In April, United States Congressman Michael Grimm (R-NY) pleaded not guilty in response to an indictment on a number of federal charges, including tax fraud, vowing, “I’m going to fight tooth and nail … until I am fully exonerated.”
What a difference a few months can make. Today, Grimm pleaded guilty to aiding and assisting the preparation of a false tax return, a felony charge. The plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office, and Richard Weber, Chief, IRS-Criminal Investigation.
According to the original indictment, Grimm was one of the owners and managers of “Healthalicious,” a fast food restaurant located in Manhattan. Prosecutors claimed that Grimm under-reported more than $1 million in sales and wages. He was accused, among other things, of hiring workers who did not have authorization to work in the United States, paying his employees wages in cash in order to reduce payroll taxes, federal and state taxes and workers’ compensation premiums and falsely testifying that he did not pay any of his workers in cash.
While Grimm only pleaded guilty to the one count, U.S. Attorney Lynch says that he has “signed a statement admitting to the conduct underlying every charge filed against him.” Those admissions include hiring undocumented workers and paying them in cash. It also includes causing “numerous false business and personal tax returns to be filed for several years” and the fact that he “lied under oath to cover up his crimes.”
Those lies were told while Grimm was serving as a Member of Congress. Grimm was elected to Congress in 2011; in January 2013, Grimm was deposed under oath in connection with a civil lawsuit relating to the labor practices at Healthalicious. Grimm has admitted that he testified during that deposition to things that he knew to be false, including that employees had not been paid in cash.
Richard Weber, Chief, IRS-Criminal Investigation said, about Grimm’s activities, “The public expects their elected officials to meet their tax obligations before they take office, while they hold office and when they leave office. Today, Mr. Grimm admitted to breaching the public’s trust by fraudulently underreporting $900,000 in restaurant gross receipts and lowering payroll taxes through ‘off-the-book’ payments. As the only law enforcement agency with the authority to investigate federal tax crimes, IRS-Criminal Investigation is committed to ensuring that everyone pays their fair share.”
Grimm faces a prison term of up to three years. He must also pay restitution to the Internal Revenue Service (IRS), the New York State Department of Taxation and Finance, and the New York State Insurance Fund (NYSIF).
For now, Grimm remains in office. He has refused to resign, telling reporters, “As I said before as long as I am able to serve I will serve.” Despite calls to force his resignation, House Speaker John Boehner (R-OH) has not yet indicated how he will respond to the plea from Grimm, once considered a rising star in the Republican party.
