grimmart.jpeg

A chart posted at the U.S. Attorney's Office in Brooklyn that depicts the fraudulent web of financial deception that Rep. Michael Grimm is alleged to have perpetrated while running Healthalicious. (Staten Island Advance/Tom Wrobleski)

A chart posted at the U.S. Attorney's Office in Brooklyn that shows a timeline of Rep. Michael Grimm's alleged improprieties. (Staten Island Advance/Tom Wrobleski)

NEW YORK -- New York prosecutors have unveiled a 20-count indictment against Rep. Michael Grimm in connection with his operation of Healthalicious, an Upper East Side health food restaurant he owned prior to entering political life.

The indictment, which officials outlined during an 11 a.m. press conference at the office of U.S. Attorney Loretta Lynch in Brooklyn, alleges that Grimm schemed to under-report both payroll costs and the amount of money the restaurant earned to avoid federal and New York state taxes.

In total, he's accused of concealing more than $1 million in Healthalicious gross receipts and hundreds of thousands of dollars of employees' wages.

From 2007 to 2010, Grimm paid workers -- many of whom were allegedly undocumented immigrants -- in cash and did not report those wages to federal and state authorities, according to the indictment. By under-reporting the true amount of the restaurant's payroll to the New York State Insurance Fund, Grimm received lower monthly workers' compensation premiums, the indictment alleges.

Additionally, by under-reporting the amount of gross receipts the restaurant earned, he dramatically lowered the taxes the restaurant owed to both the state and federal government, the indictment alleges. The indictment alleges Grimm concealed a significant amount of Healthalicious' cash sales from an accountant who filed the restaurant's state and federal tax returns. The alleged fraud resulted in Healthalicious filing false tax returns in 2008, 2009 and 2010, that concealed over $1 million in unreported income.

U.S. Attorney Loretta Lynch speaks at the press conference announcing Rep. Michael Grimm's 20-count indictment Monday. (Staten Island Advance/Tom Wrobleski)

"He deliberately planned to systematically lie to every taxing authority to whom his business had an obligation to report," Ms. Lynch said, adding that he even became a "fraud instructor" to a new Healthalicious manager.

"Michael Grimm never met a tax he didn't like to evade," she said.

The congressman also faces charges of perjury and obstruction of justice in connection with a federal civil lawsuit that two former Healthalicious employees filed against him in the Southern District of New York in 2011, alleging he did not pay them the minimum wage or overtime.

When Grimm was deposed by the attorney representing one of his former workers in January 2013, he lied under oath about his business practices, the indictment alleges.

Grimm is accused of lying about several material matters in connection with the lawsuit, including whether he paid his employees in cash, whether he had interacted with the Payroll Processing Companies, whether he corresponded regarding Healthalicious matters through email and whether he still had access to such an email account.

"Even after his return to public service, when called to account for his actions and questioned under oath Grimm went for the cover up, and lied about his role in his own business," Ms. Lynch said in a statement.

The 20-count indictment charges Grimm with five counts of wire fraud, three counts of aiding and assisting in the preparation of false federal tax returns, one count of conspiring to defraud the United States, one count of impeding the Internal Revenue Service, one count of employing unauthorized aliens, two counts of perjury and one count of instructing an official proceeding.

If convicted, Grimm faces a prison term of up to 20 years for each mail and wire fraud charge and for the obstruction charge; up to 10 years in prison for the health care fraud charge; and up to five years in prison for the charge of conspiring to defraud the U.S. and for each perjury charge.

Grimm also faces imprisonment of up to three years for each charge of aiding and assisting in the preparation of a false and fraudulent tax return and for the charge of obstructing and impeding the due administration of Internal Revenue Laws. He faces up to six months imprisonment if convicted of hiring and continuing to employ unauthorized aliens.

FBI Assistant Director George Venizelos issued a statement condemning Grimm, a former FBI special agent, for his alleged actions.

"As a former FBI agent, Representative Grimm should understand the motto: fidelity, bravery, and integrity," Venizelos said in the statement. "Yet he broke our credo at nearly every turn. In this twenty-count indictment, Representative Grimm lived by a new motto: fraud, perjury, and obstruction."

Grimm, who has yet to speak publicly since news of his pending indictment broke Friday afternoon, surrendered to authorities at an undisclosed location Monday morning and was taken to Lower Manhattan for processing.

The two-term congressman, who is up for re-election this November, pleaded not guilty to the charges at a noon arraignment in federal court. The 20-count indictment against Grimm is the culmination of a 2.5-year investigation that began as a probe into his 2010 campaign fundraising.

Advance staff writers Tom Wrobleski and Eddie D'Anna contributed to this report.