Michael Grimm of Staten Island pleads not guilty to federal charges

Rep. Michael Grimm, center, leaves federal court in

Rep. Michael Grimm, center, leaves federal court in Brooklyn on Monday, April 29, 2014, after being indicted on a charge of mail, wire and health care fraud, filling false tax returns, perjury, obstruction of an official proceeding, hiring and employing unauthorized aliens and related charges, in connection with a Manhattan restaurant he owned and operated. (Credit: Charles Eckert)

Staten Island Republican Rep. Michael Grimm hired undocumented workers at a restaurant he ran before his election, evaded taxes on $1 million in receipts and lied in a civil suit, according to a 20-count indictment filed Monday in Brooklyn.

Grimm, a hard-charging former FBI agent elected in 2010, was the target of a well-publicized investigation of campaign-finance irregularities for two years, but was accused only of the tax-avoidance scheme at the Healthalicious restaurant he opened in 2007.

"He chose to violate every oath he had ever taken," said U.S. Attorney Loretta Lynch in Brooklyn, who added the investigation was ongoing and "broader" charges were still possible. "When it came to his business, Michael Grimm never met a tax he didn't lie to evade."


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Grimm, 44, surrendered Monday morning, and was released after pleading not guilty. In an appearance at a veterans memorial a block from the Brooklyn federal court, he said he would still stand for re-election in November.

"We're going to fight tooth and nail until I'm fully exonerated," said the Marine veteran, who accused prosecutors of pursuing a "political witch hunt."

Grimm won his seat in 2010 based in part on his upstanding image, but the charges and separate indictments of two of his fundraisers come on top of other controversies, including a January incident in which he threatened to throw a TV reporter over a Capitol balcony for asking about the investigation.

A Republican official in Washington said local GOP leaders have growing concerns about Grimm's re-election, and New York City Mayor Bill de Blasio, a Democrat, Monday took the opportunity to predict a victory for Grimm's Democratic foe.

"I felt for a long time that Domenic Rechia was going to win that race," de Blasio said. "I feel more strongly today."

Grimm opened his health-food restaurant on Manhattan's Upper East Side at the end of an FBI career that included time as an undercover agent investigating fraud on Wall Street.

Prosecutors said he knowingly hired some workers illegally, paid employees in cash, falsified payroll records, underreported the restaurant's income by $1 million and cheated on sales, income and payroll taxes from 2007 to 2010.

He also kept a double set of books, underpaid workers' compensation premiums, and, after his election in 2010, lied under oath in a deposition in a civil suit alleging minimum-wage and overtime violations brought by ex-workers, the indictment said.

Grimm faces up to 20 years in prison on each of the top charges, but House rules do not prevent him from continuing to serve or running for re-election while the charges are pending.

The indictment was unsealed just after the deadline for parties to choose their House candidates, but Lynch said there was no political motive behind the timing. "We bring it when it is ready," she said.

In Congress, Grimm has called for a crackdown on hiring of undocumented immigrants, and last year urged adoption of the "E-Verify" system that allows employers to check the eligibility of prospective employees "so that we don't have illegal workers."

With Tom Brune

and Ivan Pereira

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