State Attorney General Letitia James is accusing the city's Taxi and Limousine Commission of inflating the price of yellow taxi medallions over the last 14 years, leading to a financial crisis that left thousands of drivers saddled with debt and an industry on the edge of collapse.

James announced plans to sue the city on Thursday, marking the latest turning point in an investigation by her office, which found that, between 2004 - 2017, the Taxi and Limousine Commission marketed licenses for taxi medallions to buyers as sound investments, conducted sales and engaged in a scheme that defrauded medallion owners despite internal reports and warnings about the inflated values.

“Government should be a source of justice, not a vehicle for fraudulent practices. These taxi medallions were marketed as a pathway to the American Dream, but instead became a trapdoor of despair for medallion owners harmed by the TLCs unlawful practices," James said in a statement.

James has filed noticed of claim with the City Comptroller's office and is seeking $810 million from the city to compensate drivers. Last month, a city panel appointed by the City Council and Mayor de Blasio proposed a $500 million bailout for taxi drivers, but the money would not have to come from city coffers.

"This crisis has been ours to solve – working tirelessly to clean up the carelessness and greed of others,” Mayor de Blasio's press secretary said in a statement. “If the Attorney General wants to launch a frivolous investigation into the very Administration that has done nothing but work to improve the situation, this is what she’ll find."

James' office said the attorney general will file suit against the city for fraud, unlawful profit and other violations of state law in the next 30 days, unless the city agrees to provide financial relief to medallion owners.

In the meantime, City Comptroller Scott Stringer said his office takes the issues “very seriously” and will vigorously review this claim on its merits.