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'Taxi King' gets better plea deal after raid on Trump's lawyer

New York state authorities sweetened a plea offer made to a taxi operator who partnered with President Donald Trump's personal lawyer Michael Cohen after federal authorities raided Cohen's home, office and hotel room, according to court transcripts.

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Kara Scannell
(CNN) — New York state authorities sweetened a plea offer made to a taxi operator who partnered with President Donald Trump's personal lawyer Michael Cohen after federal authorities raided Cohen's home, office and hotel room, according to court transcripts.

Evgeny "Gene" Freidman, known as New York's "Taxi King," pleaded guilty last week to criminal tax fraud for failing to pay $5 million in taxes in a deal that would allow him to avoid prison time.

The no-prison deal was a significant enhancement from an offer Freidman rejected on April 4 -- just a few days before the FBI raid on Cohen -- that would have included a minimum of two years and as much as six years in prison and a $1 million fine, according to transcripts of the March court proceeding. The offer included a sliding scale; if Freidman paid less than $1 million he would face more jail time. Friedman had faced as much as 25 years in prison when he was charged last year.

The investigation by US prosecutors in Manhattan was initiated in part by a referral from special counsel Robert Mueller. FBI agents working with Mueller have interviewed several business partners of Cohen as part of Mueller's broader inquiry into election meddling. Freidman's cooperation in the deal suggests he has useful information for prosecutors and could place added pressure on Cohen, who has been Trump's attorney for a decade, to cooperate with authorities.

The initial offer and subsequent enhancement has not been previously reported. New York investigators made the initial offer in late March. When Freidman rejected the deal at the hearing two weeks later, John Healy, a lawyer with the state attorney general's office, told Justice Peter Lynch, "The offer is withdrawn. We don't intend to make any offers and we are ready for trial come June 18."

But days later, on April 9, FBI agents working with the US attorney's office in Manhattan raided Cohen's home, office, hotel room and safe deposit box, seizing several boxes of documents and over a dozen electronic devices.

Prosecutors have not said anything publicly about the raid being the impetus for a better deal.

The search warrant authorized the seizure of information relating to any payments Cohen made to suppress women from coming forward with damaging information about the President and details about Cohen's taxi medallion business, sources have told CNN.

As part of Freidman's plea deal he will cooperate with state and federal authorities, The New York Times first reported. A spokesman for the New York attorney general's office declined to comment. Freidman's attorney also declined to comment.

Freidman owns and operates one of the largest taxi operations in the country. One of his clients is Cohen, who for more than two decades bought taxi medallions expanding a business started by his father-in-law.

Cohen's taxi medallion holding companies owe New York more than $280,000 in unpaid taxes, an analysis of state records shows, with nearly two-thirds of the back taxes owed from April. Bloomberg, which first reported the unpaid taxes, said Cohen claims that he does not owe the taxes. Instead, the report said, Cohen claims Freidman is responsible for the payments.

Cohen hasn't been charged with any wrongdoing, but his lawyers have been fighting in court to limit the government's review of the seized material. Judge Kimba Wood appointed a special master to review the material for records that may be protected by attorney-client privilege.

At a hearing scheduled for Wednesday, the judge is expected to receive an update on the progress of the review. She may also decide whether to allow porn star Stormy Daniels' attorney Michael Avenatti to formally appear in the case. Daniels has sued Cohen to nullify a $130,000 "hush money" deal to keep details about the porn star's alleged affair in 2006 with Trump quiet. Avenatti has said records that were seized may be relevant to his client. The White House has repeatedly said that the President denies the affair took place.

Cohen's attorneys have objected to Avenatti's appearance, saying he made inaccurate public statements about Cohen and improperly leaked personal financial records of Cohen that revealed millions of dollars of consulting contracts he had with a US investment firm linked to a Russian oligarch, AT&T and Novartis Pharmaceuticals.

Avenatti has accused Cohen of leaking select audio recordings to the media that "may relate" to Daniels and wants the judge to question Cohen's attorneys about any leaks.

After Freidman's guilty plea and cooperation agreement became public, Cohen tweeted to distance himself from the taxi operator.

"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," Cohen said.

Freidman saw it differently. His attorney provided a statement to CNN last month on Freidman's behalf saying, "With regard to Michael Cohen, Michael is a great friend and a wonderful client."

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