National

New York Rep. Grimm pleads guilty to felony, refuses to resign

Just weeks after winning a third term in the U.S. House, Republican Rep. Michael Grimm of New York pleaded guilty Tuesday to a single felony count of assisting in the preparation of a false income tax return.

In return, federal prosecutors dropped 19 other counts against Grimm, but only after he signed a statement admitting to the conduct underlying the other charges. That required Grimm to acknowledge effectively keeping two sets of books while running a Manhattan restaurant to conceal $900,000 in receipts. As part of his admission, Grimm also conceded that he lied under oath while deposed in 2013 in a civil suit filed by a former employee.

He is sure to face pressure to resign from his congressional seat, as have most other members of Congress convicted of felonies. But the message Grimm sent through his lawyer set a defiant tone.

“At this time, Mr. Grimm will not be stepping down,” Stuart N. Kaplan said in an emailed statement. “He is committed to serving his constituents who recently reaffirmed their support for him in the November election.”

What remains to be seen is how much prison Grimm will face and, if he refuses to quit on grounds that his constituents knew of his indictment when he was reelected, whether his House colleagues will vote to expel him.

The guilty plea also puts a notch in the belt of Loretta Lynch, the U.S. attorney in Brooklyn who is awaiting Senate confirmation to become the nation’s first female African American attorney general.

“Michael Grimm has admitted that while running his business he chose lies and deception over honest dealings with federal and state authorities as well as his own employees,” Lynch said in a statement.

According to a statement of facts in the case that Grimm signed:

--From 2007 through 2009, while overseeing the day-to-day operations of Healthalicious, a fast-food restaurant, Grimm underreported the true amount that the business earned and paid restaurant workers in cash and “off the books” in cash.

--He concealed over $900,000 in Healthalicious’ gross receipts from the accountant who prepared the restaurant’s tax returns.

--He failed to report “off the books” cash wages he paid to some Healthalicious workers, resulting in the restaurant paying lower federal and state payroll taxes to cover Social Security and Medicare for its employees. Some of the workers received at least half of their wages in cash.

--His conduct shorted federal and New York state, as well as the New York State Insurance Fund that collects workers compensation premiums from employers, of between $80,000 and $200,000.

  Comments