Brooklyn Boro

Brooklyn Congressman Grimm will ‘not abandon post’

Pleads Not Guilty to Federal Charges

April 29, 2014 By Charisma L. Miller, Esq. Brooklyn Daily Eagle
Screen Shot 2014-04-29 at 11.39.20 AM.png
Share this:

An unfazed Brooklyn Congressman pleaded not guilty to a 20-count indictment unsealed Monday morning in Brooklyn’s federal court. U.S. House Representative Michael Grimm faces up to 20 years behind bars if found guilty of tax fraud, perjury and other charges related to his operation of a Manhattan restaurant.

After an investigation that took more than two years by the Federal Bureau of investigation (FBI), the Internal Revenue Service (IRS) and the U.S. Attorney’s Office, a grand jury returned an indictment charging Grimm with defrauding the federal government.

As alleged in the indictment, Grimm started the Manhattan restaurant Healthalicious and, from 2007 through 2010, handled the day-to-day operations including the payment of employees, maintenance of payroll documents and tax reporting. During his run as operations manager, it is alleged that Grimm improperly hired undocumented aliens and paid the majority of his employees in cash in order to underreport the business earnings and pocket the profit.

“Grimm paid a significant 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,” the criminal indictment read. Cash wages are not per se an illegal act for employee payment, however, the non-reporting of cash wages as a means to reduce payroll and other business taxes leads to the violation of federal and state tax laws.

Grimm, a former undercover agent with the FBI, reportedly kept a second set of payroll records detailing the cash payments made to Healthalicious employees. These allegedly true records were not disclosed to the appropriate government officials during the tax periods of 2007-2010.

“This scheme is breathtaking in its simplicity,” stated U.S. Attorney General for the Eastern District, Loretta Lynch. Healthalicious is a primarily cash-only business, which means the paper trail that accompanies credit and debit card charges and receipts does not exist. Without a significant document trail, the government asserted that Grimm was able to “make $1 million disappear” from the business. The government was reluctant to confirm the exact amount involved in the scheme and was also unable to identify what Grimm did with the supposedly missing cash.

Grimm removed himself from the business in 2010 and began to pursue a new career in public service. Ultimately, he was elected as a federal congressman representing parts of Brooklyn and Staten Island. Although removed from the day-to-day operations of Healthalicious upon taking his oath of office, it is alleged that Grimm trained the managers at Healthalicious in how to continue the scheme of tax evasion.

A few years after Grimm, a Republican, began to settle into his new Washington career, he was hit with a federal lawsuit filed by two former Healthalicious employees alleging that Grimm and the business failed to pay minimum wage or overtime pay. As a part of that suit, Grimm was deposed under oath on the business’ operations. In his deposition testimony, Grimm explained that employees were paid in cash only because they did not have a means of cashing paychecks. Payment came in “cash envelopes for several employees because as soon as we opened, some employees complained that they didn’t have a bank account and that its costly and timely to go to a check cashing place so as a courtesy, we often cashed their checks for them,” he said.

Grimm went on to explain that there were no partial payments in cash that went unreported; rather, “they would get a check but they would get the equivalent in cash. [W]e would just deposit the check into our bank basically, again a courtesy, cashing the check for them.”

The second set of payroll records, retained by Grimm, reflects a different story, according to the investigation.  In various email exchanges throughout 2010, Grimm sent excerpts from the second set of payroll records to the restaurant’s operating manager. Records that deviated from the payroll records reported to the federal and state governments. 

Grimm has also been brought up on charges of unlawfully employing undocumented workers. The government would not state whether or not any of these employees were assisting in the Grimm investigation and, if they were, if such cooperation would fast-track a citizenship application.

Released on a $400,000 bond, secured by his Staten Island home, Grimm exited the courthouse, essentially a free man. As a condition of his bond, Grimm is prevented from traveling outside of the U.S. and was required to surrender his passport.

A former marine, Grimm, flanked by his attorneys, held a press conference in front of the World War II veterans’ memorial in Brooklyn Heights. The attorneys, former Nassau County Judge John Kase and his daughter, Elizabeth Kase, attempted to deflect from the actual charges facing their client by claiming that the charges revealed an issue of security and privacy. “All Americans should be grateful that this case is not about national security concerns given the amount and frequency of leaked information from supposed secret grand jury proceedings,” said Elizabeth Kase. 

Despite the twenty federal charges hanging over his head, Grimm is determined to move forward in representing his Brooklyn and Staten Island constituents. “I am relieved,” Grimm stated as he commenced his post-arraignment press conference. “It has been anonymous sources and absolutely shameful disgraceful government leaks. In the face of possible prison time, he insisted that he would not abandon his post.

Leave a Comment

Leave a Comment