New York Representative Grimm Indicted on Fraud and Tax Charges

Federal prosecutors indicted New York Representative Michael Grimm on Monday on 20 counts of fraud and tax evasion.  The charges stem from the owning and operating of a restaurant in Manhattan, with prosecutors claiming Grimm failed to report over $1 million in revenue from the restaurant.

“Michael Grimm made the choice to go from upholding the law to breaking it,” said United States Attorney Loretta Lynch.  “And in doing so, he turned his back on every oath he had ever taken.”

The charges against Grimm included mail fraud, wire fraud, and filing of fraudulent federal income tax returns with the IRS.

Prosecutors arraigned Grimm on Monday in a Brooklyn courtroom, where Grimm plead not guilty to the charges.  The judge set bail for Grimm at $400,000, which Grimm quickly posted.  The judge also required that Grimm remain in the continental United States and turn his passport over to the court no later than May 11.

Grimm spoke publicly after his release, noting he and his attorneys plan to fight the charges.

“We’re going to fight tooth and nail until I am fully exonerated,” said Grimm from the courthouse steps.  Grimm also indicated that he would continue to fulfill his responsibilities as a representative and would seek re-election in the fall of 2014.

“I will get right back to work as I always have, with honor and distinction, I will serve,” continued Grimm.  “And then, on top of all that, I have an election to win.”

However, Grimm has chosen to step down from the House Financial Services Committee, where he served as a member.

In addition to being a representative, Grimm was formerly an FBI agent and he served with the United States Marine Corps.  George Venizelos, the Assistant Director of the FBI, made it clear the agency expected better of its former members.

“As a former FBI agent, Representative Grimm should understand the motto:  fidelity, bravery, and integrity.  Yet he broke our credo at nearly every turn,” said George Venizelos, the Assistant Director of the FBI.  “In this 20-count indictment, Representative Grimm lived by a new motto:  fraud, perjury, and obstruction.”

Grimm ran a restaurant called Healthalicious from 2007 through 2010.  According to the indictment, Grimm often paid worker salaries using cash taken from the register.  In doing so, Grimm kept those monies off the books so that he did not have to report them as taxable income.

In addition, Grimm stands accused of employee undocumented workers.

Fraud and Tax Charges Not First Accusations Faced by Grimm

The charges announced on Monday against Grimm are not the first accusations levied against the representative.  Previously the House Ethics Committee opened an investigation of Grimm for finance violations in his election campaign.

Grimm acknowledged in response to the investigation that he received as much as $300,000 in campaign contributions from an Israeli Rabbi, Yoshiyahu Yosef Pinto, and his followers.  Members of Pinto’s congregation claim much of the money donated to Grimm was contributed under the names of fictitious donors.

Grimm denied an wrongdoing related to his campaign finances.  With the charges levied against him on Monday, Grimm claimed the government was simply trying a new tactic to remove him from office since the campaign finance accusations did not work.

“This political witch hunt was designed to do a couple of things, but first and foremost assassinate my character and remove me from office,” said Grimm.

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by Mark Johnston

Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.