As I mentioned on Saturday, Congressman Michael Grimm, the only Republican representing a significant portion portion of New York City in the House, learned late Friday he was about to be indicted on federal criminal charges. Those charges came this afternoon, when federal prosecutors in Brooklyn unsealed a 20-count indictment charging Grimm, who represents Staten Island and part of south Brooklyn, with willfully failing to report over a million dollars in taxable gross receipts and wages from the health-food restaurant he owned before his election to Congress in 2010.
The indictment charges Grimm with mail fraud, wire fraud, health care fraud, conspiracy to commit tax fraud, obstructing the IRS, assisting in the filing of false tax returns, perjury, hiring illegal aliens, and obstructing an official proceeding. The charges relate to Healthalicious, a health food restaurant on Manhattan’s Upper East Side that Grimm owned from 2006 to 2010. U. S. Attorney Loretta Lynch, whose jurisdiction covers Brooklyn, Staten Island, Queens and Long Island, launched a federal investigation of Grimm’s 2010 campaign in the summer of 2012. However, the investigation branched out to include Grimm’s business dealings, including Healthalicious.
According to prosecutors, Grimm lied to federal and New York state authorities about Healthalicious’ gross receipts, allowing him to radically lower his restaurants’ income and sales taxes. Prosecutors also say that from 2007 to 2010, Grimm and others maintained two sets of payroll records to conceal his employees’ actual wages from his payroll processors and auditors. This reportedly resulted in Healthalicious’ payroll processors filing four years’ worth of tax forms based on the falsified records, resulting in Healthalicious paying significantly lower payroll taxes. Grimm is accused of furthering this scheme by paying several of his employees wholly or partly in cash. A number of them were in this country illlegally, so they were not in a position to complain. Grimm is also accused of lying to the New York State Insurance Fund about the true size of Healthalicious’ payroll. In doing this, prosecutors say, Grimm was able to lower his workers’ comp premiums.
From the looks of it, prosecutors began focusing on Healthalicious when two former deliverymen sued Grimm for paying less than minimum wage, not paying overtime and paying them under the table in cash. In a January 2013 deposition, Grimm maintained that he did not pay his employees in cash–a statement that, according to the indictment, was false. The indictment also charges Grimm with lying about whether he used an email account to help run Healthalicious. In fact, prosecutors have evidence that Grimm sent several emails in 2010 regarding the second set of payroll records–the one allegedly hidden from payroll processors.
Lynch appeared to be particularly displeased that Grimm reportedly lied under oath just after being sworn in for a second term. “Even after his return to public service,” she said, “when called to account for his actions and questioned under oath, Grimm went for the cover-up, and lied about his role in his own business.” George Venizelos, the head of the FBI in New York City, said that Grimm stood accused of trampling on every principle he swore to uphold as an FBI agent from 1991 to 2006. Instead of the FBI’s motto of “fidelity, bravery, and integrity,” Venizelos said, “Representative Grimm lived by a new motto: fraud, perjury and obstruction.”
Grimm surrendered to the FBI on Monday morning. He pleaded not guilty and was released on $400,000 bond. He struck a defiant tone in front of reporters in Brooklyn after being released, saying he had every intention of fighting the charges and continuing his campaign for a third term. “I didn’t abandon my post when I was fired on in combat,” he said. “I didn’t abandon my post when I thought my identity was compromised when I was deep undercover as an FBI agent. I’m not abandoning my post now.”
If Grimm is convicted before this fall’s election, he won’t be the only one in a sticky wicket. Filing for the election closed on Thursday, so it’s too late for someone to challenge him in the primary. His district is by far the most conservative of the 12 that divide New York City, and the only one where Republicans even have a prayer of winning.? However, it has become somewhat friendlier to Democrats in recent years; with a Cook Partisan Voting Index of R+2, it was the only even potentially competitive race in New York City well before this indictment was handed up.? Grimm would likely have to withdraw from the race if convicted, and local Republican leaders in both Staten Island and Brooklyn would have to pick a replacement. The last time they had to do so exploded in their faces. Back in 2008, when six-term Republican Vito Fossella was forced to abandon his bid for a seventh full term after being arrested for DWI, local Republicans took a long time to agree on a replacement, allowing Michael McMahon to become the first Democrat to win this district in 27 years. McMahon lost to Grimm in 2010 by only three points, which is pretty underwhelming considering this district’s history. He only won reelection by seven points in 2012; by comparison, Republicans held this district for three decades by 15 points or more.
Grimm faces a strong Democratic challenger in former city councilman Domenic Recchia, who represented much of the Brooklyn share of the congressional district. Regardless of how the case against Grimm plays out, Recchia is going to need a lot of help if the Democrats are to have any chance of erasing the last smudge of red from New York City’s congressional map. Donate to Recchia at ActBlue.
Edited/Published by: SB
Darrell Lucus is a radical lefty Jesus-lover who has been blogging for change for a decade. Follow him on Twitter @DarrellLucus or connect with him on Facebook.
