Frost Law
Twenty years, to three years, to eight months. That was the time that former U.S. Representative Michael Grimm faced for tax related charges originally outlined in a 21 count indictment brought against him in April 2014 that he promised to “fight tooth and nail” until his eventual exoneration. Grimm, a Republican from New York, managed to rack up a number of federal charges during his time as partial owner of a small restaurant in New York City called Healthalicious. The charges include mail, wire, and health care fraud, as well as filing false business and personal tax returns, among others.
It was in the well-known New York boroughs such as Brooklyn and Manhattan that Grimm helped to build his business, Healthalicious, and later win a seat representing the 11th Congressional district . It is also where Grimm developed and employed the schemes that resulted in the eventual charges against him and, ultimately, a crumbling career. From 2007 until 2010, Grimm was a partial owner and manager of Healthalicious, a fast food restaurant for the health conscious. It was during this time that Grimm engaged in the fraudulent tax practices charged in his indictment.
During his time with Healthalicious, Grimm is accused of under-reporting over $1 million in wages and sales. In addition, Grimm is alleged to have paid workers in cash in order to reduce payroll, federal and state tax obligations. Other charges in the extensive indictment include lying under oath (Grimm stated that he did not pay employees in cash during a deposition for a civil matter relating to labor practices at Healthalicious) and impeding the Internal Revenue Service. The ex-Marine and former FBI fraud investigator kept up his elaborate scheme by working two books for the restaurant—one with his actual payroll numbers, and the other with doctored numbers, for use by payroll processing companies, accountants and agencies.
Grimm initially pleaded not guilty to all of the charges brought against him. The “political witch hunt,” as he referred to it, began in April 2014 with claims of innocence, wound its way to an eventual guilty plea in December 2014, and culminated in his sentencing earlier this month. The turning point occurred last December when Grimm pleaded guilty to one count of aiding and assisting the preparation of a false tax return. Despite pleading guilty to this one count of tax fraud, U.S. Attorney Loretta Lynch confirmed that Grimm admitted to “conduct underlying every charge filed against him.”
During sentencing, Grimm argued that the hit to his reputation was enough punishment and, as his attorney Daniel Rashbaum said, “A prison sentence does no one good here.” In response, U.S. District Judge Pamela Chen read from a letter written by a constituent in Grimm’s former district, in which the author referred to Grimm’s actions as deceitful and treacherous. Stating that she was “troubled” by Grimm’s apology in the courtroom that day, Judge Chen sentenced Grimm to eight months in prison, with one year of supervised release. Grimm will also be required to serve 200 hours of community service and pay restitution to tax authorities.
