Martha T. Moore and Kevin Johnson

USA TODAY

NEW YORK — Republican Rep. Michael Grimm was indicted Monday on federal charges of tax evasion and perjury for allegedly hiding more than $1 million in revenue from a New York City restaurant he owned where, prosecutors said, he also hired undocumented immigrants.

Grimm, a former FBI agent who has been under federal investigation regarding campaign contributions, said he is the victim of a "political witch hunt" and said he would not resign his seat.

Federal prosecutors said Grimm concealed revenue from Healthalicious, a Manhattan fast-food restaurant, and paid employees in cash to avoid sales, income and payroll taxes. From 2007 to 2010, according to the court documents, Grimm also "intentionally'' hired undocumented immigrants. After being elected to Congress, Grimm lied under oath about paying employees in cash, prosecutors said.

Grimm "never met a tax he didn't lie to evade," Loretta Lynch, U.S. attorney for the Eastern District of New York, said at a news conference Monday announcing the indictment.

"It's never a happy day when you bring charges against a former law enforcement official," Lynch said.

George Venizelos, assistant director in charge of the FBI's New York field office, called Grimm "anything but an upstanding citizen. He cheated, evaded and then lied."

Grimm, 44, surrendered to federal authorities Monday and pleaded not guilty to charges of conspiracy, obstruction, mail fraud and perjury.

Released on bail, Grimm said at a news conference that leaks about the investigation into his campaign finances were intended to "assassinate my character and remove me from office.'' He said he would "fight tooth and nail until I am fully exonerated."

"I know I'm a moral man, a man of integrity, and I also know that I have a lot more service and leadership to provide this country,'' Grimm said. He said he would continue to serve with "honor and distinction. ... And on top of that, I have an election to win.''

Grimm did step down from the House Financial Services Committee, "in light of recent events,'' he said in a letter to House Speaker John Boehner released Monday afternoon. Boehner, through spokesman Michael Steel, called Grimm's committee resignation "appropriate under the circumstances.''

Grimm's indictment gives Democrats new hope of capturing his district, which covers Staten Island and parts of Brooklyn. The district leans Republican, but President Obama won it in 2012 with 52% of the vote. The deadline has passed to replace Grimm on the ballot for the Republican primary June 24. His likely opponent, former New York City councilman Domenic Recchia, has been hammering the Republican over ethics.

The House Ethics Committee opened an investigation into Grimm over campaign contributions in 2012, but then said it would defer to a Justice Department investigation. Monday's indictment was unrelated to campaign finance, but Lynch said the investigation into Grimm is "ongoing.''

Grimm has acknowledged that he received as much as $300,000 in campaign donations from followers of Yoshiyahu Yosef Pinto, an Israeli rabbi. Some of Pinto's followers in New York have since said they made tens of thousands of dollars in illegal campaign contributions to Grimm, including gifts passed through straw donors. Last week, Diana Durand, a woman who had been romantically involved with the congressman, was charged with using straw donors to make illegal campaign contributions. Durand's lawyer said she would plead not guilty. Ofer Biton, a businessman who served as Grimm's liaison to Pinto's congregation, pleaded guilty in August to an immigration fraud charge.

Grimm made national headlines in January when he threatened a TV reporter on camera who attempted to ask him about the long-running federal investigation. Grimm later apologized to NY1 reporter Michael Scotto.

Johnson reported from Washington.Contributing: Catalina Camia.