Federal prosecutors are already investigating possible crimes related to the business affairs of President Trump’s former personal attorney, fixer, and bulletproof vest, Michael Cohen, including bank fraud, campaign-finance violations, and hush payments made to cover up alleged flings Trump had with a porn star and a Playboy model. So, hey, why not throw tax fraud into the mix?
The Wall Street Journal reported on Aug. 7 that the feds are examining whether Cohen underreported income from his taxi-medallion business on federal tax returns. A source told the Journal that income included “hundreds of thousands of dollars received in cash and other payments over the last five years.”
As someone who was unfamiliar with the history of cabs in New York City, I had no idea how coveted taxi medallions are were, and Cohen has held numerous medallions in his portfolio. At one time, the limited number of medallions issued by the city made each one extremely valuable. As recent as four or five years ago, each medallion was estimated to be worth more than $1 million. But then Uber and Lyft happened, which drove down the demand for cabs—and medallions. Two medallions sold for less than $200,000 each earlier this year.
Then there’s this:
Meantime, federal prosecutors subpoenaed Mr. Cohen’s former accountant, Jeffrey A. Getzel, who was responsible for preparing many of Mr. Cohen’s financial statements submitted to banks, people familiar with the matter said. Mr. Getzel also served as an accountant for Evgeny “Gene” Freidman, a taxi-medallion manager who worked with Mr. Cohen, according to public court records. Mr. Freidman is cooperating with federal prosecutors in the investigation, according to people familiar with the matter.
Freidman, known in New York City as the “Taxi King” (I thought that was Louie De Palma?), pleaded guilty on May 22 to a single count of criminal tax fraud for evading $50,000 worth of taxes, even though he’s been accused of failing to pay $5 million in taxes.
Getzel, CPA, CFF, is managing partner of the Woodbury, NY-based firm Getzel Schiff & Pesce LLP, which specializes in forensic accounting. Among Getzel’s responsibilities are advising clients on “general business and tax-related matters, transaction structuring and financing alternatives, and long-range strategic planning,” according to his bio on the firm’s website.
Getzel could not be reached for comment by Going Concern.
Authorities are also looking into whether any bank employees allowed Cohen to obtain loans without adequate documentation, according to the WSJ:
In particular, federal investigators are looking closely at Mr. Cohen’s relationship with Sterling National Bank—which provided financing for Mr. Cohen’s taxi-medallion business—including whether Mr. Cohen inflated the value of any of his assets as collateral for loans, according to people familiar with the matter.
Cohen has yet to be charged with a crime and has denied any wrongdoing.
The Accounting News Roundup newsletter is back! Every Friday you’ll get a recap of recent content posted on Going Concern, On This Date in Going Concern History, list of hot remote and hybrid accounting jobs, and more. Sign up here today.
Reminder: Trump said he only hires the best people.