Medallion Bank - Part I

There's a bundle of money to be made on those taxi medallions (that's the tin piece affixed to a car that assures passengers that the city has licensed that particular taxi).  The City of New York strictly limits the number of medallions it issues, and a recent press release notes that a medallion sold for a new record high price of $763,000.

But the quarterly report that Medallion filed May 8 with the Securities and Exchange Commission revealed some interesting information. (Sometimes when it seems like a company is going to extra effort to not disclose something, it's worth digging a little deeper.)  

In the section dealing with related party transactions (section 10), the company's filing states the following:

"A member of the Board of Directors of the Company since 1996 is also of counsel in the Company's primary law firm.  Amounts paid to the law firm were approximately $193,000 and $49,000 for the 2009 and 2008 first quarters."

Any guesses as to whose law firm got $193,000 in the first three months of this year, on top of $404,000 for all of 2008? The unnamed Medallion director is former New York Gov. Mario Cuomo. The firm is Willkie Farr & Gallagher LLP.

Cuomo isn't the only high-profile director for Medallion.  He is joined on the board by fellow luminaries Henry L. Aaron -- better known to baseball fans as "Hammerin' Hank" Aaron -- and former Connecticut Gov. Lowell P. Weicker, Jr.

Medallion's proxy statement - which outlined the fees paid in 2008 to Cuomo's firm - notes that "Mr. Cuomo does not have a direct interest in the payment of such legal fees, but has an indirect interest in such fees as an employee of the law firm."  

Unlike some companies that sold stock to the government through TARP, Medallion is still profitable. The company reported that its increase in net assets from operations was $1.89 million in first quarter, compared with $3.92 million a year earlier.

But when a company is seeking a little government help to see it through hard times, it also can't hurt to have some heavy hitters on board.