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Ex-U.S. Representative Grimm Gets Prison Time For Tax Evasion

Ex-U.S. Representative Grimm Gets Prison Time For Tax Evasion

By Joseph Ax

NEW YORK (Reuters) – Former U.S. Representative Michael Grimm was sentenced to eight months in prison for felony tax evasion in Brooklyn federal court on Friday, seven months after he pleaded guilty and resigned from Congress.

Grimm, a Republican who represented a district in the New York City borough of Staten Island, admitted in December that he underreported employee wages at Healthalicious, a restaurant he co-owned before embarking on his political career.

A former Marine and FBI agent who won the first of three terms in 2010, Grimm previously made headlines in January 2014 when he threatened to throw a television reporter off a balcony.

He won re-election in a landslide last year despite his indictment on 20 federal charges, including allegations that he hired illegal immigrants and paid employees under the table.

After pleading guilty to one count, a defiant Grimm vowed not to resign, only to step down a week later after pressure from Republican leadership.

During Friday’s hearing, Grimm told U.S. District Judge Pamela Chen that he had cut corners to keep his business afloat because he lacked the “bravery to fail.”

“It wasn’t out of greed,” he said. “I would give my life for this country.”

But Chen called his expressions of remorse “belated” and said she rejected his argument that he had already been punished enough by the losses of his congressional seat and his reputation.

“These are not punishments,” she said. “These are collateralconsequences … Everyone falls from grace when they are caught committing a crime; some fall farther than others.”

As part of his plea, Grimm signed a statement of facts that contained additional admissions, including that he concealed more than $900,000 in gross receipts from 2007 to 2010 and committed perjury during a 2013 deposition.

Before the indictment, Grimm was perhaps best known nationally for his videotaped confrontation with the reporter in the U.S. Capitol building.

“I’ll break you in half,” he told the reporter, who had asked about an ongoing probe of Grimm’s fundraising. “Like a boy.”

The Healthalicious case stemmed from the fundraising investigation, which also led to the indictment of Grimm’s former fundraiser Diana Durand.

Durand was sentenced to three months in prison after pleading guilty to charges that she funneled illegal campaign contributions to Grimm’s campaign.

(Editing by Noeleen Walder and Tom Brown)

Photo: Former U.S. Representative Michael Grimm (R-NY) arrives at the Brooklyn Federal Courthouse in the Brooklyn Borough of New York July 17, 2015. REUTERS/Brendan McDermid

Late Night Round-Up: The New Diverse Congress Meets The Tea Party

Late Night Round-Up: The New Diverse Congress Meets The Tea Party

In his opening monologue on Tuesday, Conan O’Brien noted that Congress now has a record number of African-American lawmakers — but there’s a complication: “This is particularly awkward for the Tea Party congressmen who keep thinking they’re all the same guy.”

The Daily Show discovered the terrible consequences from the resignation of Rep. Michael Grimm (R-NY) after he pled guilty to tax evasion: Without representation in Congress, Staten Island has suddenly become a human wasteland.

And on The Tonight Show, Jimmy Fallon got in one last round of holiday season jokes, looking at the pros and cons of certain New Year’s resolutions.

New York Rep. Michael Grimm Pleads Guilty To Federal Charge

New York Rep. Michael Grimm Pleads Guilty To Federal Charge

By Christine Mai-Duc, Los Angeles Times (TNS)

Embattled Republican Rep. Michael Grimm (R-NY) pleaded guilty Tuesday to a single count of tax evasion, according to federal court records.

Grimm was indicted in April on federal charges including mail fraud, wire fraud, tax evasion, employing undocumented workers and perjury in relation to a Manhattan fast-food restaurant he once co-owned and operated.

In a 20-count indictment, federal prosecutors accused Grimm of underreporting his employees’ wages to the Internal Revenue Service, paying them in envelopes full of cash, and said he had lied under oath when he claimed he was not responsible for handling payroll.

Grimm sold his interest in the restaurant before taking office in 2011, according to prosecutors.

The trial was set to begin in February, according to the Associated Press. If convicted, Grimm could have faced a sentence of anywhere from six months for hiring undocumented workers to 20 years for each of the mail and wire fraud charges, prosecutors said.

The Staten Island Republican, a former FBI special agent and Marine, has called himself the victim of a political witch hunt.

Controversy has dogged the congressman, who was just elected to his third term, for years.

Federal prosecutors first began investigating Grimm in a probe of an alleged “donor swapping” scheme designed to skirt individual contribution limits to candidates.

In January, Grimm threatened to throw a New York TV reporter off a balcony and break him in half “like a boy” for asking him about the allegations on camera. Video of the incident quickly went viral, and he was pilloried by pundits and on late-night shows.

Despite the controversy, Grimm won re-election in November.

“I know who I am and I know what I’ve done for this country,” Grimm told reporters after pleading not guilty in April. “I know I’m a moral man, a man of integrity. I also know that I have a lot more service and leadership to provide this country, and that’s exactly what I intend to do.”

But Tuesday’s guilty plea renewed questions about his future in Congress, as Democratic leaders called for his ouster.

In a statement released Tuesday ahead of Grimm’s plea, House Minority Leader Nancy Pelosi (D-CA) released a statement calling on House Speaker John Boehner to “insist that Congressman Grimm resign immediately.”

The Democratic Congressional Campaign Committee also called for Grimm’s resignation. “It’s past time for Michael Grimm to go and it’s John Boehner’s responsibility to make it happen,” said Josh Schwerin, a DCCC spokesman, in a statement. Schwerin said allowing Grimm to stay in Congress despite his guilt “is a disservice to the people of Staten Island and Brooklyn and a stain on the institution of the United States House of Representatives.”

Boehner’s office had no immediate comment.

“We won’t have any announcements until the speaker discusses the matter with Mr. Grimm,” said Michael Steel, a spokesman for Boehner.

Grimm has previously that if he was convicted, he would step down from Congress. “Certainly, if I was not able to serve, then of course I would step aside,” he said at a debate in October, according to the Associated Press.
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(Staff writers Michael Memoli and Richard Serrano contributed to this report.)

AFP Photo/Alex Wong

This story has been updated.

Rep. Michael Grimm Is Indicted On Fraud Charges, Says He’s ‘Moral Man’

Rep. Michael Grimm Is Indicted On Fraud Charges, Says He’s ‘Moral Man’

By Michael A. Memoli and Richard A. Serrano, Tribune Washington Bureau

WASHINGTON — Even as Rep. Michael Grimm (R-NY) faced charges of defrauding the federal government and pleaded not guilty Monday, he vowed to seek re-election.

Grimm was charged with fraudulently underreporting more than $1 million in sales and wages at a Manhattan fast-food restaurant he once co-owned and operated.

The 20-count indictment unsealed at the federal courthouse in Brooklyn included five counts of mail fraud, five counts of wire fraud, three of aiding and assigning in the preparation of false tax returns, two of perjury, and one each of employing undocumented workers, engaging in health care fraud, conspiring to defraud the U.S., impeding the Internal Revenue Service and obstructing an official proceeding.

The Staten Island Republican, who has called himself the victim of a political witch hunt, surrendered Monday. After entering a plea, he was released on $400,000 bond.

In a statement, Grimm referred to his previous roles as a Marine and an FBI agent before his 2010 election to Congress and promised not to “abandon my post.”

“I know who I am and I know what I’ve done for this country,” he said. “I know I’m a moral man, a man of integrity. I also know that I have a lot more service and leadership to provide this country. And that’s exactly what I intend to do.”

But in a letter to House Speaker John A. Boehner (R-OH), on Monday evening, Grimm, who is also an attorney and accountant, said he would give up his seat on the House Financial Services Committee.

Loretta Lynch, the U.S. attorney in Brooklyn, said Grimm, 44, “made the choice to go from upholding the law to breaking it. In so doing, he turned his back on every oath he had ever taken.”

FBI Assistant Director George Venizelos said that although Grimm “billed himself as a patriot and an American hero,” he was in fact “anything but an upstanding citizen.”

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

The lawmaker has been the subject of a federal investigation for nearly two years, one that began as a probe of an alleged “donor swapping” scheme, in which one candidate’s supporters donate money to other candidates, who then give money back to the original candidate in order to skirt limits on individual contributions.

He garnered national attention in January for threatening to throw a New York TV reporter off a Capitol balcony for asking about the probe.

At the heart of the indictment are allegations that from 2007 to 2010 Grimm personally oversaw the day-to-day operations of the Upper East Side restaurant Healthalicious and “paid a significant portion of employees’ wages in cash.”

Many employees received all or half of their pay in cash, often in envelopes at the end of each week, prosecutors said. Then, according to the indictment, Grimm underreported their wages to the IRS. By creating an “off-the-books” pay scheme, he “caused a number of false filings to occur” with the IRS, the indictment alleged.

Grimm’s activities came to light after two former Healthalicious employees filed a federal lawsuit in New York contending that he owed them back wages and overtime pay.

In a deposition in that suit, Grimm allegedly lied under oath when he contended that the restaurant’s “back office” handled payroll and that he was simply the one “handing out the envelopes.”

He maintained that employees who did not have bank accounts were given cash envelopes as a favor so they could avoid high check-cashing fees at financial institutions.

Grimm also denied that he discussed business matters in emails. “Not really,” he said under oath. “Almost everything was done on the phone or in person. I wasn’t big on email then.”

But according to the indictment, Grimm sent numerous emails regarding his payroll records, including one in April 2010 that discussed putting “envelopes and paychecks in a bag.”

Prosecutors say Grimm sold his interest in the restaurant before taking office.

If convicted, Grimm could face a prison sentence ranging from six months for hiring the undocumented workers to 20 years for each of the mail and wire fraud charges.

Lynch said the investigation was continuing.

Grimm will probably face pressure to surrender his seat. The House Republican leadership discussed his situation at a closed-door meeting Monday evening, but no formal statement was expected until Tuesday. Most lawmakers were still returning to the capital after a two-week spring recess.

The nonpartisan Cook Political Report, which handicaps congressional races, changed its rating of Grimm’s district from “Lean Republican” to “Lean Democrat” shortly after he surrendered to authorities.

Portrait via Wikimedia Commons