- Evgeny Freidman, a long-time business partner of President Donald Trump's lawyer Michael Cohen, has agreed to cooperate with federal and state prosecutors, The New York Times reported.
- Cohen is under criminal investigation by federal prosecutors in New York City.
- A $130,000 hush-money payment Cohen made porn star Stormy Daniels is among the issues being eyed by prosecutors.
That cooperation by the "Taxi King" Freidman could spell very bad news for Cohen, who is the subject of an ongoing criminal investigation by federal prosecutors in New York City.
The Times suggested that Freidman's cooperation "could be used as leverage to pressure Cohen to work with the special counsel," Robert Mueller, "examining Russian interference in the 2016 presidential election."
Freidman, 46, pleaded guilty Tuesday to evading taxes in court in Albany County. He agreed to pay restitution and judgments totaling $5 million to New York State, according to New York Attorney General Barbara Underwood.
Freidman has managed taxi cabs for Cohen for years. At one point, Friedman was one of the largest operators of taxi medallions in New York City.
CNN reported last month that prosecutors are interested in Cohen's financial dealings with a husband and wife who own a large tax business in Chicago.
Freidman was arrested last June on charges that he and another business partner stole more than $5 million in state surcharges that are imposed on taxi rides in New York City.
But the amount of taxes he pleaded guilty to evading was much less than that, just $50,000.
Often in cases involving an agreement to cooperate with prosecutors, a defendant is allowed to plead guilty to a charge that is much less serious than the initial one lodged.
The criminal investigation of Cohen in New York, which was referred by Mueller to prosecutors there, is focused on his business dealings, as well as on a $130,000 payment he made to porn star Stormy Daniels on the eve of the 2016 presidential election.
Daniels, whose real name is Stephanie Clifford, has said the money was in exchange for her agreeing not to speak to reporters about an affair she claims to have had with Trump in 2006.
The White House has denied Trump had an affair with Daniels. But Trump did reimburse Cohen for the payment to her, according to a recent financial disclosure filing.
Cohen has not been charged by prosecutors. However, his office, home and a hotel room where he had been staying were raided last month by FBI agents.
After that raid, he and lawyers for Trump and the Trump organization have raised concerns in federal court in Manhattan that material seized in the raids that might be subject to attorney-client privilege protections might be improperly seen by the prosecutors investigating him.
Judge Kimba Wood has appointed a so-called special master to review that material to avoid privileged documents from being seen by prosecutors.
On Tuesday, Daniels' lawyer, Michael Avenatti, in a letter to Wood said he suspects that audio recordings relating to Daniels are being leaked to media outlets by Cohen or Cohen's own legal team.
Avenatti also requested that she ask Cohen's lawyers about these leaks at a hearing scheduled for Thursday.
It is not clear what audio recordings or media outlets Avenatti was talking about.
Lawyers for Cohen did not immediately return requests for comment by CNBC.
Avenatti's letter comes as Cohen's lawyers are opposing his request to be admitted to Manhattan federal court for the purpose of representing Daniels there. Because Avenatti is not currently admitted to federal court in New York, he needs a special "pro hac vice" admission for Cohen's case
In his letter to Wood, Avenatti wrote:
"We write to bring an important matter to the Court's attention. We have reason to believe that plaintiff Michael Cohen, or members of his team, have begun to leak select audio recordings to the media that were seized in the FBI raids. We further have reason to believe that these recordings may relate to our client, Ms. Stephanie Clifford. We think that these select leaks are meant to paint a false narrative relating to Mr. Cohen and his business
dealings at the same time he is not disclosing numerous other recordings of him speaking with individuals such as Mr. Trump.
We respectfully request that the Court make inquiry of Mr. Cohen's attorneys of these leaks at Thursday's hearing, including, among other things, whether Mr. Cohen's team is thesource of the leaks, what was disclosed, and the reasons for the disclosures. Such leaks would plainly call into question the seriousness of Mr. Cohen's arguments opposing my pro hac vice motion. They may also directly interfere with the privilege review being conducted by the Special Master. Further, if the materials publicly disclosed relate to our client, the disclosures would also have relevance to our motion to intervene."