Michael Cohen's longtime business associate strikes deal to cooperate with investigators: Source Evgeny Friedman is a Russian immigrant known as the “Taxi King.”

A longtime business associate of President Trump’s former personal attorney has agreed to cooperate with the government as part of a plea deal reached with prosecutors in New York, a source familiar with the agreement told ABC News.

Evgeny Friedman, 46, a Russian immigrant known as the “Taxi King,” was chief executive of Taxiclub Management Inc. which managed a fleet of more than 800 cabs, including some controlled by Cohen and his wife. He was accused of failing to pay the state $5 million in surcharges on taxi rides and pleaded guilty in Albany County to a single count of tax fraud.

“The Taxi King admitted that he built his empire by stealing from New Yorkers,” New York State Attorney General Barbara Underwood said. “Friedman pocketed money that should have provided much-needed investment in our transit system and he’ll now have to pay back every cent.”

His plea deal, announced Tuesday, requires Friedman to assist federal prosecutors in the Southern District of New York who have been investigating Cohen’s business practices and hush payments to women, the source said, as well as paying the $5 million owed to the state. Friedman was facing what would have amounted to a life sentence, the source said, but if he satisfies the terms of the agreement, he will receive just five years of probation.

In a statement to ABC News, Friedman expressed regret for his actions and sought to distance Cohen, who he described as a “dear, dear personal friend” from the scandal.

“I plead guilty to a felony, I am humbled and shamed!” Friedman said. “This is me taking responsibility for my actions! … Michael is a dear, dear personal friend and a passive client! That's it! This is a very difficult day for myself and my family! I had been an officer of the court in excess of 20 years and now I am a felon! I hate that I have been grouped in this runaway train that I am not a part of!”

Hans Pennink/AP

While prosecutors declined to discuss with ABC News how Friedman is prepared to assist them in the criminal investigation of Cohen, they typically know in advance what a potential witness could offer in exchange for a reduced sentence. There is no specific mention of cooperation in a transcript of the plea hearing obtained by ABC News, but prosecutor Ben Clark mentioned “other factors known to the AG” in outlining the terms of the agreement.

“The Attorney General's office agrees that if the defendant fulfills these conditions, and taking into account all other factors known to the AG at the time of sentencing, we would recommend that he would receive a sentence of 5 years’ probation.”

Later in the hearing the judge warned that a violation of the agreement by Friedman would likely lead to a prison sentence of up to 3 to 9 years.

Legal experts agree that the terms of the deal appear to be very favorable for Friedman, suggesting that he agreed to provide something of significant value to prosecutors.

Kendall Coffey, a former U.S. Attorney for the Southern District of Florida, said the terms of the deal appear to signify a substantial level of cooperation.

“A no jail time deal like this strongly suggests a level of cooperation significant enough to incriminate other significant subjects,” he said. “And those who are prosecuted under New York State law, cannot be saved by a Presidential pardon.”

Jonathan Turley, a professor at George Washington University Law School, described it as a “very good deal” for Friedman that could prove a major headache for both Cohen and Trump.

“This defendant [Friedman] could potentially have a seismic impact on the president’s case because he is a direct threat to Michael Cohen, who is direct threat to the president,” he said.

Michael Volkov, a defense attorney at The Volkov Law Group, sounded a grim note on Cohen’s legal prospects after the deal had been struck.

“The government now has a strong inside witness who can assist in explaining many of Cohen’s business activities and potential fraud schemes, especially when it came to valuing the medallions for loan purposes,” he said. “Cohen secured large loans with the medallions as collateral. As I have been saying, Cohen is a dead man walking and Friedman’s plea puts Friedman in the role of undertaker.”

Seth Wenig/AP, file

Cohen’s attorney, Stephen Ryan, did not immediately respond to questions about Friedman’s plea, but in a Thursday morning Tweet, Cohen sought to distance himself from Friedman.

“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,” Cohen wrote. “Gene Freidman and I are not partners and have never been partners in this business or any other.”

Friedman’s attorney, Patrick Egan, declined to discuss whether Friedman’s plea spells trouble for Cohen.

"I cannot comment on any speculation regarding what the entry of the plea indicates regarding any case other than my client's,” he said.

In a text message to a reporter for the New York Daily News, Friedman denied he flipped on his friend in exchange for leniency.

“This is me taking responsibility for my actions and has nothing to do w/mc,” Friedman wrote to the newspaper.

ABC News’ Kaitlyn Folmer contributed to this report.