Officials went after Grimm and Capone for bigger crimes but got them on tax fraud. | AP Photos Grimm and Capone: A tax connection

Some wonder why prosecutors shifted from probing Michael Grimm’s campaign funds to charging him with run-of-the-mill tax crimes.

Think Al Capone.


Of course, the New York Republican didn’t commit murder or build a bootlegging empire that would stump cops for years.

But several years after federal investigators began probing Grimm, who maintains his innocence, for allegedly taking illegal campaign contributions, they indicted him Monday on unrelated, textbook tax fraud charges: under-reporting business income and paying employees under the table — peanuts compared to what some were expecting.

Sound familiar? America’s most notorious gangster, Capone was nailed for not paying his taxes after law enforcement couldn’t pin him for racketeering or murder or bribery.

“I don’t think the man deserves to be compared to Al Capone, who murdered a lot of people, but this is certainly a ‘gotcha,’ like they used to catch Capone,” said Steve Gremminger, former Justice Department tax division senior trial attorney. “They apparently either couldn’t bring the campaign finance investigation to closure with an indictment, or they’re still working on it and will use this to help them get it.”

( PHOTOS: Michael Grimm's congressional career)

Officials often get indictments on such tepid offenses when they are really going after bigger crimes. The Justice Department says the investigation is ongoing and would not comment on whether investigators veered off course because they didn’t have the goods on Grimm’s campaign fundraising.

Grimm allies, meanwhile, are calling “witch hunt!”

“They couldn’t get him on the original charges, so they had to develop some kind of an exit strategy — they checked his restaurant,” said former Rep. Guy Molinari, who hails from Grimm’s Staten Island- and Brooklyn-based district and calls himself Grimm’s “adopted father.” “They’re looking, looking, looking — if he spits on the ground, they’d arrest him.”

Either way, a handful of former Justice Department tax prosecutors interviewed by POLITICO called the charges commonplace crimes that rarely make national headlines.

Still, if they have enough to lock him away, the nature of the crimes won’t matter, they said.

“The government brings the strongest case it can prove,” said Jeffrey Neiman, former DOJ tax prosecutor — who is skeptical that any more indictments will surface. “The money trail generally doesn’t lie.”

( Also on POLITICO: Michael Grimm: Desperately seeking leadership meetings)

DOJ has been investigating Grimm since at least 2012, when it asked the House Ethics Committee to suspend its probe of the lawmaker’s 2010 fundraising practices because it could infringe on its work.

Since then, two former Grimm fundraisers have been charged in connection with his campaign — one with a business link to Grimm’s former health food restaurant, Healthalicious.

Some observers were caught off guard when U.S. Attorney Loretta Lynch announced Grimm would face 20 counts of tax-related charges, including skimming $1 million of income off tax returns for Healthalicious to avoid taxes and paying undocumented workers hundreds of thousands of dollars in cash to dodge payroll taxes.

Even Grimm’s lawyer, Elizabeth Kase, told POLITICO she didn’t know he’d be hit with a tax charge until Friday.

( Also on POLITICO: John Boehner won’t say whether Michael Grimm should resign)

Tax fraud is one of the most common crimes on the books, with loads of small businesses — especially restaurant owners — finding themselves in hot water for paying employees in cash without tracking it for the tax man.

The IRS obtained from 78 to 92 indictments in each of the past three years for “employment tax evasion” and won incarcerations in 80 percent of them, with most offenders serving about two years behind bars, according to agency data.

Most never make national news, and some are even handled civilly, not criminally.

“This is essentially an off-the-books tax case, much like many others charged by federal prosecutors and most of which receive little notoriety,” said Daniel Levy, a former Southern District of New York white-collar crime prosecutor.

Even Lynch on Monday acknowledged the tax crimes are “rather typical.”

Former federal prosecutors say DOJ could have pursued the tax charges for several reasons.

Perhaps, as in the Capone case, they couldn’t prove anything better.

IRS officials have been known to keep posters on their walls that read: “Only an accountant can catch Al Capone,” according to one former agency employee.

Or prosecutors might have thought they had a stronger, more winnable case when they stumbled across the alleged restaurant tax shenanigans.

Since prosecutors are loath to bring to court a case they can’t win, the tax matter could be “an easy shot for a prosecutor if it’s true,” one former DOJ prosecutor said.

Last year, DOJ’s tax division won or had “favorable outcomes” in 95 percent of all civil and criminal cases brought by its lawyers.

Cono Namorato, a former DOJ and IRS official now at Caplin & Drysdale, said the indictment looks pretty damning, particularly since it alleges that Grimm kept two different payroll books, including one that had the actual amount of wages paid to employees.

“He kept an accurate second set of payroll records, which in a criminal tax case is a prosecutor’s dream because it’s the smoking gun,” Namorato said. “If the government can prove the allegations in this indictment, he’s toast.”

A former IRS and DOJ prosecutor who wished to remain unnamed said federal prosecutors could have gone for the tax charges because they often carry stronger penalties — unless they can establish bribery in a campaign contribution case.

“If they can’t prove bribery, they’ll go for a tax case — it’s very simple.”

But even when compared with a typical tax fraud case, several former DOJ prosecutors say the allegations against Grimm are fairly moderate. All 20 counts — wire fraud, mail fraud, health care fraud — come back to the tax issue.

“Here you have a stand-alone tax case dressed up as something more,” Neiman, now with Marcus Neiman & Rashbaum in Fort Lauderdale, said. “It doesn’t look like a sophisticated tax scheme.”

Levy, now a principal in the New York office of McKool Smith, said although the indictment doesn’t include all the detail necessary to officially calculate how much Grimm’s company cheated Uncle Sam, he estimates that it’s only about $200,000 to $400,000, of under-reported income “which is pretty average for federal tax cases,” he added.

It could still mean jail time for Grimm, of course — though many are skeptical he would get the 20-year prison sentence Lynch said he faces if found guilty.

On Tuesday, for example, a Georgia dentist got only 12 months behind bars and a $189,661 fine for “intentionally concealing money he earned from patients who paid with credit cards from his accountants and the IRS.” He had under-reported his income by $500,000, evading $185,000 in taxes.

DOJ says the tax indictment isn’t the end of its probe. In that sense, campaign finance charges could still come.

Some attorneys, like Neiman, are skeptical: “If there was going to be more to come, it would have already come.”

But Gremminger, who now has his own firm, says these charges could “put a lot of pressure on [Grimm] to take a plea on the campaign finance investigation, maybe agree to withdraw from the congressional race.”