A New York taxi operator pleaded guilty Tuesday to improperly pocketing $5 million in state tax money and has agreed to cooperate with federal prosecutors as they investigate President Trump’s personal attorney, Michael Cohen, according to a person familiar with the case.

Evgeny “Gene” Freidman, an immigrant from the former Soviet Union long known as the “taxi king” of New York, pleaded guilty to criminal tax fraud in Albany County Court. He is a former business partner of Cohen who managed taxis owned by the president’s lawyer for several years.

Freidman’s cooperation agreement could be a significant development for Cohen, whose personal business practices are under investigation by the U.S. attorney for the Southern District of New York. Special counsel Robert S. Mueller III, who is leading the federal Russia investigation, has also scrutinized Cohen’s activities and business relationships.

Stephen Ryan, an attorney for Cohen, declined to comment, as did Brett Berman, an attorney for Freidman. Freidman’s plea and cooperation were first reported by the New York Times.

On Wednesday, Cohen tweeted: “I am one of thousands of medallion owners who entrust management companies to operate my medallions according to the rules of the NYC Taxi and Limousine Commission. Gene Freidman and I are not partners and have never been partners in this business or any other.” He added “#MediaWrongAgain”

As part of the New York probe, prosecutors are investigating Cohen for possible campaign finance violations and bank fraud. Last month, FBI agents searched his home, office and hotel room. Among the documents agents sought were records related to loans he took out against his taxi medallions, people familiar with the warrant have said.


Federal prosecutors have sought records related to loans that Michael Cohen took out against his taxi business. (Seth Wenig/AP)

Public records show that Cohen took out a business loan in late 2014 for an unspecified amount using three taxi companies as collateral.

Investigators also sought records related to Cohen’s October 2016 payment to Stormy Daniels, an adult-film movie actress who said she had an affair with Trump, as well as other records related to Cohen’s involvement in responding to damaging news stories about Trump before his election.

Cohen entered the taxi business as a young lawyer in the 1990s, buying up valuable taxi medallions, which are required to operate a cab in New York and other cities. By 2003, Cohen owned a fleet of 200 taxicabs, working in partnership with a Ukrainian immigrant named Simon Garber.

In 2006, Cohen went to work for the Trump Organization as a lawyer and executive vice president. He handed off the management of his taxi medallions first to Garber and later to Freidman.

The value of a taxi medallion reached a high of $1.2 million in 2014, but their value has slumped to about $300,000 amid the rise of ride-hailing services such as Uber.

Freidman struggled financially as the value of taxi medallions plummeted. He declared bankruptcy on some of his medallions in 2016 and last year was charged by the New York state attorney general with theft.

State prosecutors said Tuesday that Freidman, who operated 800 taxis between 2012 and 2015, failed to remit a 50-cents-per-ride tax owed to the state. Instead, he filed false tax returns designed to hide the theft, they said. During that period of time, he was operating taxis controlled by Cohen, according to people familiar with their relationship.

Freidman is required to pay restitution as part of his plea deal and will be sentenced to five years of probation, according to the attorney general’s office.

“Today, the ‘Taxi King’ admitted that he built his empire by stealing from New Yorkers,” acting attorney general Barbara D. Underwood said in a statement. “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.”

Tom Hamburger contributed to this report.