Freidman Withheld Nearly $5 Million In MTA Passenger Surcharges From The State Of New York.
New York, NY - May 23, 2018 - Attorney General Barbara D. Underwood and Acting Commissioner of Taxation and Finance Nonie Manion announced today the guilty plea of Evgeny A. Freidman, 46, of New York, NY for failure to remit to the New York State Department of Taxation and Finance $5 million in 50-cent MTA surcharges between 2012 and 2015. During this time period, Friedman — the CEO of Taxiclub Management Inc. — managed a fleet of over 800 medallion taxicabs out of locations in Manhattan, Brooklyn, Woodside, and Long Island City. Today, in Albany County Court, Freidman pleaded guilty to Criminal Tax Fraud in the Second Degree and agreed to pay restitution and judgments totaling $5 million to New York State.
“Today, the ‘Taxi King’ admitted that he built his empire by stealing from New Yorkers,” said Attorney General Underwood. “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.”
This case was the result of a joint investigation by the New York State Attorney General’s Office and the New York State Department of Taxation and Finance (“DTF”). The Attorney General’s indictment, filed in Albany County Court in June 2017, charged Freidman, together with Taxiclub Management CFO Andreea Dumitru, with four counts of Criminal Tax Fraud in the First Degree and one count of Grand Larceny in the First Degree, all class B felonies.
According to statements made by prosecutors and documents filed in court, Freidman’s TaxiclubManagement, Inc. oversaw the operation of four NYC taxicab medallion management agencies: 28th Street Management Inc. (located at 313 10th Ave., New York, NY); Downtown Taxi Management LLC (located at 330 Butler St., Brooklyn, NY); Tunnel Taxi Management LLC (located at 44-07 Vernon Blvd., Long Island City, NY); and Woodside Management Inc. (located at 49-13 Roosevelt Ave., Woodside, NY).
Between at least January 2012 and December 2015, Freidman was also the beneficial and managing owner of over 120 companies, each of which held multiple taxicab medallions. Through these companies and the four managing agencies, Freidman served as both the licensed owner and managing agent of a fleet of over 260 medallion taxicabs. In addition to the hundreds of medallions he owned, Freidman’s managing agencies leased hundreds of additional medallions from other owners. Taxi Club Management Inc. and the four managing agencies controlled over 800 medallion taxicabs between 2012 and 2015.
During this four-year period, these taxicabs provided millions of rides to millions of New York City passengers. The vast majority of those rides were subject to a 50-cent New York State Tax known as the “MTA Tax,” which was automatically collected from passengers as part of their fare. Instead of remitting that tax to the DTF as required by law, Freidman and Dumitru allegedly orchestrated a scheme to withhold that money by improperly filing returns, failing to file returns, failing to remit the tax on filed returns and by filing falsified returns which underreported the true number of taxable rides. Through this scheme, Freidman and Dumitru allegedly withheld nearly $5 million in taxes from the State of New York that had been collected from passengers.
Today, in Albany County Court before the Honorable Peter A. Lynch, Freidman pleaded guilty to one count of Criminal Tax Fraud in the Second Degree, in violation of Tax Law Section 1805, a class “C” felony. Pursuant to his guilty plea, Freidman admitted that from January 1, 2012 through February 4, 2016, he was the CEO of Taxi Club Management, and the managing member of 28th Street Management, Downtown Taxi Management, Tunnel Taxi Management, and Woodside Management. In that capacity, Freidman admitted that he received MTA surcharge taxes collected from taxicab customers in the City of New York on behalf of taxicab medallions he owned or managed, and intentionally failed to remit those moneys to the DTF. In particular, over the time-period of January 1, 2015 through February 4, 2016, Freidman received over $50,000 in MTA surcharge taxes collected from taxicab customers in the City of New York on behalf of taxicab medallions he owned or managed, and intentionally failed to remit those moneys to DTF. Friedman further admitted that knew that he was obligated to remit this money to DTF, and he willfully failed to remit the money with intent to defraud DTF.
As part of his guilty plea, within 30 days of his plea, Freidman must pay restitution in the amount of $500,000 to DTF. Additionally, on or before the date of his sentencing, he must pay an additional $500,000 restitution to DTF, execute a closing agreement with DTF to cover all MTA tax liabilities between January 1, 2012 through December 31, 2015, and enter a confession of judgment in an amount not to exceed four million dollars $4 million in favor of DTF. Freidman’s sentence will be adjourned to allow him to complete his restitution payments; if satisfies the terms of the agreement, he will be sentenced to 5 years’ probation.
The Attorney General’s Taxpayer Protection Bureau is conducting an ongoing parallel civil investigation into Mr. Freidman’s conduct. Separately, the Attorney General’s Labor Bureau has investigated Freidman’s failure to properly pay drivers; those investigations resulted in a 2013 settlement for $1.2 million and a 2016 consent order in New York Supreme Court, requiring Freidman and four of his taxi medallion management agencies to pay over $275,000 in damages and fines and to hire an independent monitor to examine compliance with TLC driver-related rules.
The Office of the Attorney General thanks the New York State Department of Taxation and Financing’s Criminal Investigations Division for its invaluable assistance on this case.
The charges against Andreea Dumitru remain pending; the charges against Dumitru are merely accusations, and the defendant is presumed innocent unless and until proven guilty in a court of law.
The criminal case is being handled by Assistant Attorneys General John R. Healy and Benjamin S. Clark of the Criminal Enforcement and Financial Crimes Bureau. The Criminal Enforcement and Financial Crimes Bureau is led by Bureau Chief Stephanie Swenton and Deputy Bureau Chief Joseph D’Arrigo. The Criminal Division is led by Margaret Garnett, Executive Deputy Attorney General for Criminal Justice.
The Attorney General’s investigation was conducted by Investigators Mark Terra, Anna Ospanova and Deputy Chief Antoine Karam. Forensic accounting was performed by Associate Forensic Auditor Meaghan Scotellaro. The Investigations Bureau is led by Chief Dominick Zarrella. The Forensic Audit Section is led by Chief Auditor Edward J. Keegan.