Rep. Michael Grimm Is Said to Agree to Tax Fraud Guilty Plea – New York Times

Representative Michael G. Grimm, a Republican, was easily re-elected last month to his third term in Congress despite a pending federal indictment.
By WILLIAM K. RASHBAUM
December 22, 2014

Representative Michael G. Grimm, a Republican from Staten Island who was easily re-elected to his third term in Congress last month despite a pending federal indictment, has agreed to plead guilty to a single felony charge of tax fraud, according to three people with knowledge of the matter.

A former Marine and agent with the Federal Bureau of Investigation who first ran for office as a law-and-order corruption fighter, Mr. Grimm, 44, is scheduled to appear in federal court in Brooklyn on Tuesday for a plea hearing, according to the docket sheet in his case, which provides no further detail. His trial was scheduled to start Feb. 2.

A guilty plea by the congressman, who has steadfastly maintained his innocence, would almost certainly put him under tremendous pressure to resign. One of his lawyers, Stuart N. Kaplan, said in an email that he could confirm only that there was “a change of plea hearing” scheduled for Tuesday.

Mr. Grimm was charged in a 20-count indictment in April after an investigation by federal prosecutors in Brooklyn, the Internal Revenue Service and the F.B.I. focused on accusations of campaign finance fraud and other improprieties. The indictment charged him with underreporting wages and revenue while he ran a fast-food restaurant called Healthalicious on the Upper East Side of Manhattan. He ran the business after the F.B.I. and before serving in Congress.

Mr. Grimm is expected to plead guilty to a single count of aiding or assisting in the preparation of a false or fraudulent tax return, said one person with knowledge of the matter, who, like the two others, spoke only on the condition of anonymity because the agreement has not been announced. If he does plead guilty, he will most likely face 24 to 30 months in prison when he is sentenced by Judge Pamela K. Chen of United States District Court. His lawyers can also seek a lesser sentence, including one with no jail time.

A guilty plea by the combative congressman, who in a televised encounter in the gallery of the Capitol rotunda this year threatened to throw a reporter off the balcony, would bring an end to the exhaustive four-year inquiry that Mr. Grimm has contended was rooted in politics and old grudges.

The investigation grew out of the congressman’s fund-raising for his first run for office in 2010, when a substantial portion of the money he raised came from supporters of a Sephardic rabbi and mystic, Yoshiyahu Yosef Pinto. Some of the donors said they gave sizable illegal contributions.

The money had been solicited by one of the rabbi’s senior aides, Ofer Biton, who was charged, in connection with the case, with immigration fraud and later pleaded guilty to visa fraud. Another of Mr. Grimm’s fund-raisers, Diana K. Durand, was also charged and pleaded guilty to illegally funneling money into his 2010 campaign.

The indictment against Mr. Grimm alleged that he essentially kept two sets of records and provided his accountant with doctored books, leading to inaccurate tax forms being filed with the government.

Prosecutors said Mr. Grimm concealed more than $1 million in gross receipts for the restaurant and failed to report hundreds of thousands of dollars in employee wages, thus fraudulently lowering his federal and state tax payments. The indictment said he also lied under oath in a deposition taken in January 2013, while he was a member of Congress.

In addition to investigating the congressman’s campaign finances and his business, F.B.I. agents and prosecutors looked into a variety of activity involving the possible mob ties of one of his business associates and the illegal doings of another.

While the state has laws that apply to legislators in Albany, there are no federal statutes that require members of Congress to forfeit their offices when convicted of a felony, according to the Congressional Research Service. House rules, however, instruct members not to vote in committee or on the floor once they have been convicted of a crime for which the punishment may be two or more years’ imprisonment.

Conviction of some crimes can subject House members to internal disciplinary proceedings that may result in resolutions including reprimand, censure or — upon approval of two-thirds of the members — expulsion. But the fate of the newly re-elected congressman, if he pleads guilty as expected, remains unclear.

Correction: December 22, 2014

An earlier version of this article misstated the number of terms Mr. Grimm has served in Congress. He was re-elected last month to his third term, not his second. The error was repeated in a picture caption.

Marc Santora contributed reporting.

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