(Bloomberg) -- A longtime business partner of Michael Cohen, Donald Trump’s personal lawyer and fixer, entered into a surprise plea deal to a tax charge on Tuesday, suggesting he may be cooperating with the government as it turns up the heat on one of the president’s closest associates.
The plea by Evgeny Freidman, a taxi operator who was charged with failing to pay $5 million in taxes, could provide the government with a new source of information about Cohen. Though Freidman reached a deal with New York state, he may be in a position to brief federal prosecutors who are probing Cohen’s financial dealings, including his taxi holdings, real estate ventures, and legal and political work for Trump and others.
Cohen hasn’t been charged with wrongdoing. But federal prosecutors in Manhattan are probing him for bank fraud and other possible crimes following a referral from Special Counsel Robert Mueller, who is investigating Russian interference in the 2016 presidential election. The FBI raided Cohen’s home, office and hotel room in New York on April 9.
In recent weeks, details have emerged about hush payments Cohen orchestrated on behalf of Trump and a Republican fundraiser and about money he received from companies including Novartis AG, AT&T Inc. and others looking for insights into the Trump administration. All told, there has been intense interest in whether Cohen may ultimately decide to cooperate with the government in his own bid for leniency.
With Freidman’s plea, Cohen may now need to weigh whether to begin talks with prosecutors before they amass enough evidence from other sources to make his cooperation unnecessary. Cohen’s lawyer, Stephen Ryan, didn’t respond to a request for comment.
Freidman’s lawyer, Patrick Egan, declined to comment on whether Freidman is cooperating with state or federal authorities but said he was “satisfied” with the plea deal. Freidman -- the so-called Taxi King of New York who operated taxis for Cohen’s family and others -- will serve five years of probation and pay at least $1 million for evading taxes if he lives up to his end of the bargain.
Freidman’s sentencing for failing to pay $50,000 in taxes is postponed for a year, another indication he may be cooperating with the government.
Last year, Freidman was charged with four counts of tax fraud and one count of grand larceny for failing to collect more than $5 million in 50-cent fare surcharges intended to help fund mass transit. The charges could have resulted in years in prison if he’d been convicted. He pleaded to a single count.
“Today, the ‘Taxi King’ admitted that he built his empire by stealing from New Yorkers,” said Attorney General Barbara Underwood, who was confirmed just hours earlier as the state’s top law enforcement officer. “Freidman pocketed money that should have provided much-needed investment in our transit system -- and he’ll now have to pay back every cent. Our office will continue to hold accountable those who cheat the system.”
New York State and New York City have claimed almost $300,000 in unpaid taxes owed by 16 taxi medallion-holding companies owned by Cohen and members of his family, including Mad Dog Cab Corp., Smoochie Cab Corp., Golden Child Cab Corp. and N.Y. Futon Taxi Corp.
Cohen claims Freidman is responsible for the tax debt.
Both Cohen and Freidman took out taxi-related loans back when the value of medallions -- licenses to operate cabs -- neared their apex. The value of those medallions collapsed during the past three years as ridesharing services such as Uber and Lyft surged in popularity, putting both men in trouble with lenders.
While Freidman’s banks took him to court, Cohen restructured more than $10 million of loans with Sterling National Bank. As part of the deal, Cohen offered up his $9 million Park Ave. apartment, as well as money he might receive from Freidman for managing his taxis, as additional collateral.
Lawyers for Cohen are due in federal court in Manhattan next week for a conference with the judge overseeing review of the evidence seized by the U.S. in the April raid. U.S. District Judge Kimba Wood has appointed a retired judge who is reviewing the material and aiding the parties in resolving which communications are protected by attorney-client privilege and which can be seen by the government.
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