By Alexandre Gladstone
Financial medallion strives to stay afloat as its business empire sinks deeper and deeper into financial distress. After the value of taxi medallions that make up a substantial part of the company’s portfolio fell last year, triggering defaults within its family of companies, Medallion forged a working relationship that raises eyebrows. with a model turned investor relations professional, three sources recently said. Debt transfer.
A woman named Sarah Rabby Frigo updated her LinkedIn profile in early 2016 to announce that she had been appointed head of investor relations at Medallion. Her profile also indicated that she was simultaneously working as a freelance contributor for The Huffington Post, and that her previous experience included eight years of working as a model, the sources said.
Frigo then posted a screenshot on her Instagram account that described an alleged email exchange with Arianna Huffington, the founder of HuffPo, writing in the caption “When one of your idols emails your pen name to say that she would like you to write for her website … # dreamâ.
She then posted three articles to the site under the pseudonym “Jayme Stanley,” all of which were essentially promotional items for Medallion, and which Medallion would later publish in the “In The News” section of its own webpage, according to the. sources.
One of the articles, published on May 3, includes a statement claiming that Medallion Bank, one of the subsidiaries of Medallion Financial, “is worth double the capital. [of the parent] today. âMFIN stock closed at $ 7.34 on the day the article was published. Stock is at $ 2.19 today, a 70% decline from the date of publication of the article.
Frigo also created the usernames stanleyjayme and Jayme post promotional comments for Medallion on the Seeking Alpha and Yahoo Finance websites, with quotes such as “The share price is so low it’s a great buy ” and “This company is a gem and it is only a matter of time before the stock bursts.“
Posting the stories and comments under a pseudonym, without revealing that a company employee is behind the posts, ascribes artificial credibility based on the perceived independence of fatherhood, a lawyer said in response to the situation. Behavior of this nature could be considered a violation of Securities and Exchange Commission rule 10b-5, particularly the “failure to state material fact” clause, the attorney said.
An SEC representative declined to comment specifically on Medallion or any allegations made against the company and / or Frigo.
For its part, the company also declined to comment on whether Frigo’s activities could have violated securities law.
“Ms. Frigo is not currently, nor has she ever been, an employee of Medallion. She is no longer associated with the Company in any way. We are not aware of anything that she said. publicly that was not accurate or otherwise reflected in information already available to the public, and any comments that she posted under a pseudonym that she posted without Medallion’s knowledge, âwrote a spokesperson for the company in a statement.
In November, rumors of a Frigo / Stanley scheme spread among some investors and traders who follow Medallion, the sources noted, adding that as the news circulated, Medallion had removed the HuffPo stories from. his website.
On November 28, Frigo made several changes to her LinkedIn profile, removing “Independent Huffington Post Contributor” from her current role and changing her role at Medallion from “Investor Relations” to “Consultant,” the sources said, noting that two days later, the reference to Medallion was completely removed.
Medallion’s financial situation is currently precarious. She is facing a lawsuit from one of her lenders, the Metropolitan Bank, for failing to repay a loan of around $ 10 million when it fell due last October. An arbitrary ruling against the company could trigger a cross default among other facilities in its $ 350 million debt pile. Recent reports from the Federal Deposit Insurance Corporation also indicate that the Medallion Bank Company subsidiary is likely in violation of its minimum leverage ratio requirement.
Alexander Gladstone is a Debtwire reporter who covers troubled debts. He can be contacted at [email protected] and on Twitter at @gladstonea.