Cohen Avoided Taxes, Jacked Up Interest Rate On Loans He Made To Chicago Taxi Operator, Feds Say

CHICAGO (CBS) -- President Trump's former lawyer, Michael Cohen, illegally hid millions of dollars in income he received in a financial arrangement with a Chicago tax cab operator, federal prosecutors said Friday.

The revelation was contained in a sentencing memo that recommends significant prison time for Cohen's financial crimes. Those crimes also include campaign finance violations for paying off two women to keep quiet during the 2016 presidential campaign about affairs they had with the president.

As for the Chicago connection, Cohen evaded taxes by failing to report $2.4 million in interest received from a series of personal loans Cohen made to an unidentified taxi operator, who leased some of Cohen's taxi medallions.

Between 2012 and 2015, Cohen issued the loans to the operators and demanded an interest rate in excess of 12 percent, prosecutors said. Cohen funded those loans by using a personal line of credit at a 5 percent rate, allowing Cohen to earn "a substantial spread on the difference between the two loan rates," prosecutors said in the sentencing memo.

Cohen directed the taxi operator to make the payments to him personally and the checks were deposited in either his personal account or his wife's personal account.

Cohen never reported the income or told his accountants about the arrangement to avoid paying taxes, prosecutors said.