Mikey's got a problem and so does his former boss

The legal pressures facing Michael Cohen are growing in a wide-ranging investigation of his personal business affairs and his work on behalf of his former client, President Trump.

In previously unreported developments, federal prosecutors in New York are examining whether Mr. Cohen committed tax fraud, people familiar with the investigation said.

Federal authorities are assessing whether Mr. Cohen’s income from his taxi-medallion business was underreported in federal tax returns, one of the people said. That income included hundreds of thousands of dollars received in cash and other payments over the last five years, the person said.

Prosecutors also are looking into whether any bank employees improperly allowed Mr. Cohen to obtain loans for which he didn’t provide adequate documentation, people familiar with the matter said. 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.

Convictions for federal tax- and bank-fraud may carry potentially significant prison sentences, which could put additional pressure on Mr. Cohen to cooperate with prosecutors if he is charged with those crimes, according to former federal prosecutors.