N.Y. Rep. Grimm Calls 20-Count Indictment Against Him ‘A Political Witch Hunt’

April 30, 2014

U.S. Rep. Michael Grimm (R-N.Y., 11th District), who as a House Financial Services Committee member was instrumental in adopting the flood insurance relief bill and in advocating for renewal of Terrorism Risk Insurance Act, says a 20-count federal indictment against him is “a witch hunt” meant to drive him out of office.

The indictment involves allegations of hiding sales and wages at a New York restaurant where he was one of the owners and the managing member, according to an announcement from the United States Attorney’s Office in the Eastern District of New York.

The indictment is the culmination of an investigation that was initially launched to examine Grimm’s political fundraising in his 2010 campaign.

Grimm was a sponsor of H.R.3370 (“Homeowner Flood Insurance Affordability Act of 2014”) which was enacted after being signed by President Barack Obama on March 21, 2014.

Grimm surrendered to FBI agents early Monday and he pleaded not guilty through his lawyer in Brooklyn federal court to mail, wire and tax fraud charges. He was released on $400,000 bond secured by his home, the Associated Press reported.

Grimm later held a press conference and accused the prosecutors of leaking “all kinds of innuendos and accusations to support a political witch hunt.”

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

“I know I’m a moral man, a man of integrity,” he added. “We are going to fight tooth and nail until I am fully exonerated.”

Grimm said he will return to work in the U.S. House of Representatives while fighting the charges. But Grimm also announced he is stepping down from his post in the House Financial Services Committee. He told Republican House Speaker John Boehner he should be removed from the committee but said he plans to return once his legal issues are resolved, the Associated Press reported.

The 20-count indictment against Grimm, unsealed in federal court in Brooklyn, includes the following: five counts of mail fraud, five counts of wire fraud, three counts of aiding and assisting in the preparation of false federal tax returns, one count of conspiring to defraud the United States, one count of impeding the Internal Revenue Service, one count of health care fraud, one count of engaging in a pattern or practice of hiring and continuing to employ unauthorized aliens, two counts of perjury and one count of obstructing an official proceeding.

Prosecutors allege that Grimm evaded taxes by concealing more than $1 million in sales and wages while running “Healthalicious,” a fast food restaurant located in Manhattan’s Upper East Side. Prosecutors say that from 2007 through 2010, Grimm oversaw the day-to-day operations of the restaurant, which included the reporting and distribution of the restaurant’s payroll.

Grimm is charged with engaging in schemes to fraudulently under-report the wages he paid his workers and fraudulently under-report the true amount of money the restaurant earned to both federal and New York State tax and insurance authorities, according to the indictment.

Prosecutors allege that Grimm paid a large portion of Healthalicious’ employees’ wages in cash and did not report those cash wages to federal and state authorities, thereby lowering the restaurant’s payroll tax costs. According to the indictment, Grimm also allegedly under-reported the true amount of Healthalicious’ payroll to the New York State Insurance Fund (“NYSIF”), allowing him to receive lower monthly workers’ compensation premiums.

“In 2007, Michael Grimm, former Marine, former FBI agent, accountant and attorney, was poised for success as a small business owner. Instead, as alleged, Grimm made the choice to go from upholding the law to breaking it,” said Loretta Lynch, United States Attorney for the Eastern District of New York who announced the indictment Monday.

The Associated Press contributed to this report.

Topics USA Fraud New York Restaurant

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