [the Valuation Firm] independently valuing
Medallion Bank, he is going to have to go elsewhere....  Wish I had another solution but I think
we have lost the client to maintain our integrity and avoid potential liability.”
D.   Rejecting the Auditor’s Advice, Murstein Fires the Valuation Firm.
120. On November 1, 2016, after the Valuation Firm refused to provide a valuation of
$193 million for Medallion Financial’s third quarter Form 10-Q, Murstein fired the Valuation
Firm.
121. Murstein fired the Valuation Firm against the advice of the Auditor.  On October
21, 2016, the Auditor emailed Murstein:  “[The Valuation Firm] is necessary.  On a quarter to
quarter basis the methodology should not change.  Especially when supporting an increase of this
size, we will need additional support.”  On October 24, 2016, the Auditor emailed Murstein that

 29
“your current valuation firm” should “conclude on a value.”
122. The Valuation Firm also advised Murstein of the importance of maintaining
consistency in an October 31, 2016 email: “we are tied to the prior valuation methodology in the
absence of compelling new information that we would be required to consider.”
123. On November 2, 2016, Murstein emailed the Auditor that he was “done with [the
Valuation Firm.]”  Murstein—after complaining that the Auditor was “costing us significant
dollars to obtain these valuations”—then misrepresented to the Auditor the reasons that he fired
the Valuation Firm:  “They have been difficult to work with for quite some time.  They are too
small for a transaction of this size.”
124. The Auditor pushed back, telling Murstein:  “The key here is to bridge the gap
from your prior quarter’s valuation, and utilize known methods (hopefully consistent methods)
from the prior quarter to evaluate the fair value for this quarter. . . .  I would recommend that you
continue to utilize the same third party specialist quarter-after-quarter.”
125. Murstein rejected his Auditor’s advice, and did not disclose to the Auditor that he
fired the Valuation Firm because it refused his demand to increase the Bank’s fair value.
126. GAAP principles (ASC 820-10-35-25) provide that “[v]aluation techniques used
to measure fair value shall be applied consistently.”
127. By firing the Valuation Firm and using a new firm that used different assumptions
and inputs from what had previously been used, without justification or evidence that it would
produce a value more representative of the Bank’s fair value, Murstein and Medallion Financial
violated GAAP.

 30
E.    Murstein Entices Investment Bank C Firm to Provide a Valuation.
128. After firing the Valuation Firm, Murstein immediately began opinion-shopping
for a more compliant firm.
129. On November 1, 2016, Murstein sent Investment Banks A and B, as well as a
third investment bank (“Investment Bank C”), identical emails stating:
Do you think you can issue something like this report [attaching the Valuation Firm’s 2Q
2016 report] indicating the bank is now worth at least 1.3 times book value or $193
million.  I believe it is worth substantially more but that is the minimum amount that
needs to be confirmed right now for us to work with you to potentially sell a portion of
the bank.  Thank you.

130. Investment Banks A and Bank B did not respond to Murstein’s email.
131. An employee of Investment Bank C, however, responded within minutes:  “I have
little doubt that we can.”
132. Investment Bank C did not typically provide valuation opinions for public
company audits.  It agreed to do so largely because of the incentive offered by Murstein to “sell a
portion of the bank,” which was much more lucrative than providing a valuation.
133. The quid pro quo arrangement that Murstein offered—providing a pre-determined
valuation number dictated by Murstein in exchange for investment banking work—was not
disclosed to the Auditor or to investors.
134. In order to reach the valuation number that Murstein demanded for the third
quarter Form 10-Q, Investment Bank C did not use assumptions and inputs that were consistent
with the Valuation Firm’s earlier reports.  Instead, Investment Bank C changed key assumptions,
including the discount rate used to estimate the present value of future cash flows, in order to
obtain the higher fair-value number that Murstein directed.
135. Due to Murstein’s abrupt firing of the Valuation Firm and hiring of Investment

 31
Bank C, Medallion Financial had to rush to meet its filing deadline for its Form 10-Q for the
third quarter of 2016.
136. On November 9, 2016, the Auditor emailed Murstein that the “due date of the
[Form 10-]Q is today” and the Auditor still had not received “management’s valuation memo
that specifically deals with the reasons for the [Bank’s] increase in [fair] value this quarter[.]”
137. The valuation memorandum, signed by Murstein, was emailed to the Auditor that
afternoon, just hours before the Form 10-Q became public.
F. Medallion Financial’s Form 10-K Filing for 2016.
138. For the quarter ending December 31, 2016, Medallion Financial increased the
valuation of Medallion Bank from $193 million to $280 million.  The overall increase totaled
approximately $110 million in only six months, which meant that the fair value had changed
from approximately 11% greater than book value to more than double book value.
139. The increase in the value of the Bank to $280 million as of December 31, 2016,
was again driven by Murstein’s pressure on Investment Bank C.  Murstein had already
determined the value he wanted to report for the Bank and conveyed that value to Investment
Bank C before they had done the valuation analysis.
140. The Bank’s reported fair value as of December 31, 2016, of $280.6 million, was
nearly four times greater than the market capitalization of its parent company, Medallion
Financial, which was $73 million as of that date.
141. The Bank’s valuation for the period ending September 30, 2016, was
approximately “41% up the range” ultimately provided by Investment Bank C.  In a late January
2017 email exchange between Murstein and Medallion Financial’s CFO, the two discussed the
need for the valuation of the Bank for the following quarter, December 31, 2016, to also be 41%

 32
“up the range.”  The CFO then told Murstein that “the $280 MM for this valuation needs to be
roughly 41% up the range they derive as well.”
142. Murstein discussed potential valuation ranges with the CFO, concluding
“[d]epends on the range, but for example $239 to $339 puts it right at 41%.  Other ranges would
work too.”
143. Murstein then forwarded that email exchange to Investment Bank C, with the note
“see [b]elow.”
144. Investment Bank C’s report as of December 31, 2016, issued on March 1, 2017,
concluded that the fair value of the Bank ranged from $262 million to $309 million.  (A value of
$280 million was approximately 41% “up the range” provided by the Investment Bank.)
     H.   Medallion Financial’s 2017 Periodic Filings.
145. For the second quarter of 2017, Investment Bank C provided another report but
made clear that the report was not an independent fair-value determination:  “For the avoidance
of doubt, the Analysis is a mathematical exercise based on a series of inputs provided by the
Company and represents neither an opinion as to the value nor a fair market valuation of the
Bank on the part of [Investment Bank C].”
146.   In fact, all of Investment Bank C’s valuation reports were mere “mathematical
exercises” that did not take into consideration the poor credit quality of the Bank’s loan portfolio
and simply accepted management’s projections.  As a result, the Bank’s fair value rose to $286
million by the second quarter of 2017, more than double the Bank’s book value.
147. On July 11, 2017, Murstein sent Investment Bank C an angry email criticizing it
for failing to generate any offers for the Bank, stating that: “You were engaged to sell a minority
piece in the bank. That’s why you took on the project.”

 33
148. Murstein fired Investment Bank C in late July 2017, and Medallion Financial
hired yet another firm to provide a valuation opinion—the third such firm in less than one year.
This firm’s opinion tracked Investment Bank C’s approach, and the Bank reported a fair value of
$290.5 million by year-end 2017.
149. Murstein knew that medallion values were continuing to deteriorate in 2017.  A
consultant retained by Murstein reported to him in August 2017 that “there continues to be
deterioration in values as indicated by arms length transfers in NYC and Chicago,” and that “the
survivability of the medallion system” was at stake.  The consultant estimated medallion values
at $150,000 for New York City medallions and $10,000 for Chicago medallions.
150. The dramatic increases in the Bank’s fair value of its common stock, as compared
to book value, is summarized below (numbers are in millions):

6/30/16

9/30/16 12/31/16 3/31/17 6/30/17 9/30/17 12/31/17
Fair Value 166.5 193.9 280.6 284.4 286.0 290.7 290.5
Book Value 149.9 149.0 135.6 139.3 140.6 145.2 137.9
Ratio 111% 130.1% 207% 204.1% 203.4% 200.2% 210.7%

I.    False and Misleading Disclosures in Forms 10-K and 10-Q.
151. Medallion Financial’s 2016 and 2017 Forms 10-K and Forms 10-Q, gave three
reasons in the Management’s Discussion and Analysis (“MD&A”) for the increases in the
Bank’s fair value:
a. “Expression(s) of interest in Medallion Bank from both investment bankers and
interested parties has continued through 2016 and 2017;”
b. “[I]n the third quarter of 2016 there was a court ruling involving a marketplace
lender that the Company believes heightens the interest of marketplace lenders to
acquire or merge with Utah industrial banks;”  and

 34
c. “We also engaged a valuation specialist to assist the Board of Directors in its
determination of Medallion Bank’s fair value.”
152. Each of these reasons for the Bank’s significant valuation increase was false or
misleading, as Murstein knew or recklessly disregarded.  A reasonable investor would find the
company’s explanations of the reasons for the Bank’s increases in fair value to be material.
153. First, Murstein knew that the “expressions of interest” from third parties were not
appropriate as a basis for a fair value calculation.  This is what the Valuation Firm and the
Auditor told him.  No sale ever occurred, and none of the purported bids went beyond the rote
recital of Murstein’s inflated valuation number.  None of the third parties even conducted due
diligence.  In fact, the “expressions of interest” were manufactured by Murstein not to sell the
Bank but to create the illusion of genuine market interest in order to justify the Bank’s
skyrocketing fair value.
154. Fair value is intended to measure the price at which a willing buyer and a willing
seller would enter into a transaction.  In 2016 and 2017, however, it was apparent that there were
no willing buyers to be found.  As noted above, Murstein knew from Investment Bank C that
there was almost no market interest in acquiring even a portion of the Bank, other than in a “junk
bond priced deal.”  As Investment Bank C told Murstein:  “[C]learly the market reaction to the
capital raise was substantially different than your expectations and more in line with your stock
value.”
155. Second, the “court ruling” the MD&A referred to, Consumer Financial Protection
Bureau v. CashCall, Inc., No. 15-cv-7522-JFW (C.D. Cal. Aug. 31, 2016), had nothing to do
with the Bank.  As emails show, on the afternoon of November 9, 2016—the same day the Form

 35
10-Q was filed—the reference to the CashCall decision was inserted as a last-minute rider to the
MD&A.
156. Third, the disclosure that Medallion Financial used “a valuation specialist” was
false and misleading.  In fact, Medallion Financial used three different valuation firms that used
different methods and inputs.  The disclosure also omits, among other things, that Murstein fired
the Valuation Firm against the Auditor’s advice, hired Investment Bank C by offering it banking
work in exchange for valuing the Bank at a certain number.
157. These false and misleading disclosures in the MD&A appear to have originated
with the valuation memorandum that Murstein signed in November 2016, and that was provided
to the Auditor just before the third quarter Form 10-Q was filed.
158. As Murstein knew or recklessly disregarded, Medallion Financial’s reported fair
value for Medallion Bank was overstated by approximately $110 million at year-end 2016 and
by about $85 million at year-end 2017.
159. Medallion Financial’s valuation of the Bank, as well as its disclosures in its
periodic reports and corresponding earnings releases furnished as exhibits to Forms 8-K, was
misleading for the periods ending September 30, 2016, December 31, 2016, March 31, 2017,
June 30, 2017, September 30, 2017 and December 31, 2017, as Murstein knew or recklessly
disregarded.
V.   Books and Records and Internal Controls Violations.
160. Medallion Financial was required to make and keep books, records and accounts,
which accurately reflect the values of its assets.
161. Medallion Financial was also required to devise and maintain a system of internal
accounting controls sufficient to provide reasonable assurances that, among other things

 36
transactions are executed in accordance with management’s general or specific authorization,
and that transactions are recorded as necessary to permit preparation of financial statements in
conformity with GAAP.  To this end, Medallion Financial was required to establishing
procedures designed to prevent errors and irregularities
162. Medallion Financial’s internal accounting controls were not properly designed to
implement an appropriate valuation methodology and procedures to value Medallion Financial’s
loans or the Bank consistent with GAAP.  In particular, Medallion Financial’s valuation
procedures did not adequately take into account the decline in the value of medallions.
Furthermore, Medallion Financial did not have sufficient internal accounting controls to analyze
the application of the valuation techniques being used in the valuations of the Bank to ensure
they were being done on a consistent basis.  And Medallion Financial’s documentation
concerning its valuation decisions and reporting disclosures was inadequate.
163. During 2016, both Medallion Bank and Medallion Financial had loans that were
collateralized by taxi medallions in both New York and Chicago.  In addition to loans
collateralized by medallions, Medallion Financial also owned some Chicago medallions outright.
In 2016, the value of medallions was declining precipitously, but the drop was particularly
significant in the Chicago medallion market.
164. As of September 30, 2016, the Bank and Medallion Financial valued Chicago
medallions at twice their market value.  Medallion Financial and Murstein knew that Medallion
Financial was valuing the Chicago medallions at twice the market value because they closely
monitored transactions occurring in the market place.  As Medallion Financial and Murstein
were aware, sufficient and readily available comparable sales data suggested that Chicago
medallions had a value of $65,000 each as of September 30, 2016.

 37
165. Murstein signed a valuation memo provided to the Auditor on November 9, 2016,
that stated that the average sales price of a Chicago tax medallion in November 2016 was
$64,700.  Murstein was also aware that a comparable bank had already reduced the value of its
Chicago medallions to $60,000 each based on reports it had received from an investor analyst
firm.
166. Despite the data points cited in its valuation memo indicating a fair value of less
than $120,000 each and sales transactions indicating an even lower value, Medallion Financial
valued the Chicago taxi medallions it owned at $120,000 each.  Medallion Financial and
Murstein simply disregarded all comparable sales when calculating the fair value of the Chicago
medallions in an effort to avoid materially impacting Medallion Financial’s financial statements.
167. Medallion Financial also failed to consider collateral value when calculating the
value of its medallion-backed loans, contrary to fair-value accounting principles.  As Murstein’s
November 2016 valuation memorandum states, Medallion Financial calculated the value of loans
at par (i.e., the amount of outstanding principal) so long as the loans were performing.
Medallion Financial concluded that loans were performing if the loan payments were not more
than ninety days past due and/or lacked other indicia of distress (such as bankruptcy of the
borrower or troubled debt restructuring).
168. Given the significant decline in the value of medallions—the collateral for the
loans—throughout 2016 and 2017, this valuation methodology did not approximate fair value.
Medallion Financial nevertheless claimed that it reported its loans at fair value in its financial
statements filed with the Commission.
169. Medallion Financial’s summary of significant accounting policies stated:  “In
determining the fair value [of the loans], the Board of Directors considers factors such as the

 38
financial condition of the borrower, the adequacy of the collateral, individual credit risks, cash
flows of the borrower, market conditions for loans (e.g. values used by other lenders and any
active bid/ask market), historical loss experience and the relationships between current and
projected market rates and portfolio rates of interest and maturities.”  (Emphasis added.)
170. Medallion Financial, however, failed to do such a fair value analysis, even when it
was aware that both the “adequacy of the collateral” and “market conditions for loans” had
deteriorated significantly.  Importantly, Medallion Financial had sales data that showed the value
of taxi medallions—the collateral that supported its medallion-backed loans—had declined in
both of the company’s major markets, New York and Chicago.  Between the end of 2014 and the
end of 2017, New York medallion sales prices had declined by approximately 60 percent, and
Chicago prices had declined by over 80 percent.
171. Medallion Financial and Murstein knew or recklessly disregarded that Medallion
Financial was not carrying the medallion-backed loans at fair value but was instead significantly
overvaluing the loans given their significantly increased risk profile.  Medallion Financial’s
reported aggregate loan-to-value ratios climbed to over 130%—meaning that the outstanding
loan principal was substantially higher than the collateral value and indicating that the loan was
significantly riskier.  Medallion Financial and Murstein knew that other holders of medallion-
backed loans had begun to mark their loans down to collateral value, even when those loans were
less than 90 days past due.
172. Medallion Financial knew that the loans were significantly riskier by 2016 and
that market conditions had significantly worsened but failed to consider that changing landscape
when calculating the value of its loans.

 39
173. Another inaccuracy concerned the weighted average LTV ratio of the loan
portfolio.  The LTV ratio is material because it gives investors the ability to estimate the extent
to which the loans are over- or under-collateralized.  Under-collateralized loan portfolios are
significantly riskier to the lender because there is not enough collateral to collect against if the
debtors default on the loans.  An LTV ratio greater than 100% indicates the portfolio is under-
collateralized.
174. Medallion Financial made misleading statements regarding the method by which
it calculated the LTVs for its loans in its 2017 financial statements.  In both its 2016 and 2017
Forms 10-K, Medallion Financial claimed to calculate LTV ratios on a gross loan balance—
meaning that the managed unrealized depreciation or allowance was not included in the
calculation.  The amount of managed unrealized depreciation on these loans during this time
period was significant—approximately $63 million for both 2016 and 2017.  For both 2016 and
2017, Medallion Financial claimed that the LTV ratios were approximately 130 percent.
175. In Item 1 of its Form 10-K for the year ended December 31, 2017, Medallion
Financial claimed that its weighted average LTV of loans collateralized by taxi medallions was
131% compared to 129% at December 31, 2016.  The Form 10-K stated that “[t]hese ratios also
do not factor in the [] unrealized depreciation on these loans of $62,723,000 and $63,252,000 as
of December 31, 2017 and 2016, respectively.”
176. These statements were false and misleading.  For the 2017 Form 10-K, Medallion
Financial actually calculated the LTV on a net basis—meaning that the approximate $63 million
in unrealized depreciation or allowance was included prior to calculating the LTV ratio.

 40
177. Medallion Financial’s misstatement regarding LTV in its 2017 Form 10-K
misleadingly gave the appearance that the LTV ratios remained stable, at approximately 130%,
for the periods ending in 2016 and 2017.
178. If Medallion Financial had calculated the 2017 LTV ratio consistently with the
2016 LTV calculation, and in the way described in its 2017 Form 10-K, the LTV ratio would
have been 155%. That increase in LTV ratio from approximately 130% in 2016 to approximately
155% in 2017—a significant increase in LTV ratio—would have shown the decline in the
collateral supporting for Medallion Financial’s and the Bank’s loans during that time period.
179. As Medallion Financial’s President and Chief Operating Officer, and as head of
the Investment Committee and Chief Credit Officer, Murstein knowingly or recklessly failed to
ensure that Medallion Financial kept accurate books and records through the recording of
inaccurate valuations for the Bank, the medallion-backed loans, Chicago medallions and LTV
disclosures.
180. Medallion Financial failed to devise and maintain a system of internal accounting
controls sufficient to provide reasonable assurance that transactions were recorded as necessary
to permit preparation of financial statements in conformity with generally accepted accounting
principles.  Murstein knowingly or recklessly aided and abetted Medallion Financial’s books and
records and internal accounting controls violations.
VI.   Murstein Deceived the Auditor.
181. On November 9, 2016, Murstein signed a management representation letter in
connection with the Form 10-Q filing for the third quarter of 2016.  The letter was provided to
the Auditor, and, among other things, represented that:
“[W]e agree with the findings of . . . valuation specialists . . . used.  We did not give or
cause any instructions to be given to specialists regarding the values or amounts derived

 41
in an attempt to bias their work, and we are not otherwise aware of any matters that have
had an impact on the independence or objectivity of the specialists.”

182. This representation was false.  In fact, Murstein had given instructions to
Investment Bank C regarding the Bank’s minimum fair value and offered investment banking
work to bias the valuation opinion.
183. Murstein also signed management representation letters in connection with
Medallion Financial’s filings for the period ended December 31, 2016, March 31, 2017, June 30,
2017, September 30, 2017 and December 31, 2017.
184. The management representation letters signed by Murstein also stated that:
 Interim  consolidated  financial  statements  were  “prepared  in  conformance  with  U.S.
Generally Accepted Accounting Principles”;
 “[W]e have designed our internal controls over financial reporting to provide reasonable
assurance regarding the reliability of financial reporting”;
 “We have no knowledge of any fraud, suspected fraud, or allegations of fraud affecting the
Company involving management...where fraud could have a material effect on the interim
consolidated financial statements”; and
 “There are no violations or possible violations of laws or regulations whose effects should
be considered for disclosure in the consolidated interim financial statements.”

185. Murstein knew or was reckless in not knowing that each was these representations
was false.  Murstein knew or recklessly disregarded the GAAP violations; the internal controls
failures; the misrepresentations and omissions in the MD&A; and his failure to disclose his and
the company’s role in the touting scheme.
186. Murstein was also the sole signatory for the valuation memoranda provided to the
Auditor to explain the reasons behind Medallion Financial’s valuation decisions.  Murstein
signed the valuation memoranda for Medallion Financial’s filings for the period ended December
31, 2016, March 31, 2017, June 30, 2017, September 30, 2017 and December 31, 2017
187. Murstein’s November 2016 valuation memoranda emphasizes the summaries
Murstein solicited from Investment Banks A and B as supporting the increased valuation, even

 42
though the Valuation Firm and the Auditor told Murstein that the summaries were insufficient.
The memorandum also states that the Utah industrial bank—the source of the “good at 200”
email—“contacted the Company unsolicited to acquire the Bank and indicated a value of over
$200 mill.”  This was false: the email was not “unsolicited” because Murstein initiated the
contact, and no offer at all was made for the Bank.
188. Murstein’s valuation memoranda for 2017 also refer to “a potential minority
investor in Medallion Bank at a $350 million valuation to purchase a 0.57% of Medallion Bank.”
As described above, that transaction was part of a larger partnership arrangement that was not
being negotiated, and Murstein’s representation that he was “currently negotiating the terms of
such an agreement” was misleading.
VII.  GAAP Violations
189. Medallion Financial violated GAAP’s fair value principles, including ASC 820-
20-55-1 (“objective of fair value measurement is to estimate the price . . . to sell the asset . . .
under current market conditions”); ASC 820-10-35-25 (“valuation techniques . . . shall be
applied consistently”); ASC 820-10-35-24 (“reporting entity shall use valuation techniques that
are appropriate in the circumstances . . . maximizing the use of observable inputs”); ASC 820-
10-35-54E (“reporting entity shall include appropriate risk adjustments”); ASC 820-10-55-8
(“fair value measurement should include a risk premium reflecting . . . the uncertainty inherent in
cash flows”); ASC 820-10-35-54D (“analysis of the transactions or quoted process is needed”);
ASC 820-10-35-54J-c (“reporting entity . . . shall take into account the transaction price”); and
ASC 820-10-35-54G (even if “significant decrease in the volume or level of activity . . . the
objective of a fair value measurement remains the same”).  Murstein know or should have
known, or was reckless in disregarding, these violations.

 43
TOLLING AGREEMENTS
190. In 2019, 2020 and 2021, Medallion Financial, Murstein and Meyers signed tolling
agreements entered into with the Commission.  Each tolling agreement specifies a period of time
(a “tolling period”) in which “the running of any statute of limitations applicable to any action or
proceeding against [Medallion Financial, Murstein and Meyers] authorized, instituted, or brought
by . . . the Commission . . . arising out of the [Commission’s investigation of Defendants’
conduct], including any sanctions or relief that may be imposed therein, is tolled and suspended .
. . .”  Each tolling agreement further provides that the Defendants and any of their agents or
attorneys “shall not include the tolling period in the calculation of the running of any statute of
limitations or for any other time-related defense applicable to any proceeding, including any
sanctions or relief that may be imposed therein, in asserting or relying upon any such time-
related defenses.”
191. Collectively, these agreements tolled the running of any limitations period or any
other time-related defenses alleged in this Complaint from October 21, 2019 through December
31, 2021, a period of at least 803 days (as to Medallion Financial and Murstein), and from
October 16, 2019 through December 31, 2021, a period of at least 808 days (as to Meyers)
FIRST CLAIM FOR RELIEF
(Defendants Medallion Financial and Murstein)
Violations of Section 17(a) of the Securities Act

192. The Commission realleges and incorporates by reference herein each and every
allegation contained in paragraphs 1 through 191, as if fully set forth herein.
193. By engaging in the conduct described above, Defendants Medallion Financial and
Murstein, directly or indirectly, singly or in concert, in the offer or sale of securities and by the
use of the means or instruments of transportation or communication in interstate commerce or by

 44
use of the mails, knowingly or recklessly has: (a) employed devices, schemes, or artifices to
defraud; (b) obtained money or property by means of untrue statements of a material fact or
omissions of a material fact necessary in order to make the statement made, in light of the
circumstances under which they were made, not misleading; and/or (c) engaged in transactions,
practices, or courses of business which operated or would operate as a fraud or deceit upon
purchasers of securities and upon other persons.
194. By engaging in the foregoing, Defendants Medallion Financial and Murstein
violated, and unless restrained and enjoined, will continue violating Section 17(a) of the
Securities Act [15 U.S.C. § 77q(a)].
SECOND CLAIM FOR RELIEF
(Defendants Medallion Financial, Murstein, Meyers, and Ichabod’s Cranium)
Violations of Section 10(b) of the Exchange Act and Rule 10b-5

195. The Commission realleges and incorporates by reference herein each and every
allegation contained in paragraphs 1 through 191, as if fully set forth herein.
196. By engaging in the conduct described above, the Defendants, knowingly or
recklessly, in connection with the purchase or sale of securities, directly or indirectly, by the use
of means or instrumentalities of interstate commerce, or the mails, or the facilities on a national
securities exchange: (a) employed devices, schemes, or artifices to defraud; (b) made untrue
statements of a material fact or omitted to state a material fact necessary in order to make the
statement made, in light of the circumstances under which they were made, not misleading;
and/or (c) engaged in acts, transactions, practices, or courses of business which operated or
would operate as a fraud or deceit upon other persons.
197. By engaging in the foregoing, the Defendants violated and, unless restrained and
enjoined, will continue violating Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and

 45
Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
THIRD CLAIM FOR RELIEF
(Defendants Meyers and Ichabod’s Cranium)
Violations of Section 17(b) of the Securities Act

198. The Commission realleges and incorporates by reference herein each and every
allegation contained in paragraphs 1 through 191, as if fully set forth herein.
199. By engaging in the conduct described above, Defendants Meyers and Ichabod’s
Cranium, by use of means or instruments of transportation or communication in interstate
commerce or by the use of the mails, published, gave publicity to, or circulated notices, circulars,
advertisements, newspapers, articles, letters, investment services or communications which,
though not purporting to offer securities for sale, described such securities for a consideration
received or to be received, directly or indirectly, from an issuer, underwriter or dealer without
fully disclosing the receipt past or prospective of such consideration and the amount thereof.
200. By engaging in the foregoing conduct, Defendants Meyers and Ichabod’s
Cranium violated, and unless restrained and enjoined, will continue violating, Section 17(b) of
the Securities Act [15 U.S.C. § 77q(b)].
FOURTH CLAIM FOR RELIEF
(Defendants Medallion Financial and Murstein)
Aiding and Abetting Violations of Section 17(b) of the Securities Act and Section 10(b) of
the Exchange Act and Rule 10b-5 Thereunder

201. The Commission realleges and incorporates by reference herein each and every
allegation contained in paragraphs 1 through 191, as if fully set forth herein.
202. By engaging in the conduct described above and pursuant to Section 15(b) of the
Securities Act [15 U.S.C. § 77o(b)] and Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)],
Defendants Medallion Financial and Murstein, singly or in concert, directly or indirectly, aided
and abetted, and are therefore also liable for Defendants Meyers’s and Ichabod’s Cranium’s, and

 46
other uncharged touters, primary violations of Section 17(b) of the Securities Act [15 U.S.C. §
77q(b)] and Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder
[17 C.F.R. § 240.10b-5], because they knowingly or recklessly provided substantial assistance to
Defendants Meyers’s and Ichabod’s Cranium’s, and other uncharged touters’, violations of
Section 17(b) of the Securities Act [15 U.S.C. § 77q(b)] and Section 10(b) of the Exchange Act
[15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
203. Unless restrained and enjoined Defendants Medallion Financial and Murstein will
continue aiding and abetting violations of Section 17(b) of the Securities Act [15 U.S.C. §
77q(b)] and Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder
[17 C.F.R. § 240.10b-5].
FIFTH CLAIM FOR RELIEF
(Defendant Medallion Financial)
Violations of Sections 13(a), 13(b)(2)(A) and (B) of the Exchange Act and Rules 12b-20,
13a-1, 13a-11 and 13a-13 thereunder

204. The Commission realleges and incorporates by reference herein each and every
allegation contained in paragraphs 1 through 191, as if fully set forth herein.
205. By engaging in the conduct described above, Defendant Medallion Financial (a)
failed to make and keep books, records and accounts that in reasonable detail accurately and
fairly reflected its transactions and disposition of assets; and (b) failed to devise and maintain a
system of internal accounting controls sufficient to provide reasonable assurances that
transactions were executed in accordance with management’s general or specific authorization;
transactions were recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles or any other criteria applicable to such
statements, and to maintain accountability for assets.
206. By engaging in the conduct described above, Medallion Financial failed to file

 47
with the Commission such financial reports as the Commission has prescribed, and medallion
Financial failed to include, in addition to the information expressly required to be stated in such
reports, such further material information as was necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading,
207. By engaging in the foregoing conduct, Defendant Medallion Financial violated
and, unless retrained and enjoined, will continue violating Sections 13(a), 13(b)(2)(A) and (B) of
the Exchange Act [15 U.S.C. § 78m(a), (b)(2)(A) and (B)] and Rules 12b-20, 13a-1, 13a-11 and
13a-13 thereunder [17 C.FR. §§ 240.12b-20, 13a-1, 13a-11 and 13a-13].
SIXTH CLAIM FOR RELIEF
(Murstein)
Aiding and Abetting Violations of Sections 13(a), 13(b)(2)(A) and (B) of the Exchange Act
and Rules 12b-20, 13a-1, 13a-11 and 13a-13 Thereunder

208. The Commission realleges and incorporates by reference herein each and every
allegation contained in paragraphs 1 through 191, as if fully set forth herein.
209. By engaging in the conduct described above and pursuant to Section 20(e) of the
Exchange Act [15 U.S.C. § 78t(e)], Defendant Murstein, singly or in concert, directly or
indirectly, aided and abetted, and is therefore also liable for Defendant Medallion Financial’s
primary violations of Sections 13(a), 13(b)(2)(A) and (B) of the Exchange Act [15 U.S.C. §
78m(a), (b)(2)(A) and (B)] and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder [17 C.FR. §§
240.12b-20, 13a-1, 13a-11 and 13a-13], because he knowingly or recklessly provided substantial
assistance to Defendant Medallion Financial’s violations of Sections 13(a), 13(b)(2)(A) and (B)
of the Exchange Act [15 U.S.C. § 78m(a), (b)(2)(A) and (B)] and Rules 12b-20, 13a-1, 13a-11
and 13a-13 thereunder [17 C.FR. §§ 240.12b-20, 13a-1, 13a-11 and 13a-13].
210. Unless restrained and enjoined Defendant Murstein will continue aiding and
abetting violations of Sections 13(a), 13(b)(2)(A) and (B) of the Exchange Act [15 U.S.C. §

 48
78m(a), (b)(2)(A) and (B)] and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder [17 C.FR. §§
240.12b-20, 13a-1, 13a-11 and 13a-13].
SEVENTH CLAIM FOR RELIEF
(Murstein)
Violations of Rule 13b2-2 of the Exchange Act

211. The Commission realleges and incorporates by reference herein each and every
allegation contained in paragraphs 1 through 191, as if fully set forth herein.
212. By engaging in the conduct described above, Defendant Murstein, directly or
indirectly: (a) made or caused to be made materially false or misleading statements to an
accountants; or (b) omitted to state, or caused another person to omit to state, material facts
necessary in order to make statements made, in light of the circumstances under which such
statements were made, not misleading, to an accountant in connection with (1) an audit, review,
or examination of financial statements required by the Exchange Act or rules thereunder; or (2)
the preparation of filing of a document or report required to be filed with the Commission.
213. By engaging in the foregoing conduct, Defendant Murstein violated and, unless
restrained and enjoined, will continue violating Rule 13b2-2 of the Exchange Act [17 C.FR. §§
240.13b2-2].
PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that this Court enter a Final
Judgment:
a) finding the Defendants violated the federal securities laws and rules promulgated
thereunder as alleged against them herein;
b) permanently restraining and enjoining the Defendants and their agents, servants,
employees and attorneys and all persons in active concert who receive actual notice of the

 49
injunction and each of them from, directly or indirectly, violating or aiding and abetting
violations of the federal securities laws alleged in this complaint;
c) ordering the Defendants to disgorge any ill-gotten gains and to pay prejudgment
interest on those amounts;
d) ordering Defendants to pay civil monetary penalties pursuant to Section 20(d) of the
Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. §
78u(d)(3)];
e) permanently barring Defendant Murstein from acting as an officer or director of any
public company pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and Section
21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)]; and
(f) granting such other and further relief as this Court may deem just and proper.
JURY DEMAND

     Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff demands trial by
jury in this action of all issues so triable.

Dated: New York, New York
     December 29, 2021

                              Respectfully submitted,

By:       /s/  Richard R. Best
Richard R. Best
Celeste Chase
David Stoelting
Olivia Zach
Attorneys for Plaintiff
U.S. Securities and Exchange Commission
New York Regional Office
200 Vesey Street, Suite 400
New York, New York 10281-1022
Tel: (212) 336-0174 (Stoelting)
Email: [email protected]

Richard R. Best 
REGIONAL DIRECTOR 
Celeste Chase 
David Stoelting 
Olivia Zach 
Attorneys for Plaintiff 
U.S. SECURITIES AND EXCHANGE COMMISSION  
New York Regional Office 
200 Vesey Street, Suite 400 
New York, NY 10281-1022 
Phone:  (212) 336-0174 (Stoelting)  
Email: [email protected] 
 

 
UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 
________________________________________________     
        : 
SECURITIES AND EXCHANGE COMMISSION, : 
        : 21-CV-__________ (   ) 
     Plaintiff,  : 
        :  
  -against-     :          COMPLAINT 
        : 
MEDALLION FINANCIAL CORP.,   : 
ANDREW MURSTEIN,      : Jury Trial Demanded 
LAWRENCE MEYERS,     : 
and ICHABOD’S CRANIUM, INC.,   : 
        :  
     Defendants.  : 
________________________________________________: 

 
 

Plaintiff Securities and Exchange Commission (the “Commission”), for its Complaint 

against Defendants Medallion Financial Corp. (“Medallion Financial”), Andrew Murstein 

(“Murstein”),  Lawrence Meyers (“Meyers”), and Ichabod’s Cranium, Inc. (“Ichabod’s 

Cranium”) alleges as follows:   

PRELIMINARY STATEMENT 

1. From late 2014 through 2017, Murstein—Medallion Financial’s President and 

Chief Operating Officer—perpetuated two fraudulent schemes intended to boost Medallion 

Case 1:21-cv-11125   Document 1   Filed 12/29/21   Page 1 of 49



 2

Financial’s sinking stock price.  Until 2014, Medallion Financial had been on an extended run of 

success, as its stock rose to an all-time high of $17 per share and the company paid cash 

dividends every quarter.  Driving this success was Medallion Bank, a wholly-owned subsidiary 

of Medallion Financial, which provided the majority of the company’s profits year in and year 

out.  Medallion Financial’s primary business—making loans to taxi drivers secured by the 

medallions—seemed impervious to challenge. 

2.   By 2015, however, everything had changed.  Ridesharing apps such as Uber and 

Lyft threatened the taxi industry and the value of taxi medallions—which collateralized the loan 

portfolios held by Medallion Financial and Medallion Bank—dropped dramatically.  Medallion 

Financial’s stock dropped to about $3 per share and the regular dividend payments stopped.  The 

company, moreover, became a target of short-sellers and sharply negative discussions on 

financial websites and blogs.  Under pressure to do something, Murstein violated the federal 

securities laws. 

3.  The first scheme involved illegal touting.  To try to silence the short-sellers and 

bloggers that were writing Medallion Financial’s epitaph, Murstein hired Meyers, whose 

specialty was “stealth” public relations, and paid Meyers to anonymously promote Medallion 

Financial online.  Murstein approved Meyers’s pieces before publication, which did not disclose 

the payments, and Meyers made hundreds of postings, many of them using pseudonyms.  In 

early 2016, Murstein hired a second person to tout anonymously and, at Murstein’s request, 

Meyers trained the new touter.  Murstein knew or was reckless in not knowing that the touters 

did not disclose their affiliation with the company.  For Murstein, that was the point: his touters 

would not be credible if they disclosed that they were being paid. 

4. In late 2016, after nearly two years of recruiting, paying for, and encouraging 

Case 1:21-cv-11125   Document 1   Filed 12/29/21   Page 2 of 49



 3

anonymous touters, Murstein’s secret was exposed.  Journalists confronted him with the obvious 

fact that hiring and paying someone to anonymously tout was a violation of the securities laws.  

Murstein, however, falsely claimed that he did not know his touter posted anonymously.  

Seeking to bury the controversy, Murstein had the second touter sign a non-disclosure agreement 

and paid her hush money.  Neither Medallion Financial nor Murstein ever disclosed to investors 

Murstein’s conduct in recruiting, paying, and instructing his touters.  Murstein acted knowingly 

or recklessly in hiring and keeping touters on the Medallion Financial payroll for nearly two 

years.   

5. The second scheme was to increase Medallion Financial’s stock price by boosting 

the carrying value, or “fair value,” of Medallion Bank.  There was no legitimate basis to do so, 

however, because of the deteriorating value of the collateral securing the Bank’s medallion loan 

portfolio.  And the valuation firm Medallion Financial used to determine fair value made this 

clear to Murstein. 

6. Murstein pressured the valuation firm to accept his inflated number. The valuation 

firm, however, refused. As a result, Murstein abruptly fired the valuation firm and went opinion-

shopping for a firm that would agree to value that Bank at his targeted number of $193 million.  

Murstein quickly found an investment bank that was lured by his quid pro quo offer:  provide the 

requested valuation number in exchange for much more lucrative investment banking work in 

the future.   

7. The Bank’s reported fair value—which was $166 million as of 2nd quarter of 

2016)—jumped to $193 million (3rd quarter 2016) and then to $280 million (4th quarter 2016) 

and $290 million (4th quarter 2017) .   

8. Investors were not told the truth.  Medallion Financial’s Forms 10-K and 10-Q for 

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the last two quarters of 2016 and all four quarters of 2017 attributed the increases to “expressions 

of interest” in the Bank from “investment bankers and interested parties”; to “a court ruling 

involving a marketplace lender”; and that “a valuation specialist” had been engaged.  These 

disclosures were false and misleading.   

9. In fact, Medallion Financial’s sudden increases in fair value—at a time when the 

collateral values of the Banks’s loans were plummeting—resulted from Murstein’s behind-the-

scenes conduct, which included firing Medallion Financial’s valuation firm, instructing the new 

valuation firm on the correct value, biasing the new firm with possible incentives, and concealing 

information from Medallion Financial’s Auditor (the “Auditor”).  

10.   Medallion Financial’s financial statements contained other inaccuracies related 

to its valuations.  In its Form 10-Q as of September 30, 2016, the Bank and Medallion Financial 

valued Chicago medallions at twice their market rate.  Medallion Financial also failed to 

properly value its medallion-backed loans by failing to take into account the adequacy of the 

collateral and market conditions.  And Medallion Financial inaccurately reported its loan-to-

value (“LTV”) ratios for its medallion-backed loans in its Form 10-K for 2017.  As a result, 

Medallion Financial’s internal accounting controls also were not properly designed to implement 

appropriate valuation procedures consistent with Generally Accepted Accounting Principles 

(GAAP).  Murstein, who was head of the Investment Committee and controlled Medallion 

Financial’s valuation procedures and decisions, aided and abetted these violations. 

11. The misconduct materially impacted Medallion Financial’s financial statements.  

The reported fair value for Medallion Bank was overstated by at least $110 million at year-end 

2016 and by at least $85 million at year-end 2017.  In addition, the portfolios of medallion loans 

held by Medallion Financial were overvalued by more than $30 million at year-end 2016 and by 

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the same amount at year-end 2017, which were additional material misstatements.  As a result, 

Medallion Financial’s reported total assets and total shareholders’ equity were overstated by 

more than $140 million at year-end 2016, and both were overstated by more than $115 million at 

year-end 2017 (excluding the impact of income taxes). 

VIOLATIONS 

12. By engaging in the foregoing conduct and as alleged further in this Complaint: 

a. Defendants Medallion Financial and Murstein violated Sections 17(a) of the 

Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 

1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]; 

b. Defendant Medallion Financial violated Sections 13(a) and 13(b)(2)(A) and (B) of 

the Exchange Act [15 U.S.C. §§ 78m(a), 78m(b)(2)(A) and (B)] and Rules 12b-20, 13a-1, 13a-11 

and 13a-13 thereunder [17 C.F.R. §§ 240.12b-20, 13a-1, 13a-11 and 13a-13], and Defendant 

Murstein aided and abetted these violations by Medallion Financial; 

c. Defendants Meyers and Ichabod’s Cranium violated Section 17(b) of the 

Securities Act [15 U.S.C. § 77q(b)], and Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] 

and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and Defendants Medallion Financial and 

Murstein aided and abetted these violations by Meyers and Ichabod’s Cranium; 

d. Defendants Medallion Financial and Murstein aided and abetted uncharged 

violations by others of Section 17(b) of the Securities Act [15 U.S.C. § 77q(b)]; and 

e. Defendant Murstein violated Rule 13b2-2 of the Exchange Act [17 C.F.R. § 

240.13b2-2].        

 

      

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NATURE OF PROCEEDINGS AND RELIEF SOUGHT 

13. The Commission brings this action pursuant to authority conferred by Section 

20(b) of the Securities Act [15 U.S.C. § 77t(b)] and Section 21(d)(1) and 21(d)(5) of the 

Exchange Act [15 U.S.C. §§ 78u(d)(1) and 78u(d)(5)]. 

14. The Commission seeks a final judgment: (a) restraining and permanently 

enjoining Defendants from engaging in the acts, practices and courses of business alleged against 

them herein and from committing future violations of the above provisions of the federal 

securities laws; (b) ordering Defendants to disgorge any ill-gotten gains they received and to pay 

prejudgment interest thereon; (c) ordering Defendants to pay civil money penalties pursuant to 

Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange 

Act [15 U.S.C. § 78u(d)(3)]; (d) barring Defendant Murstein from serving as an officer or 

director of a public company pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] 

and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)]; and (e) ordering such other 

and further relief as the Court may deem just and proper.   

JURISDICTION AND VENUE 

15. This Court has jurisdiction over this action pursuant to Section 22(a) of the 

Securities Act [15 U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa]. 

16. Venue lies in the Southern District of New York pursuant to Section 22(a) of the 

Securities Act [15 U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa].  

Certain of the acts, practices, transactions, and courses of business alleged in this complaint 

occurred within the Southern District of New York, and were effected, directly or indirectly, by 

making use of means or instrumentalities of transportation or communication in interstate 

commerce, or the mails, or the facilities of a national securities exchange, in that Medallion 

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Financial’s operations were primarily located in New York, New York, and Medallion Financial 

is a public company with common stock that trades on the NASDAQ exchange. 

DEFENDANTS 

17. Medallion Financial is a Delaware corporation with its principal place of 

business in New York, New York.  Medallion Financial’s common stock is registered with the 

Commission pursuant to Section 12(b) of the Exchange Act.  Medallion Financial files periodic 

reports, including Forms 10-K and 10-Q, with the Commission pursuant to Section 13(a) of the 

Exchange Act and the rules thereunder.  Medallion Financial traded under the stock ticker TAXI 

until 2016, when it changed to MFIN. 

18. Murstein, age 57, is a founder, Director, President and Chief Operating Officer of 

Medallion Financial.  Murstein resides in New York, New York.  He received compensation of 

approximately $3.54 million for 2014, $3.56 million for 2015, $1.92 million  for 2016, and $2.23 

million for 2017.  His compensation package for those years included salary, bonus, restricted 

stock awards, country club membership, a driver, a car lease, parking, car insurance and social 

club memberships.  Murstein and his father Alvin Murstein, who is Medallion Financial’s Chief 

Executive Officer (CEO), own or control nearly 15% of Medallion Financial’s common stock. 

19. Meyers, age 55, resides in Woodland Hills, California.  Meyers is the owner, 

Chief Executive Officer, Secretary, Chief Financial Officer, and sole director of Defendant 

Ichabod’s Cranium which, from at least 2014 through 2016, did business under the name 

Asymmetrical Media Strategies.   

RELEVANT ENTITY 

20. Medallion Bank (the “Bank” or “Medallion Bank”) was established by 

Medallion Financial in 2003.  The Bank is regulated by the Utah Department of Financial 

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Institutions and the Federal Deposit Insurance Corporation.  Prior to 2018, the Bank was required 

to be carried at fair value on Medallion Financial’s financial statements. 

FACTS 
 

I. Background. 

21. A taxicab medallion is a license to operate a taxi and accept street hails.  In New 

York City and other cities, the number of taxi medallions is restricted by municipal authorities.  

Medallions are  typically financed by firms such as Medallion Financial, which focused 

primarily on New York City medallions, but also loaned to purchasers of medallions in Chicago, 

Boston, and Cambridge, Massachusetts. 

22. For decades before 2015, the price of medallions continued to increase.  In the 

mid-1990s, New York City medallions sold for approximately $200,000 each.  By 2011, taxi 

medallions were selling for $1 million or more each and, by 2013, the value of a New York City 

medallion had risen to $1.3 million.   

23. In 1996, Alvin Murstein and his son, Andrew Murstein, established Medallion 

Financial as a public company.  Medallion Financial’s Form 10-K for 1996 stated that the 

company’s “principal focus is the origination and servicing of loans financing the purchase of 

taxi medallions and related assets.” 

II. Medallion Financial’s Stock Price Plummets As Ridesharing Apps Proliferate. 

24. As apps such as Uber and Lyft became popular in 2014, the threat to Medallion 

Financial’s business model was apparent.  An internal memorandum signed by Murstein in 2016 

recognized the threat posed by Uber: “The media constantly touted [Uber], and fear began to 

spread about the taxi medallion industry.  The Company’s stock began to drop dramatically as 

investors worried about the Company’s collateral and rising delinquencies.” 

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25. Medallion Financial’s stock price fell from $17 per share in 2013 to $3 per share 

in 2015.  Other key financial metrics underscored Medallion Financial’s distress.  For example, 

the company’s net investment income before taxes was $15.1 million in 2014 and $16.8 million 

in 2015, but it reported losses of $9.9 million in 2016 and $7.8 million in 2017.  Dividend 

income from the Bank to Medallion Financial also dropped precipitously, from $15 million in 

2014 and $18 million in 2015, to $3 million in $2016 and $0 in 2017.   

26. The value of the collateral underlying the medallion loans similarly declined from 

2014 through 2017, as shown by increases in the reported aggregate LTV ratio.  LTV expresses 

the ratio of a loan to the value of the asset purchased.  An LTV ratio over 100%  indicates that 

the value of the collateral is not sufficient to cover the loan.  The LTV ratio of Medallion 

Financial loan portfolio increased dramatically from 60% as of December 2014 to 131% by 

December 2017.  

27. Medallion Bank, which had been the crown jewel among Medallion Financial’s 

assets, was experiencing similar declines in performance.  Its net income, for example, which 

was $26.3 million in 2014 and $23.7 million in 2015, plummeted to $2.0 million in 2016 and 

$4.6 million in 2017.  Losses on the medallion loans were a primary cause for the precipitous 

decline in net income.  In 2015, the Bank recorded less than $5 million in medallion loan losses; 

in 2016, more than $56 million; and about $35 million in 2017.  The Bank had been the source of 

the great majority of Medallion Financial’s earnings, and those earning had allowed the company 

to pay cash dividends to its shareholders every year.  Those dividend payments stopped in late 

2016. 

28. Faced with a deteriorating stock price and concerned investors, Murstein 

undertook two fraudulent schemes.  

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III. Defendants’ Illegal Touting Scheme.  

A. Murstein Hires Meyers to Secretly Counter Negative Media. 

29. From 2014 through 2016, Meyers did business through Asymmetrical Media 

Strategies, whose web site described its “strategic crisis communications strategies” as offering 

“guerilla PR tactics to deliver our clients’ messages.”  Myers’s website also stated: “[w]e will 

employ any strategy or tactic you desire”; “if you are under attack from opponents seeking to 

destroy you, we will launch an asymmetrical, sustained, multi-front assault on them”; and 

“Anonymity—Attack opponents without client exposure—you are kept in the clear. . . .  Because 

we operate without any detectable connection to you, you may engage opponents in any way you 

choose, while we carry out our stealth mission to undermine their position.” 

30. On December 1, 2014, Meyers emailed Murstein to say that “[t]he market clearly 

does not understand your business,” and suggested “that you retain me to do some online PR for 

the company via all the financial outlets I write for.”  When Murstein responded with interest, 

Myers proposed “a monthly retainer where I am constantly writing about the company . . . 

bashing Uber, and specifically the low risk that exists to TAXI itself even if medallion process 

were to fall[.]”   

31. Meyers and Murstein signed a Consulting Agreement dated December 19, 2014 

(the “Agreement”) between Ichabod’s Cranium d/b/a Asymmetrical Media Strategies and 

Medallion Consulting Services LLC (a subsidiary of Medallion Financial).  The Agreement 

stated that Meyers was being retained to “provide[] various public relations, marketing and 

communications services, such as articles, blog posts . . . in order to influence public opinion 

with regard to company issues.”  For providing these services and agreeing “to partner with [the] 

Company,” the Agreement stated that Myers would be paid a consulting fee of $5,000 per 

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month.     

32. The Consulting Agreement also provided that, prior to the publication of any 

“articles, blog posts, etc.,” Meyers “must receive the prior written approval of both [Medallion 

Financial’s] President and Legal Department,” who are required to “review and approve or 

reject” any materials.  

33. Just before the Agreement was executed, Murstein forwarded it to Medallion 

Financial’s Chief Compliance Officer and General Counsel for review.  On December 18, 2014, 

the General Counsel emailed Meyers that “we’re a public company and the SEC’s view is that if 

a company engages anyone to perform social media functions the company is adopting that 

person’s statements as its own.”   

34. Between December 2014 and June 2016, Meyers published at least fifty to sixty 

articles and hundreds of comments relating to Medallion Financial, for which the company paid 

Meyers approximately $65,000.  Meyers never disclosed the compensation he received from 

Medallion Financial.   

35. Meyers’s articles and comments appeared on Seeking Alpha, TheStreet.com, 

InvestorPlace.com, Crain’s NewYorkBusiness.com and BloggerNewsNetwork.com.  Meyers’s 

articles and comments argued, consistent with what Murstein told him, that Medallion Financial 

was grossly undervalued, that the threat from Uber and Lyft was overstated, that Medallion 

Financial stock was an outstanding opportunity for value investors, and that the stock could 

again reach the price of $15 to $17 per share. 

36. For example, in an article on Seeking Alpha dated February 9, 2015, and entitled 

“NYC Data Proves Taxi Medallion Resilience; Rideshare Effect Negligible,” Meyers claimed 

that “[t]here is no reason why TAXI stock should be selling below $10….  TAXI stock should 

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trade back to $15 once the market realizes it has overreacted.” 

37. Meyers’s articles and comments also argued for a much higher value for 

Medallion Bank.  In an article dated August 5, 2015, entitled “Medallion Financial Delivers 

Again. Will the Market Ever Learn?” posted to Seeking Alpha, Meyers (using a pseudonym) 

wrote that “Medallion Bank is arguably worth $595 million.  If we include realized losses, the 

Bank made $27 million, and is worth $459 million.  Yet Medallion Financial Corporation carries 

the Bank at around $160 million.”     

38. Meyers prepared his articles and comments in close coordination with Murstein.  

As Murstein was particularly angered by the posts of several individuals, Meyers frequently 

targeted these individuals with vitriolic postings.  

39. Murstein sent emails to Meyers on what to write and how to respond to negative 

articles about Medallion Financial.  On April 9, 2016, for example, Murstein saw an article on 

Seeking Alpha by “ValueSquared” titled: “Medallion Financial: Overstated Book Value With A 

Significant Near-Term Downside Catylyst Starting With Chicago in 1Q ’16.”   Murstein emailed 

Meyers asking him to “put out short piece tmrw and say something like…who might even be 

behind that anonymous post.  You can say what I told you today . . . . [t]hat you anaylsyzed [sic] 

the losses of medallions consumer division from 2003 to today… [and] losses never went very 

high.”  Murstein added additional points for Myers to make is another April 9 email: “You can 

also add his analysis is flawed as it makes no mention or calculations based upon the fact that 

100% of taxis loans are personally guaranteed. . . . They [Medallion Financial] were prudent 

lenders and it shows.  There’s a reason that they have never had a medallion loss.  They know 

what they are doing far better than anyone else in that industry. They have learned well from 

being in that industry for over 70 years.”  Murstein followed up with Myers two days later to ask 

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“[d]id you publish it yet?” 

40. On April 11, 2016, Myers published (under one of his aliases) in Seeking Alpha 

his response, titled “Medallion Financial: Understated Book Value With A Significant Near-

Term Upside Catalyst As Shorts Rush To Cover.”  Meyers’s response repeated many of the 

points from Murstein’s April 9 emails.   

41. On April 12, 2016, a broker at a large financial services firm forwarded Myers’s 

April 11 Seeking Alpha article to Murstein.  Murstein did not inform the broker that the article 

was published by Meyers at the direction of Murstein and in exchange for compensation. 

42. Meyers emailed links to Murstein of his articles.   

43. Many of Meyers’s articles also included the following false statements:  “I wrote 

this article myself, and it expresses my own opinions.  I am not receiving compensation for it.  I 

have no business relationship with any company whose stock is mentioned in this article.”   

44. Meyers’s articles, whether under his own name or an alias, never disclosed that he 

was being paid by Medallion Financial.  Instead, Meyers identified himself in his articles as 

“president of PDL Broker, Inc.” or as “an independent contributor.”  

45. Meyers’s paid touting on behalf of Medallion Financial largely ceased after June 

2016.   

46. On November 17, 2016, however, when Murstein received by email a Seeking 

Alpha article referring to Medallion Financial’s “imminent bankruptcy risk,” Murstein emailed 

Meyers to see if Meyers was able to “get pieces published on Seeking Alpha or do you know 

anyone else that can?”  Meyers declined. 

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47. Murstein knew or recklessly disregarded that Meyers, in his articles and posts, did 

not disclose the compensation he received from Medallion Financial and posted using 

pseudonyms. 

B.  Murstein Hires Another Contractor to Anonymously Tout.  

48. In early 2016, Murstein became acquainted with a woman in her twenties (the 

“Contractor”) who was looking for work.  As Murstein wanted to have another person touting on 

behalf of Medallion Financial in addition to Meyers, Murstein offered her an Independent 

Contractor Services Agreement, which Murstein and the Contractor signed.  

49. The Contractor had little to no experience with investor relations or the financial 

markets; as a result, Murstein instructed the Contractor to “speak with [Meyers] on what to do.”  

Meyers then tutored the Contractor on his methods for posting anonymously. 

50. Murstein knew from emails he received that Meyers was showing the Contractor 

how to post anonymously and that Meyers told the Contractor “get a fake ID from the Internet” 

in order to avoid having to identify herself and reveal her connection with Medallion Financial.  

51. In an April 25, 2016 email, Murstein urged the Contractor to publish an article 

and then asked her “What name are you using?”  The Contractor responded with her alias.   

52. On April 26, 2016, the Contractor emailed Murstein that she was “[h]appy to keep 

writing articles” but “it’s just how we are going to publish anonymously is the question.” 

53. The day after that, on April 27, 2016, the Contractor forwarded to Murstein an 

email from an editor at Seeking Alpha thanking the Contractor for “an interesting article” but 

stating that “[w]e were unable to verify your ID.  Please resubmit after uploading a scan of a 

valid photo ID[.]”  The Contractor asked Murstein, “What do you think I should do regarding the 

ID situation?” 

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54. On April 28, 2016, the Contractor emailed Murstein that she was “still publishing 

under a pen name” and was “seeing which one of my friends will let me borrow theirs [ ID].” 

55. In an April 29, 2016, email that was forwarded to Murstein, Meyers advised the 

Contractor that “first you have to come up with a fake resume.”  Murstein also instructed the 

Contractor through a text message to use a friend’s name to open an account on Seeking Alpha. 

56. On May 2, 2016, Murstein emailed the Contractor that he was “just focused on 

you getting your articles out for now.  Have you gotten any on any web sites yet or picked up by 

anyone?”  The Contractor responded:  “Larry [Meyers] sent me the process I have to go through, 

it’s kind of crazy.  In order to be a contributor I have to make up a whole person so I have to do a 

fake resume, everything.  This goes for basically every single website I have tried to get 

published on.  It’s a process.” 

57. In a May 4, 2016, email, the Contractor told Murstein about her efforts to get 

published on TheStreet.com:  “Larry [Meyers] sent me an email walking me through it. . . .  I 

have to make up a fake resume and apply to be a contributor, can’t be anonymous but [a friend] 

agreed to let me use her ID so that’s what I’m using now for everything.”  She also told Murstein 

that Meyers had allowed her to rewrite some of his stories but to “just change up the wording so 

that plagiarism software won’t detect anything.”  Murstein responded, “Good update.” 

58. Murstein urged the Contractor to increase the frequency of her positive  postings 

about Medallion.  Between May 2016 and November 2016, the Contractor published numerous 

articles and comments on websites, including Seeking Alpha and Huffington Post.  The 

Contractor was paid by Medallion Financial but never disclosed that compensation.   

59. On August 2, 2016, Murstein texted the Contractor with numerous statements 

about Medallion Bank and instructed her to “go to yahoo message board for MFIN,” the ticker 

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symbol Medallion Financial’s stock traded under, and “[p]ost on yahoo.”   

60. On August 5, 2016, Murstein instructed the Contractor to accuse two individuals 

who had criticized Medallion Financial on Seeking Alpha of being “security law violators.”   

61. On November 17, 2016, Murstein texted the Contractor to remind her to “[j]ust 

keep blogging and commenting positive stuff on Medallion,” and five days later he texted her 

“[d]on’t comment under your real name.” 

62. Like Meyers’s postings, the Contractor’s articles and comments repeated 

Murstein’s instructions that the Bank was undervalued and that Medallion Financial’s stock was 

underpriced.   

63. For example, in a May 3, 2016 article published on Huffington Post, entitled 

“Safety in a Subsidiary: Untangling the Web of Perception Surrounding the Taxi Medallion 

Industry, Uber, TAXI Stock, & Medallion Financial Corporation,” the Contractor wrote: “The 

fact of the matter is that TAXI has a hidden gem beneath its solid and consistent stance in the 

stock market in its subsidiary, Medallion Bank (‘The Bank’).”   

64. The Contractor’s “Safety in a Subsidiary” article also stated:  “If the Bank is 

making $25m a year, easy, the best case scenario would be that their worth is, say $500 million 

and in the worst case $250 million, which is still much more than the total market cap, mind you.  

If smart investors were to dig a little deeper and do a little more due diligence they will walk 

away knowing that in fact, the Bank is worth double the market capital today.”  At the time of 

this post, the Bank’s reported fair value was $152 million, far below the article’s “worst case” 

projection of $250 million. 

65. Murstein personally directed the content of the Contractor’s posts.  For example, 

in an email to the Contractor sent on August 2, 2016, Murstein wrote:  “Things to blog and 

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comment about.  Please do this today:…will be a big boost to the stock price when people figure 

it out. . . predicting a huge pop in their price in the immediate future.”  The Contractor 

immediately responded that she was “posting things now.”  And in an email sent on August 2, 

2016, at 1:36 p.m., Murstein told the Contractor “[f]rom now until 4pm you should just put 

comments on those web sites please.” 

66. In another email to the Contractor on August 3, 2016, Murstein wrote:  “Say: 

Look at the bank and nothing else.  $170 mil of equity and $40 mil of pre tax earnings.  It’s 

worth at least $400 mil.”   

67. In an audio recording, Murstein instructed the Contractor that: “I view the stock 

worth at $10-$15 per share….  [T]he Bank alone is worth $20 per share….  Put this out 

tomorrow.” 

68. Murstein reviewed and approved many of the posts before they were published 

online.  For example, on July 7, 2016, the Contractor emailed Medallion Financial’s public 

relations firm (the “PR Firm”) regarding one article and wrote:  “Will forward to Andy 

[Murstein] now so we can get the OK to publish.”   

69. Murstein also reviewed articles relating to Medallion Financial after their 

publication.  On one audio recording, Murstein asked the Contractor “How do I find your post?”  

The Contractor also forwarded links or screen shots of articles and comments to Murstein after 

publication.   

70. In 2016, Medallion Financial’s web site (www.medallion.com) had a section 

described as:  “In The News: Articles about Medallion Financial have regularly appeared in 

major publications.  To view the latest Press releases, Articles and Interviews please click 

below.”  During 2016, the “In The News” section contained links to at least two articles written 

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by the Contractor:  “Melrose, Medallion and Medallions” and “Safety in a Subsidiary,” both of 

which appeared in Huffington Post.  The author of both pieces was identified only as 

“Contributor” on Medallion Financial’s website, and there was no disclosure that the author was 

paid by Medallion Financial to write those articles. 

71. Murstein acknowledged that the purpose of the touting activity was to boost 

Medallion Financial’s stock price.  In an email to the Contractor on November 16, 2016, he 

wrote: “All I would like you guys to do today is to write articles and post comments on message 

boards to support our stock.” 

72. Murstein knew or recklessly disregarded that the Contractor did not disclose the 

compensation she received from Medallion Financial and that the Contractor used aliases in her 

articles and comments about Medallion Financial. 

C. Murstein Paid a Public Relations Firm to Anonymously Tout.  

73. In 2016, the PR Firm told Meyers it was also willing to make similar anonymous 

postings promoting Medallion Financial.  As a result, Murstein also paid the PR Firm to write 

positive articles about Medallion Financial.  The PR Firm published at least one comment in 

which it claimed that “the Bank could be worth over $300 million and the Bank stock could 

easily be worth over $12 as a standalone company to MFIN.”   

74. The PR Firm misrepresented its affiliation with Medallion Financial.  In an 

internal email on July 7, 2016, an individual from the PR Firm acknowledged that, when 

contacted by Seeking Alpha, he claimed that he was not being compensated by Medallion 

Financial, which was consistent with Murstein’s instructions.  In a November 17, 2016, email, 

Murstein instructed the PR Firm to “publish under an anonymous name.”  In a November 18, 

2016, email, Murstein told the PR Firm that “the article shouldn’t be coming from me you or the 

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company though. More like an anonymous blogger.”  The PR Firm also emailed Murstein on 

November 16, 2016, for approval on pieces, writing “Andy, Please review the attached article for 

accuracy and style.”   

D. Murstein Responds Falsely to Press Inquiries About the Touting.  

75. On November 26, 2016, a reporter for the New York Post emailed Murstein:  

Hi Andrew, My colleague got some information about a woman who 
works for your company.   [The Contractor] has been writing articles for 
Huff Post touting the stock price of Medallion Financial under a pen 
name.  This is not only on [sic] ethical, but experts say it is illegal.  My 
colleague reached out to [the Contractor], but I wanted to reach out to you 
as well.  How long has [the Contractor] been working for you?  What is 
her role in the company?  Did you know that she was writing for 
Huffington Post?  Did you know what kind of articles she was writing?  If 
not, how do you feel to find out she was doing this?  What are the next 
steps you plan to take? 

76. Murstein’s emailed response to the reporter stated that “I am not aware of the 

postings ‘under a pen name’ to which you are referring as potentially raising ethical and legal 

issues.  Can you please send me the postings in question, and then we’ll review them and get 

back to you with a response.” 

77. The reporter then told Murstein that the Contractor’s “article[s] are listed on the 

news section of your website as just Contributor.”  Murstein falsely responded: “I was unaware 

of the below but am now looking into it.”   

78. On November 27, 2016, Murstein was interviewed by the New York Post reporter, 

and Medallion Financial’s General Counsel and the PR Firm attended.  According to notes of the 

interview taken by the PR Firm, “[Murstein] said he didn’t know [the Contractor] was writing 

stories touting Medallion for Huffington Post under [an] assumed name and posting them 

without a byline on the Medallion website,” and “[Murstein] sees nothing wrong with her trying 

to protect her identity, considering the viciousness of the short sellers.”   

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79. According to the PR Firm’s notes, “the Post reporter[] said she spoke to a former 

attorney general who said that paying someone to tout the stock under a pen name is illegal,” and 

Murstein responded that “in his opinion it is not illegal because everything in the articles is 

public information already.” 

80. Murstein also falsely claimed in the interview that he knew the Contractor “had a 

background in marketing and PR and was recommended by an IR firm,” and that the Contractor 

had stopped working for Medallion Financial in October 2016.  

81. On January 17, 2017, Murstein received by email another media inquiry stating 

that “your former IR [investor relations] head . . . used a pseudonym . . . to post positive articles 

on Medallion for the Huffington Post, and also posted pro-Medallion comments on financial 

blogs such as Seeking Alpha and Yahoo Finance.  Doing so is a practice known as ‘stock-

touting’ which could be a potential securities law violation.”   

82. On behalf of Murstein, Medallion Financial’s General Counsel again responded 

falsely to the reporter that “any comments she is alleged to have posted under a pseudonym she 

would have posted unbeknownst to Medallion.”  On January 27, 2017, the reporter responded 

with an email stating the Contractor “was responsible for posting the Huffington Post articles 

which you subsequently placed on your website.  It is obvious that you knew what she did.  This 

could potentially constitute a securities law violation.”   

E. Murstein Paid the Contractor Hush Money to Conceal His Scheme.  

83. Although Murstein knew that the Contractor had posted under an alias, he texted 

the Contractor on November 26, 2016, after he had received the media inquiries, and asked her:  

“Why did you post articles under a fake name?”  The Contractor responded on the same day:  

“Because you asked me to not use my name.  Do you want me to switch it to my name?”   

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84. On December 1, 2016, Murstein texted the Contractor:  “I’m trying to get you an 

agreement and get you paid extra money but it won’t be ready until tmrw or Monday.”   

85. On December 5, 2016, Murstein and the Contractor signed a Confidential 

Agreement and General Release (the “Release”), in which the company agreed to pay the 

Contractor $15,000 in exchange for the Contractor agreeing to release Medallion Financial from 

all claims.  The Release also required the Contractor to falsely affirm “that she was never 

instructed by [Medallion Financial] or any other Releasee to write any articles, blogs, posts or 

comments about Medallion under a pen name or false name.”   

86. Fearing that the touting would be made public, on January 18, 2017, Murstein 

texted the Contractor: “Our lawyers are sending you a letter that you are telling people I told you 

to write under a false name.  First of all there is no reason to talk to people about that.  Plus you 

signed something that says you aren’t supposed to be talking to anyone.”  

87. Neither Medallion Financial nor Murstein ever disclosed to investors that for two 

years Murstein had engaged and paid multiple persons to promote Medallion Financial in 

numerous online forums.  

IV. Murstein’s Scheme to Increase the Bank’s Fair Value. 

88. Prior to 2015, Medallion Financial measured the Bank’s fair value as the 

equivalent of “book value,” which represented the bank’s assets minus its liabilities, and 

Medallion Financial’s Forms 10-K represented that “Medallion Bank had little value beyond its 

recorded book value.”   

89. In 2015, however, Medallion Financial changed its approach to determining the 

fair value of the Bank to the more subjective (and malleable) fair value determination.  This 

change coincided with the rise of the ridesharing apps and the deterioration in medallion asset 

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values, 

90. To justify this change, Medallion Financial claimed the increase in the value of 

the Bank was justified because the Bank had a “premium” as a Utah industrial bank that 

increased its worth well beyond book value.   

91. The Bank’s status as a Utah industrial bank, however, did not support a 

significant premium over book value.  In a public response letter submitted to the Commission’s 

Division of Investment Management in February 2016, Medallion Financial acknowledged the 

many limitations inherent in the Utah bank charter:  the Bank was “not a full-service bank; 

cannot offer checking accounts, which are highly profitable for commercial banks”; the Bank 

“has no retail locations, no core deposits, does not provide residential mortgages, and does not 

provide credit cards.”  The Bank was also required to maintain its capital at a minimum of 15% 

of its average assets.  This 15% “leverage ratio” was “higher than that required by peer banks 

and further limits the value of [Medallion Financial’s] investment in Medallion Bank.”  Finally, 

the Bank was “prohibited from entering into new business lines” without regulatory approval, 

and regulatory restrictions on transfers of the Bank’s charter also impacted the Bank’s value. 

92. Murstein also knew that several peer banks had marked down their taxi medallion 

loans to amounts approximating the value of the collateral. 

93. In late 2016, Murstein nevertheless sought to reverse the downward slide of 

Medallion Financial’s stock price by nearly doubling the purported fair value of the Bank.  At 

the time, there was no basis to support a material increase in the Bank’s fair value.     

 

 

 

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A. The Valuation Firm. 
 

94. In 2015, Medallion Financial hired a third-party valuation firm (the “Valuation 

Firm”) to perform a fair value analysis.  The Valuation Firm was a specialist with substantial 

experience in bank valuations.  

95. Under GAAP (ASC 820-20-55-1), “[t]he objective of a fair value measurement is 

to estimate the price at which an orderly transaction to sell the asset or to transfer the liability 

would take place between market participants at the measurement date under current market 

conditions.”  

96. Applying these principles, the Valuation Firm provided a fair-value opinion in 

2015, which formed the basis for Medallion Financial’s disclosures in its Form 10-K for 2015.  

The Form 10-K for 2015 reported Medallion Bank’s fair value at about $152.1 million, and the 

Form 10-Q for the second quarter of 2016 reported Medallion Bank’s fair value at $166.4 

million.  Both valuations were about 11% over book value. 

B. Murstein Goads Other Financial Firms to Endorse His Valuation Number. 

97. Murstein wanted to drive the Bank’s fair value even higher above book value.  He 

therefore set out to manufacture market demand for Medallion Bank at the price that he 

determined.  To this end, Murstein initiated contact with four financial firms hoping to generate 

support for his number.  Murstein did not tell these firms that the purpose of his contact was to 

generate support for an increased valuation with the Auditor and the Valuation Firm.   

98. The contacts followed a similar pattern.  An email by Murstein would propose a 

future transaction involving a sale of all of a piece of the Bank at a number dictated by Murstein.  

Murstein would then ask for something in writing expressing support for his valuation number.  

At that point, the discussions about a transaction would go no further because Murstein’s 

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purpose was not to negotiate the transaction but rather to mislead the Valuation Firm and the 

Auditor. 

99. On October 17, 2016, Murstein sent Investment Bank A and Investment Bank B 

identical emails stating that:  “[W]e were approached by an investment bank asking if we are 

interested in selling a minority stake in our bank to their client. . . .  I think we should pursue this 

or possibly sell it to another investor.  Using other potential comps our bank would be worth well 

over $300 million. . . .  [C]ould you quickly put together a rough valuation for our bank. . . . 

Once we review it [the valuation] we can discuss engaging your firm.”   

100. Within days, Investment Banks A and B—incentivized by the prospect of 

investment banking fees—both responded.  Investment Bank A  emailed Murstein a letter and 

summary that stated that “it is reasonable to assume a valuation range of $185MM - $325MM” 

and that $300 million was “a reasonable proxy for a control sale price” but that this view was 

“tempered by regulatory uncertainty” that any transaction would receive approval.  Investment 

Bank B responded with a “potential valuation analysis” listing a range of valuations of the Bank 

up to $371 million.  

101. Next, on October 28, 2016, Murstein emailed the president of another Utah 

industrial bank and asked:  “Do you feel that you would be able to value Medallion Bank at $200 

million?”  Murstein repeated his request in another email to the industrial bank on October 29, 

2016:  “[S]end me an email Monday saying your [sic] interested in discussing a valuation above 

$200 mill[ion] with us.  I personally think it’s worth a lot more but if I get the email saying that 

we can discuss everything on the phone or in person.” 

102. On October 30, 2016, the bank president emailed Murstein a one-sentence 

response:  “We are good at 200.”     

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103. The industrial bank never pursued the transaction with Murstein, but internal 

emails show it was highly skeptical the Bank should be valued at $200 million.  In late 

November 2016, the industrial bank prepared an offer letter to be sent to the Bank’s Board of 

Directors offering $123.7 million in cash—not $200 million—to purchase the Bank.  The draft 

letter, which was not sent, noted that this proposed offer was “lower than our previously 

submitted indication of interest” but stated that this was appropriate given recent financial 

disclosures by Medallion Financial.  In an internal email dated November 21, 2016, an employee 

of the industrial bank stated:  “I think Murstein used us, when he requested we give him a $200 

million value on the bank so that he could justify not writing it down[.]”  

104. Murstein’s final effort at generating support for his valuation occurred in 

December 2016, when Murstein tried to revive stalled negotiations with a consumer lender over 

a loan participation program.  Murstein introduced a new term into the deal which would require 

the consumer lender to acquire a 2% interest in the Bank, and that for this purpose “Medallion 

Bank will be valued at 10 times 2017 projected earnings of $35,000,000 or $350,000,000.”   

105. On December 13, 2016, Murstein emailed the consumer lender that “the 

investment in the bank is a big part of the deal for us.”  As Murstein stated in an internal email 

dated December 15, 2016, “[T]he valuation that the bank will receive [from the consumer lender] 

is very high. . . .  [I]t should also greatly help the parent[ ]  company stock price.” 

106. In late December 2016, however, the consumer lender notified Murstein that it 

was ending the negotiations, but would consider revisiting the small equity investment if another 

loan participation or partnership arrangement between the parties could be arranged in the future. 

107. Murstein tried to use these contacts as support for his increased valuations.  

Murstein never told the Auditor, however, that he initiated these contacts and provided the 

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valuation numbers to the firms.  Murstein also did not tell the firms that he would provide their 

responses to the Auditor as support for the increased valuation. 

108. The Auditor, however, emailed Murstein on October 24, 2016, that Investment 

Bank A’s summary was “a ‘pitch’ document with appendices rather than a valuation” and “does 

not support the increase in value in the 3rd quarter of 2016.”  In an October 31, 2016, email to 

Murstein, the Valuation Firm dismissed Investment Bank B’s analysis as “a pitch document” not 

justifying an increase in the Bank’s fair value. 

109.   Regarding the industrial bank, Murstein forwarded the “good at 200” email to 

his CFO and declared: “[t]his is the final clincher.  [The industrial bank] has been talking to us 

about buying our bank and just sent this email of at least two hundred million dollars.  This 

should be an easy valuation for us to convey to the auditors.”  Murstein then forwarded this 

email chain to the Auditor.  The Auditor, however, responded that the “good at 200” email 

“doesn’t offer much context” and asked for more information “that would make this a bonafide 

offer.” 

110. A Medallion Bank official was also skeptical of the proposed deal with the 

consumer lender, and advised Murstein in a December 15, 2016, email that “it would be best to 

resolve our medallion problems before we enter into the strategic partnership business,” which 

he estimated would be twelve months in a best case scenario.   

111. Murstein disagreed, prompting a Bank executive to be more candid to Murstein:  

“Volatility is the enemy of this mission. . . .  The volatility introduced by ride-share means that, 

in the best case, the bank only loses millions of dollars working through it. Worst case, we lose 

hundreds of millions-and the odds of this outcome remain too high. . . .  The strategic 

partnerships business adds to the volatility of the bank. . . .  [T]he 

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reputation/regulatory/legal/operational risks remain enormous in our eyes.”   

112. Murstein, however, was not primarily interested in the strategic partnerships but 

rather in generating any support, however tenuous, for an increased valuation of the Bank that 

would elevate Medallion Financial’s stock price.   

C. For 3Q 2016, Murstein Pressures the Valuation Firm to Increase Fair Value. 

113. When the Auditor told Murstein that another fair-value opinion was needed for 

the third quarter of 2016, Murstein sought to have the Valuation Firm increase the Bank’s value 

to $193 million.   

114. On November 1, 2016, Murstein wrote the Valuation Firm:  “I would like to give 

this one more shot before we throw our long term relationship away.  I assume if we signed a 

letter of intent…stating the value of Medallion Bank would be a minimum of $200 million you 

would be able to sign off on our valuation.” 

115. The Valuation Firm, however, told Murstein, over several emails, that the 

purported transactions from the financial firms were too tenuous to form the basis of any 

valuation analysis—noting specifically that any sale would first need to include due diligence, 

including a review of the Bank’s loans.   

116. On October 31, 2016, the Valuation Firm emailed Murstein that:  

[T]here is not material information that [the Valuation Firm] can place significant weight 
on in changing our prior valuation methodology to conclude with a higher value.  The 
potential sale of the Bank to a third party could receive significant weight if you were far 
along in a transaction in terms of diligence, vetting with the regulators, and the presence 
of at least a term sheet and/or definitive agreement. 
 
117. On November 1, 2016, Murstein responded that the Valuation Firm was “going 

out of [its] way not to be reasonable” and that the Valuation Firm’s refusal to accept Murstein’s 

valuation evidence “will now greatly effect [sic] our relationship going forward.” 

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118. Despite Murstein’s pressure, the Valuation Firm refused to increase the fair value 

of the Bank, and responded to Murstein that “we have prior valuations that have been reviewed 

and approved by the Board . . . based on lower earnings . . . and there does not appear to be 

rationale to change the multiple, such as lower perceived risk . . .”  The Valuation Firm also told 

Murstein that a valuation analysis had to “consider that the recent trajectory of asset quality and 

earnings is negative.” 

119. In internal email dated November 1, 2016, an executive at the Valuation Firm was 

more explicit:  “[W]e have ample recent evidence that medallion loans are souring (Signature 

Bank, BankUnited, etc.)….  Noncurrent loans have increased 101 basis points in one quarter 

alone since your last valuation….  This is a strong argument for value of the bank declining, not 

increasing.”  In another internal email dated November 2, 2016, an executive at the Valuation 

Firm wrote:  “Unfortunately at this point, if you have not done so already, you have to let him 

[Murstein] know that unless he is agreeable to [the Valuation Firm] independently valuing 

Medallion Bank, he is going to have to go elsewhere….  Wish I had another solution but I think 

we have lost the client to maintain our integrity and avoid potential liability.” 

D. Rejecting the Auditor’s Advice, Murstein Fires the Valuation Firm. 

120. On November 1, 2016, after the Valuation Firm refused to provide a valuation of 

$193 million for Medallion Financial’s third quarter Form 10-Q, Murstein fired the Valuation 

Firm.   

121. Murstein fired the Valuation Firm against the advice of the Auditor.  On October 

21, 2016, the Auditor emailed Murstein:  “[The Valuation Firm] is necessary.  On a quarter to 

quarter basis the methodology should not change.  Especially when supporting an increase of this 

size, we will need additional support.”  On October 24, 2016, the Auditor emailed Murstein that 

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“your current valuation firm” should “conclude on a value.”   

122. The Valuation Firm also advised Murstein of the importance of maintaining 

consistency in an October 31, 2016 email: “we are tied to the prior valuation methodology in the 

absence of compelling new information that we would be required to consider.” 

123. On November 2, 2016, Murstein emailed the Auditor that he was “done with [the 

Valuation Firm.]”  Murstein—after complaining that the Auditor was “costing us significant 

dollars to obtain these valuations”—then misrepresented to the Auditor the reasons that he fired 

the Valuation Firm:  “They have been difficult to work with for quite some time.  They are too 

small for a transaction of this size.”   

124. The Auditor pushed back, telling Murstein:  “The key here is to bridge the gap 

from your prior quarter’s valuation, and utilize known methods (hopefully consistent methods) 

from the prior quarter to evaluate the fair value for this quarter. . . .  I would recommend that you 

continue to utilize the same third party specialist quarter-after-quarter.”   

125. Murstein rejected his Auditor’s advice, and did not disclose to the Auditor that he 

fired the Valuation Firm because it refused his demand to increase the Bank’s fair value. 

126. GAAP principles (ASC 820-10-35-25) provide that “[v]aluation techniques used 

to measure fair value shall be applied consistently.”   

127. By firing the Valuation Firm and using a new firm that used different assumptions 

and inputs from what had previously been used, without justification or evidence that it would 

produce a value more representative of the Bank’s fair value, Murstein and Medallion Financial 

violated GAAP. 

 

 

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E. Murstein Entices Investment Bank C Firm to Provide a Valuation.  

128. After firing the Valuation Firm, Murstein immediately began opinion-shopping 

for a more compliant firm.   

129. On November 1, 2016, Murstein sent Investment Banks A and B, as well as a 

third investment bank (“Investment Bank C”), identical emails stating:  

Do you think you can issue something like this report [attaching the Valuation Firm’s 2Q 
2016 report] indicating the bank is now worth at least 1.3 times book value or $193 
million.  I believe it is worth substantially more but that is the minimum amount that 
needs to be confirmed right now for us to work with you to potentially sell a portion of 
the bank.  Thank you.  
  
130. Investment Banks A and Bank B did not respond to Murstein’s email.   

131. An employee of Investment Bank C, however, responded within minutes:  “I have 

little doubt that we can.” 

132. Investment Bank C did not typically provide valuation opinions for public 

company audits.  It agreed to do so largely because of the incentive offered by Murstein to “sell a 

portion of the bank,” which was much more lucrative than providing a valuation.   

133. The quid pro quo arrangement that Murstein offered—providing a pre-determined 

valuation number dictated by Murstein in exchange for investment banking work—was not 

disclosed to the Auditor or to investors. 

134. In order to reach the valuation number that Murstein demanded for the third 

quarter Form 10-Q, Investment Bank C did not use assumptions and inputs that were consistent 

with the Valuation Firm’s earlier reports.  Instead, Investment Bank C changed key assumptions, 

including the discount rate used to estimate the present value of future cash flows, in order to 

obtain the higher fair-value number that Murstein directed. 

135. Due to Murstein’s abrupt firing of the Valuation Firm and hiring of Investment 

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Bank C, Medallion Financial had to rush to meet its filing deadline for its Form 10-Q for the 

third quarter of 2016. 

136. On November 9, 2016, the Auditor emailed Murstein that the “due date of the 

[Form 10-]Q is today” and the Auditor still had not received “management’s valuation memo 

that specifically deals with the reasons for the [Bank’s] increase in [fair] value this quarter[.]”   

137. The valuation memorandum, signed by Murstein, was emailed to the Auditor that 

afternoon, just hours before the Form 10-Q became public.  

F. Medallion Financial’s Form 10-K Filing for 2016. 

138. For the quarter ending December 31, 2016, Medallion Financial increased the 

valuation of Medallion Bank from $193 million to $280 million.  The overall increase totaled 

approximately $110 million in only six months, which meant that the fair value had changed 

from approximately 11% greater than book value to more than double book value.  

139. The increase in the value of the Bank to $280 million as of December 31, 2016, 

was again driven by Murstein’s pressure on Investment Bank C.  Murstein had already 

determined the value he wanted to report for the Bank and conveyed that value to Investment 

Bank C before they had done the valuation analysis.   

140. The Bank’s reported fair value as of December 31, 2016, of $280.6 million, was 

nearly four times greater than the market capitalization of its parent company, Medallion 

Financial, which was $73 million as of that date. 

141. The Bank’s valuation for the period ending September 30, 2016, was 

approximately “41% up the range” ultimately provided by Investment Bank C.  In a late January 

2017 email exchange between Murstein and Medallion Financial’s CFO, the two discussed the 

need for the valuation of the Bank for the following quarter, December 31, 2016, to also be 41% 

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“up the range.”  The CFO then told Murstein that “the $280 MM for this valuation needs to be 

roughly 41% up the range they derive as well.” 

142. Murstein discussed potential valuation ranges with the CFO, concluding 

“[d]epends on the range, but for example $239 to $339 puts it right at 41%.  Other ranges would 

work too.”   

143. Murstein then forwarded that email exchange to Investment Bank C, with the note 

“see [b]elow.”   

144. Investment Bank C’s report as of December 31, 2016, issued on March 1, 2017, 

concluded that the fair value of the Bank ranged from $262 million to $309 million.  (A value of 

$280 million was approximately 41% “up the range” provided by the Investment Bank.)   

 H. Medallion Financial’s 2017 Periodic Filings. 

145. For the second quarter of 2017, Investment Bank C provided another report but 

made clear that the report was not an independent fair-value determination:  “For the avoidance 

of doubt, the Analysis is a mathematical exercise based on a series of inputs provided by the 

Company and represents neither an opinion as to the value nor a fair market valuation of the 

Bank on the part of [Investment Bank C].” 

146.   In fact, all of Investment Bank C’s valuation reports were mere “mathematical 

exercises” that did not take into consideration the poor credit quality of the Bank’s loan portfolio 

and simply accepted management’s projections.  As a result, the Bank’s fair value rose to $286 

million by the second quarter of 2017, more than double the Bank’s book value. 

147. On July 11, 2017, Murstein sent Investment Bank C an angry email criticizing it 

for failing to generate any offers for the Bank, stating that: “You were engaged to sell a minority 

piece in the bank. That’s why you took on the project.” 

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148. Murstein fired Investment Bank C in late July 2017, and Medallion Financial 

hired yet another firm to provide a valuation opinion—the third such firm in less than one year.  

This firm’s opinion tracked Investment Bank C’s approach, and the Bank reported a fair value of 

$290.5 million by year-end 2017. 

149. Murstein knew that medallion values were continuing to deteriorate in 2017.  A 

consultant retained by Murstein reported to him in August 2017 that “there continues to be 

deterioration in values as indicated by arms length transfers in NYC and Chicago,” and that “the 

survivability of the medallion system” was at stake.  The consultant estimated medallion values 

at $150,000 for New York City medallions and $10,000 for Chicago medallions.  

150. The dramatic increases in the Bank’s fair value of its common stock, as compared 

to book value, is summarized below (numbers are in millions): 

 6/30/16 9/30/16 12/31/16 3/31/17 6/30/17 9/30/17 12/31/17 
Fair Value 166.5 193.9 280.6 284.4 286.0 290.7 290.5 
Book Value 149.9 149.0 135.6 139.3 140.6 145.2 137.9 
Ratio 111% 130.1% 207% 204.1% 203.4% 200.2% 210.7% 

 

I. False and Misleading Disclosures in Forms 10-K and 10-Q. 

151. Medallion Financial’s 2016 and 2017 Forms 10-K and Forms 10-Q, gave three 

reasons in the Management’s Discussion and Analysis (“MD&A”) for the increases in the 

Bank’s fair value:   

a. “Expression(s) of interest in Medallion Bank from both investment bankers and 

interested parties has continued through 2016 and 2017;”  

b. “[I]n the third quarter of 2016 there was a court ruling involving a marketplace 

lender that the Company believes heightens the interest of marketplace lenders to 

acquire or merge with Utah industrial banks;”  and  

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c. “We also engaged a valuation specialist to assist the Board of Directors in its 

determination of Medallion Bank’s fair value.” 

152. Each of these reasons for the Bank’s significant valuation increase was false or 

misleading, as Murstein knew or recklessly disregarded.  A reasonable investor would find the 

company’s explanations of the reasons for the Bank’s increases in fair value to be material. 

153. First, Murstein knew that the “expressions of interest” from third parties were not 

appropriate as a basis for a fair value calculation.  This is what the Valuation Firm and the 

Auditor told him.  No sale ever occurred, and none of the purported bids went beyond the rote 

recital of Murstein’s inflated valuation number.  None of the third parties even conducted due 

diligence.  In fact, the “expressions of interest” were manufactured by Murstein not to sell the 

Bank but to create the illusion of genuine market interest in order to justify the Bank’s 

skyrocketing fair value. 

154. Fair value is intended to measure the price at which a willing buyer and a willing 

seller would enter into a transaction.  In 2016 and 2017, however, it was apparent that there were 

no willing buyers to be found.  As noted above, Murstein knew from Investment Bank C that 

there was almost no market interest in acquiring even a portion of the Bank, other than in a “junk 

bond priced deal.”  As Investment Bank C told Murstein:  “[C]learly the market reaction to the 

capital raise was substantially different than your expectations and more in line with your stock 

value.” 

155. Second, the “court ruling” the MD&A referred to, Consumer Financial Protection 

Bureau v. CashCall, Inc., No. 15-cv-7522-JFW (C.D. Cal. Aug. 31, 2016), had nothing to do 

with the Bank.  As emails show, on the afternoon of November 9, 2016—the same day the Form 

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10-Q was filed—the reference to the CashCall decision was inserted as a last-minute rider to the 

MD&A.     

156. Third, the disclosure that Medallion Financial used “a valuation specialist” was 

false and misleading.  In fact, Medallion Financial used three different valuation firms that used 

different methods and inputs.  The disclosure also omits, among other things, that Murstein fired 

the Valuation Firm against the Auditor’s advice, hired Investment Bank C by offering it banking 

work in exchange for valuing the Bank at a certain number.   

157. These false and misleading disclosures in the MD&A appear to have originated 

with the valuation memorandum that Murstein signed in November 2016, and that was provided 

to the Auditor just before the third quarter Form 10-Q was filed. 

158. As Murstein knew or recklessly disregarded, Medallion Financial’s reported fair 

value for Medallion Bank was overstated by approximately $110 million at year-end 2016 and 

by about $85 million at year-end 2017.  

159. Medallion Financial’s valuation of the Bank, as well as its disclosures in its 

periodic reports and corresponding earnings releases furnished as exhibits to Forms 8-K, was 

misleading for the periods ending September 30, 2016, December 31, 2016, March 31, 2017, 

June 30, 2017, September 30, 2017 and December 31, 2017, as Murstein knew or recklessly 

disregarded. 

V. Books and Records and Internal Controls Violations.  

160. Medallion Financial was required to make and keep books, records and accounts, 

which accurately reflect the values of its assets.   

161. Medallion Financial was also required to devise and maintain a system of internal 

accounting controls sufficient to provide reasonable assurances that, among other things 

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transactions are executed in accordance with management’s general or specific authorization,  

and that transactions are recorded as necessary to permit preparation of financial statements in 

conformity with GAAP.  To this end, Medallion Financial was required to establishing 

procedures designed to prevent errors and irregularities 

162. Medallion Financial’s internal accounting controls were not properly designed to 

implement an appropriate valuation methodology and procedures to value Medallion Financial’s 

loans or the Bank consistent with GAAP.  In particular, Medallion Financial’s valuation 

procedures did not adequately take into account the decline in the value of medallions.  

Furthermore, Medallion Financial did not have sufficient internal accounting controls to analyze 

the application of the valuation techniques being used in the valuations of the Bank to ensure 

they were being done on a consistent basis.  And Medallion Financial’s documentation 

concerning its valuation decisions and reporting disclosures was inadequate.    

163. During 2016, both Medallion Bank and Medallion Financial had loans that were 

collateralized by taxi medallions in both New York and Chicago.  In addition to loans 

collateralized by medallions, Medallion Financial also owned some Chicago medallions outright.  

In 2016, the value of medallions was declining precipitously, but the drop was particularly 

significant in the Chicago medallion market. 

164. As of September 30, 2016, the Bank and Medallion Financial valued Chicago 

medallions at twice their market value.  Medallion Financial and Murstein knew that Medallion 

Financial was valuing the Chicago medallions at twice the market value because they closely 

monitored transactions occurring in the market place.  As Medallion Financial and Murstein 

were aware, sufficient and readily available comparable sales data suggested that Chicago 

medallions had a value of $65,000 each as of September 30, 2016.   

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165. Murstein signed a valuation memo provided to the Auditor on November 9, 2016, 

that stated that the average sales price of a Chicago tax medallion in November 2016 was 

$64,700.  Murstein was also aware that a comparable bank had already reduced the value of its 

Chicago medallions to $60,000 each based on reports it had received from an investor analyst 

firm.  

166. Despite the data points cited in its valuation memo indicating a fair value of less 

than $120,000 each and sales transactions indicating an even lower value, Medallion Financial 

valued the Chicago taxi medallions it owned at $120,000 each.  Medallion Financial and 

Murstein simply disregarded all comparable sales when calculating the fair value of the Chicago 

medallions in an effort to avoid materially impacting Medallion Financial’s financial statements. 

167. Medallion Financial also failed to consider collateral value when calculating the 

value of its medallion-backed loans, contrary to fair-value accounting principles.  As Murstein’s 

November 2016 valuation memorandum states, Medallion Financial calculated the value of loans 

at par (i.e., the amount of outstanding principal) so long as the loans were performing.  

Medallion Financial concluded that loans were performing if the loan payments were not more 

than ninety days past due and/or lacked other indicia of distress (such as bankruptcy of the 

borrower or troubled debt restructuring).   

168. Given the significant decline in the value of medallions—the collateral for the 

loans—throughout 2016 and 2017, this valuation methodology did not approximate fair value.  

Medallion Financial nevertheless claimed that it reported its loans at fair value in its financial 

statements filed with the Commission.   

169. Medallion Financial’s summary of significant accounting policies stated:  “In 

determining the fair value [of the loans], the Board of Directors considers factors such as the 

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financial condition of the borrower, the adequacy of the collateral, individual credit risks, cash 

flows of the borrower, market conditions for loans (e.g. values used by other lenders and any 

active bid/ask market), historical loss experience and the relationships between current and 

projected market rates and portfolio rates of interest and maturities.”  (Emphasis added.) 

170. Medallion Financial, however, failed to do such a fair value analysis, even when it 

was aware that both the “adequacy of the collateral” and “market conditions for loans” had 

deteriorated significantly.  Importantly, Medallion Financial had sales data that showed the value 

of taxi medallions—the collateral that supported its medallion-backed loans—had declined in 

both of the company’s major markets, New York and Chicago.  Between the end of 2014 and the 

end of 2017, New York medallion sales prices had declined by approximately 60 percent, and 

Chicago prices had declined by over 80 percent.   

171. Medallion Financial and Murstein knew or recklessly disregarded that Medallion 

Financial was not carrying the medallion-backed loans at fair value but was instead significantly 

overvaluing the loans given their significantly increased risk profile.  Medallion Financial’s 

reported aggregate loan-to-value ratios climbed to over 130%—meaning that the outstanding 

loan principal was substantially higher than the collateral value and indicating that the loan was 

significantly riskier.  Medallion Financial and Murstein knew that other holders of medallion-

backed loans had begun to mark their loans down to collateral value, even when those loans were 

less than 90 days past due.   

172. Medallion Financial knew that the loans were significantly riskier by 2016 and 

that market conditions had significantly worsened but failed to consider that changing landscape 

when calculating the value of its loans. 

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173. Another inaccuracy concerned the weighted average LTV ratio of the loan 

portfolio.  The LTV ratio is material because it gives investors the ability to estimate the extent 

to which the loans are over- or under-collateralized.  Under-collateralized loan portfolios are 

significantly riskier to the lender because there is not enough collateral to collect against if the 

debtors default on the loans.  An LTV ratio greater than 100% indicates the portfolio is under-

collateralized.   

174. Medallion Financial made misleading statements regarding the method by which 

it calculated the LTVs for its loans in its 2017 financial statements.  In both its 2016 and 2017 

Forms 10-K, Medallion Financial claimed to calculate LTV ratios on a gross loan balance—

meaning that the managed unrealized depreciation or allowance was not included in the 

calculation.  The amount of managed unrealized depreciation on these loans during this time 

period was significant—approximately $63 million for both 2016 and 2017.  For both 2016 and 

2017, Medallion Financial claimed that the LTV ratios were approximately 130 percent.   

175. In Item 1 of its Form 10-K for the year ended December 31, 2017, Medallion 

Financial claimed that its weighted average LTV of loans collateralized by taxi medallions was 

131% compared to 129% at December 31, 2016.  The Form 10-K stated that “[t]hese ratios also 

do not factor in the [] unrealized depreciation on these loans of $62,723,000 and $63,252,000 as 

of December 31, 2017 and 2016, respectively.” 

176. These statements were false and misleading.  For the 2017 Form 10-K, Medallion 

Financial actually calculated the LTV on a net basis—meaning that the approximate $63 million 

in unrealized depreciation or allowance was included prior to calculating the LTV ratio.   

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177. Medallion Financial’s misstatement regarding LTV in its 2017 Form 10-K 

misleadingly gave the appearance that the LTV ratios remained stable, at approximately 130%, 

for the periods ending in 2016 and 2017.   

178. If Medallion Financial had calculated the 2017 LTV ratio consistently with the 

2016 LTV calculation, and in the way described in its 2017 Form 10-K, the LTV ratio would 

have been 155%. That increase in LTV ratio from approximately 130% in 2016 to approximately 

155% in 2017—a significant increase in LTV ratio—would have shown the decline in the 

collateral supporting for Medallion Financial’s and the Bank’s loans during that time period. 

179. As Medallion Financial’s President and Chief Operating Officer, and as head of 

the Investment Committee and Chief Credit Officer, Murstein knowingly or recklessly failed to 

ensure that Medallion Financial kept accurate books and records through the recording of 

inaccurate valuations for the Bank, the medallion-backed loans, Chicago medallions and LTV 

disclosures.   

180. Medallion Financial failed to devise and maintain a system of internal accounting 

controls sufficient to provide reasonable assurance that transactions were recorded as necessary 

to permit preparation of financial statements in conformity with generally accepted accounting 

principles.  Murstein knowingly or recklessly aided and abetted Medallion Financial’s books and 

records and internal accounting controls violations.  

VI. Murstein Deceived the Auditor. 

181. On November 9, 2016, Murstein signed a management representation letter in 

connection with the Form 10-Q filing for the third quarter of 2016.  The letter was provided to 

the Auditor, and, among other things, represented that:   

“[W]e agree with the findings of . . . valuation specialists . . . used.  We did not give or 
cause any instructions to be given to specialists regarding the values or amounts derived 

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in an attempt to bias their work, and we are not otherwise aware of any matters that have 
had an impact on the independence or objectivity of the specialists.”  
  
182. This representation was false.  In fact, Murstein had given instructions to 

Investment Bank C regarding the Bank’s minimum fair value and offered investment banking 

work to bias the valuation opinion.  

183. Murstein also signed management representation letters in connection with 

Medallion Financial’s filings for the period ended December 31, 2016, March 31, 2017, June 30, 

2017, September 30, 2017 and December 31, 2017.   

184. The management representation letters signed by Murstein also stated that: 

 Interim consolidated financial statements were “prepared in conformance with U.S. 
Generally Accepted Accounting Principles”; 

 “[W]e have designed our internal controls over financial reporting to provide reasonable 
assurance regarding the reliability of financial reporting”; 

 “We have no knowledge of any fraud, suspected fraud, or allegations of fraud affecting the 
Company involving management…where fraud could have a material effect on the interim 
consolidated financial statements”; and 

 “There are no violations or possible violations of laws or regulations whose effects should 
be considered for disclosure in the consolidated interim financial statements.” 
 
185. Murstein knew or was reckless in not knowing that each was these representations 

was false.  Murstein knew or recklessly disregarded the GAAP violations; the internal controls 

failures; the misrepresentations and omissions in the MD&A; and his failure to disclose his and 

the company’s role in the touting scheme. 

186. Murstein was also the sole signatory for the valuation memoranda provided to the 

Auditor to explain the reasons behind Medallion Financial’s valuation decisions.  Murstein 

signed the valuation memoranda for Medallion Financial’s filings for the period ended December 

31, 2016, March 31, 2017, June 30, 2017, September 30, 2017 and December 31, 2017 

187. Murstein’s November 2016 valuation memoranda emphasizes the summaries 

Murstein solicited from Investment Banks A and B as supporting the increased valuation, even 

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though the Valuation Firm and the Auditor told Murstein that the summaries were insufficient.  

The memorandum also states that the Utah industrial bank—the source of the “good at 200” 

email—“contacted the Company unsolicited to acquire the Bank and indicated a value of over 

$200 mill.”  This was false: the email was not “unsolicited” because Murstein initiated the 

contact, and no offer at all was made for the Bank.  

188. Murstein’s valuation memoranda for 2017 also refer to “a potential minority 

investor in Medallion Bank at a $350 million valuation to purchase a 0.57% of Medallion Bank.”  

As described above, that transaction was part of a larger partnership arrangement that was not 

being negotiated, and Murstein’s representation that he was “currently negotiating the terms of 

such an agreement” was misleading. 

VII. GAAP Violations 

189. Medallion Financial violated GAAP’s fair value principles, including ASC 820-

20-55-1 (“objective of fair value measurement is to estimate the price . . . to sell the asset . . . 

under current market conditions”); ASC 820-10-35-25 (“valuation techniques . . . shall be 

applied consistently”); ASC 820-10-35-24 (“reporting entity shall use valuation techniques that 

are appropriate in the circumstances . . . maximizing the use of observable inputs”); ASC 820-

10-35-54E (“reporting entity shall include appropriate risk adjustments”); ASC 820-10-55-8 

(“fair value measurement should include a risk premium reflecting . . . the uncertainty inherent in 

cash flows”); ASC 820-10-35-54D (“analysis of the transactions or quoted process is needed”); 

ASC 820-10-35-54J-c (“reporting entity . . . shall take into account the transaction price”); and 

ASC 820-10-35-54G (even if “significant decrease in the volume or level of activity . . . the 

objective of a fair value measurement remains the same”).  Murstein know or should have 

known, or was reckless in disregarding, these violations. 

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TOLLING AGREEMENTS 

190. In 2019, 2020 and 2021, Medallion Financial, Murstein and Meyers signed tolling 

agreements entered into with the Commission.  Each tolling agreement specifies a period of time 

(a “tolling period”) in which “the running of any statute of limitations applicable to any action or 

proceeding against [Medallion Financial, Murstein and Meyers] authorized, instituted, or brought 

by . . . the Commission . . . arising out of the [Commission’s investigation of Defendants’ 

conduct], including any sanctions or relief that may be imposed therein, is tolled and suspended . 

. . .”  Each tolling agreement further provides that the Defendants and any of their agents or 

attorneys “shall not include the tolling period in the calculation of the running of any statute of 

limitations or for any other time-related defense applicable to any proceeding, including any 

sanctions or relief that may be imposed therein, in asserting or relying upon any such time-

related defenses.” 

191. Collectively, these agreements tolled the running of any limitations period or any 

other time-related defenses alleged in this Complaint from October 21, 2019 through December 

31, 2021, a period of at least 803 days (as to Medallion Financial and Murstein), and from 

October 16, 2019 through December 31, 2021, a period of at least 808 days (as to Meyers) 

FIRST CLAIM FOR RELIEF 
(Defendants Medallion Financial and Murstein) 
Violations of Section 17(a) of the Securities Act 

 
192. The Commission realleges and incorporates by reference herein each and every 

allegation contained in paragraphs 1 through 191, as if fully set forth herein. 

193. By engaging in the conduct described above, Defendants Medallion Financial and 

Murstein, directly or indirectly, singly or in concert, in the offer or sale of securities and by the 

use of the means or instruments of transportation or communication in interstate commerce or by 

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use of the mails, knowingly or recklessly has: (a) employed devices, schemes, or artifices to 

defraud; (b) obtained money or property by means of untrue statements of a material fact or 

omissions of a material fact necessary in order to make the statement made, in light of the 

circumstances under which they were made, not misleading; and/or (c) engaged in transactions, 

practices, or courses of business which operated or would operate as a fraud or deceit upon 

purchasers of securities and upon other persons. 

194. By engaging in the foregoing, Defendants Medallion Financial and Murstein 

violated, and unless restrained and enjoined, will continue violating Section 17(a) of the 

Securities Act [15 U.S.C. § 77q(a)]. 

SECOND CLAIM FOR RELIEF 
(Defendants Medallion Financial, Murstein, Meyers, and Ichabod’s Cranium) 

Violations of Section 10(b) of the Exchange Act and Rule 10b-5 
 
195. The Commission realleges and incorporates by reference herein each and every 

allegation contained in paragraphs 1 through 191, as if fully set forth herein. 

196. By engaging in the conduct described above, the Defendants, knowingly or 

recklessly, in connection with the purchase or sale of securities, directly or indirectly, by the use 

of means or instrumentalities of interstate commerce, or the mails, or the facilities on a national 

securities exchange: (a) employed devices, schemes, or artifices to defraud; (b) made untrue 

statements of a material fact or omitted to state a material fact necessary in order to make the 

statement made, in light of the circumstances under which they were made, not misleading; 

and/or (c) engaged in acts, transactions, practices, or courses of business which operated or 

would operate as a fraud or deceit upon other persons. 

197. By engaging in the foregoing, the Defendants violated and, unless restrained and 

enjoined, will continue violating Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and 

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Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

THIRD CLAIM FOR RELIEF 
(Defendants Meyers and Ichabod’s Cranium) 

Violations of Section 17(b) of the Securities Act 
 

198. The Commission realleges and incorporates by reference herein each and every 

allegation contained in paragraphs 1 through 191, as if fully set forth herein. 

199. By engaging in the conduct described above, Defendants Meyers and Ichabod’s 

Cranium, by use of means or instruments of transportation or communication in interstate 

commerce or by the use of the mails, published, gave publicity to, or circulated notices, circulars, 

advertisements, newspapers, articles, letters, investment services or communications which, 

though not purporting to offer securities for sale, described such securities for a consideration 

received or to be received, directly or indirectly, from an issuer, underwriter or dealer without 

fully disclosing the receipt past or prospective of such consideration and the amount thereof. 

200. By engaging in the foregoing conduct, Defendants Meyers and Ichabod’s 

Cranium violated, and unless restrained and enjoined, will continue violating, Section 17(b) of 

the Securities Act [15 U.S.C. § 77q(b)].  

FOURTH CLAIM FOR RELIEF 
(Defendants Medallion Financial and Murstein) 

Aiding and Abetting Violations of Section 17(b) of the Securities Act and Section 10(b) of 
the Exchange Act and Rule 10b-5 Thereunder 

 
201. The Commission realleges and incorporates by reference herein each and every 

allegation contained in paragraphs 1 through 191, as if fully set forth herein. 

202. By engaging in the conduct described above and pursuant to Section 15(b) of the 

Securities Act [15 U.S.C. § 77o(b)] and Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)], 

Defendants Medallion Financial and Murstein, singly or in concert, directly or indirectly, aided 

and abetted, and are therefore also liable for Defendants Meyers’s and Ichabod’s Cranium’s, and 

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other uncharged touters, primary violations of Section 17(b) of the Securities Act [15 U.S.C. § 

77q(b)] and Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder 

[17 C.F.R. § 240.10b-5], because they knowingly or recklessly provided substantial assistance to 

Defendants Meyers’s and Ichabod’s Cranium’s, and other uncharged touters’, violations of 

Section 17(b) of the Securities Act [15 U.S.C. § 77q(b)] and Section 10(b) of the Exchange Act 

[15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

203. Unless restrained and enjoined Defendants Medallion Financial and Murstein will 

continue aiding and abetting violations of Section 17(b) of the Securities Act [15 U.S.C. § 

77q(b)] and Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder 

[17 C.F.R. § 240.10b-5]. 

FIFTH CLAIM FOR RELIEF 
(Defendant Medallion Financial) 

Violations of Sections 13(a), 13(b)(2)(A) and (B) of the Exchange Act and Rules 12b-20, 
13a-1, 13a-11 and 13a-13 thereunder 

 
204. The Commission realleges and incorporates by reference herein each and every 

allegation contained in paragraphs 1 through 191, as if fully set forth herein.   

205. By engaging in the conduct described above, Defendant Medallion Financial (a) 

failed to make and keep books, records and accounts that in reasonable detail accurately and 

fairly reflected its transactions and disposition of assets; and (b) failed to devise and maintain a 

system of internal accounting controls sufficient to provide reasonable assurances that 

transactions were executed in accordance with management’s general or specific authorization; 

transactions were recorded as necessary to permit preparation of financial statements in 

conformity with generally accepted accounting principles or any other criteria applicable to such 

statements, and to maintain accountability for assets. 

206. By engaging in the conduct described above, Medallion Financial failed to file 

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with the Commission such financial reports as the Commission has prescribed, and medallion 

Financial failed to include, in addition to the information expressly required to be stated in such 

reports, such further material information as was necessary to make the statements made therein, 

in light of the circumstances in which they were made, not misleading,  

207. By engaging in the foregoing conduct, Defendant Medallion Financial violated 

and, unless retrained and enjoined, will continue violating Sections 13(a), 13(b)(2)(A) and (B) of 

the Exchange Act [15 U.S.C. § 78m(a), (b)(2)(A) and (B)] and Rules 12b-20, 13a-1, 13a-11 and 

13a-13 thereunder [17 C.FR. §§ 240.12b-20, 13a-1, 13a-11 and 13a-13]. 

SIXTH CLAIM FOR RELIEF 
(Murstein) 

Aiding and Abetting Violations of Sections 13(a), 13(b)(2)(A) and (B) of the Exchange Act 
and Rules 12b-20, 13a-1, 13a-11 and 13a-13 Thereunder 

 
208. The Commission realleges and incorporates by reference herein each and every 

allegation contained in paragraphs 1 through 191, as if fully set forth herein. 

209. By engaging in the conduct described above and pursuant to Section 20(e) of the 

Exchange Act [15 U.S.C. § 78t(e)], Defendant Murstein, singly or in concert, directly or 

indirectly, aided and abetted, and is therefore also liable for Defendant Medallion Financial’s 

primary violations of Sections 13(a), 13(b)(2)(A) and (B) of the Exchange Act [15 U.S.C. § 

78m(a), (b)(2)(A) and (B)] and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder [17 C.FR. §§ 

240.12b-20, 13a-1, 13a-11 and 13a-13], because he knowingly or recklessly provided substantial 

assistance to Defendant Medallion Financial’s violations of Sections 13(a), 13(b)(2)(A) and (B) 

of the Exchange Act [15 U.S.C. § 78m(a), (b)(2)(A) and (B)] and Rules 12b-20, 13a-1, 13a-11 

and 13a-13 thereunder [17 C.FR. §§ 240.12b-20, 13a-1, 13a-11 and 13a-13]. 

210. Unless restrained and enjoined Defendant Murstein will continue aiding and 

abetting violations of Sections 13(a), 13(b)(2)(A) and (B) of the Exchange Act [15 U.S.C. § 

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78m(a), (b)(2)(A) and (B)] and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder [17 C.FR. §§ 

240.12b-20, 13a-1, 13a-11 and 13a-13]. 

SEVENTH CLAIM FOR RELIEF 
(Murstein) 

Violations of Rule 13b2-2 of the Exchange Act 
 

211. The Commission realleges and incorporates by reference herein each and every 

allegation contained in paragraphs 1 through 191, as if fully set forth herein. 

212. By engaging in the conduct described above, Defendant Murstein, directly or 

indirectly: (a) made or caused to be made materially false or misleading statements to an 

accountants; or (b) omitted to state, or caused another person to omit to state, material facts 

necessary in order to make statements made, in light of the circumstances under which such 

statements were made, not misleading, to an accountant in connection with (1) an audit, review, 

or examination of financial statements required by the Exchange Act or rules thereunder; or (2) 

the preparation of filing of a document or report required to be filed with the Commission. 

213. By engaging in the foregoing conduct, Defendant Murstein violated and, unless 

restrained and enjoined, will continue violating Rule 13b2-2 of the Exchange Act [17 C.FR. §§ 

240.13b2-2]. 

PRAYER FOR RELIEF 
 

WHEREFORE, the Commission respectfully requests that this Court enter a Final 

Judgment:  

a) finding the Defendants violated the federal securities laws and rules promulgated 

thereunder as alleged against them herein; 

b) permanently restraining and enjoining the Defendants and their agents, servants, 

employees and attorneys and all persons in active concert who receive actual notice of the 

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injunction and each of them from, directly or indirectly, violating or aiding and abetting 

violations of the federal securities laws alleged in this complaint; 

c) ordering the Defendants to disgorge any ill-gotten gains and to pay prejudgment 

interest on those amounts; 

d) ordering Defendants to pay civil monetary penalties pursuant to Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 

78u(d)(3)]; 

e) permanently barring Defendant Murstein from acting as an officer or director of any 

public company pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and Section 

21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)]; and 

(f) granting such other and further relief as this Court may deem just and proper. 

JURY DEMAND 
 

 Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff demands trial by 

jury in this action of all issues so triable.  

 
Dated: New York, New York     
 December 29, 2021 
 
      Respectfully submitted, 
 

 
By:       /s/  Richard R. Best 

Richard R. Best 
Celeste Chase 
David Stoelting 
Olivia Zach 
Attorneys for Plaintiff 
U.S. Securities and Exchange Commission 
New York Regional Office 
200 Vesey Street, Suite 400 
New York, New York 10281-1022 
Tel: (212) 336-0174 (Stoelting) 
Email: [email protected] 

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