A man known as the city's taxi king is charged with ripping off millions of dollars from the state, money that's supposed to help the teetering transit system. NY1's Jose Martinez filed the following report.

Gene Friedman has long been a titan of the yellow cab industry, a big wheel who owns 800 taxi medallions, heaped campaign contributions on Mayor Bill de Blasio and once famously feuded with Mayor Michael Bloomberg.

"This defendant is the self-annointed 'taxi king of the city of New York,'" said assistant state attorney general John Healy.

But on Wednesday, prosecutors moved to bring the king down. He was arrested and hauled into court in handcuffs, accused of stiffing the state out of $5 million. 

"The charges facing this defendant are exceedingly serious," Healy said. "He faces five Class B felonies, each of which carries a mandatory prison sentence up to eight-and-a-third to 25 years."

The allegations involve a 50-cent surcharge imposed on every yellow cab ride in the city to generate money for the transit system. Friedman's companies allegedly failed to report the surcharge for 10 million rides from 2012 to 2015.

The Taxi Workers Alliance said drivers who leased medallions from Friedman had been accused by the state of keeping the surcharges that Friedman allegedly pocketed.

"He has to be ethical and pay that money back to those hard-working drivers," said Javaid Tariq of the New York Taxi Workers Alliance.

Friedman pleaded not guilty in Albany State Supreme Court to charges of tax fraud and grand larceny brought by Attorney General Eric Schneiderman.

"There are very significant legal defenses to the claims that are being made by the government. Our client intends to bring them to bear at trial," said defense attorney Patrick Egan.

It's the latest, and by far biggest, setback yet in a series of stumbles by the one-time political power player. 

Like other yellow cab fleet owners, the value of Friedman's medallions has cratered because of competition from ride-hailing apps like Uber and Lyft.

Iin 2013, Friedman and his companies agreed to pay $1.2 million in fines and restitution for drivers who were overcharged. And last year, he agreed to pay more than $250,000 in fines, damages and restitution for breaching the 2013 settlement and violating the rights of drivers.

Friedman's bail was set at $500,000, a little more than double what a single medallion sold for in March.