Grimm hit with fraud charges stemming from restaurant

Congressman indicted on multiple counts tied to UES eatery

New York /
Apr.April 28, 2014 06:30 PM

Rep. Michael Grimm (R-Staten Island), following a lengthy federal investigation into campaign finances, turned himself in Monday morning to face charges that he fraudulently under-reported more than $1 million in sales and wages at Healthalicious, a restaurant he owned on the Upper East Side.

Federal prosecutors say that from 2007 to 2010, Grimm ran the 1594 Second Avenue restaurant using undocumented workers, regularly underreported income to state and federal tax authorities and lied under oath during a federal civil lawsuit by two former employees.

The indictment unsealed in Brooklyn Federal Court on Monday charged Grimm with five counts of wire fraud, five counts of mail fraud and three counts of aiding in the preparation of false tax returns, among other charges. He faces 20 years in prison for each mail and wire fraud charge and ten years on charges of health care fraud.

“In 2007, Michael Grimm, former Marine, former FBI agent, accountant and attorney, was poised for success as a small business owner,” U.S. Attorney Loretta Lynch said in an announcement this morning. “Instead, as alleged, Grimm made the choice from upholding the law to breaking it.”

Grimm pleaded not guilty to the charges in federal court and was released after posting bond.

“But time and time again I’ve shown I don’t abandon my post,” Grimm said in a press conference today. “I didn’t abandon my post when I was being fired upon in combat, I didn’t abandon my post when I thought my identity was compromised and I was deep undercover as an FBI agent. I’m not abandoning my post now.”

The restaurant has been linked to allegations of campaign finance irregularities involving the congressman and supporters of Rabbi Yoshiyahu Pinto, a spiritual advisor to several major New York real estate figures. After retiring from the FBI, Grimm opened the restaurant with a business partner Bennett Orfaly, who allegedly had ties to organized crime.

Orfaly is a partner in several Manhattan restaurants with an Israeli businessman named Ofer Biton. Biton has reportedly been linked to illegal campaign contributions tied to Pinto supporters. Grimm allegedly raised several hundred thousands of dollars for his 2010 campaign from backers linked to Pinto. Biton is a former aide to Pinto.

Biton pled guilty to Visa fraud in 2013 amid reports that he refused to cooperate in the Pinto probe.

A spokesman for Lynch’s office told The Real Deal that the indictment unsealed today makes no link at all to Pinto, but he noted that the investigation is ongoing.

Grimm’s lawyer was not immediately available for comment, but he called the charges politically-driven in a statement released Friday. Biton’s lawyer, Alan Vinegrad, declined to comment.

In a highly publicized incident after the State of the Union address in January, Grimm threatened a New York 1 reporter on camera, after he asked him about the investigation during a Capitol Hill encounter.


Related Articles

arrow_forward_ios
(Image by Wolfgang & Hite via Dezeen)
Hudson Yards megadevelopment inspires a new line of sex toys
Hudson Yards megadevelopment inspires a new line of sex toys
Cammeby's International Group founder Rubin Schron and, from top: 194-05 67th Avenue, 189-15 73rd Avenue and 64-05 186th Lane (Credit: Google Maps)
Ruby Schron lands $500M refi for sprawling Queens apartment portfolio
Ruby Schron lands $500M refi for sprawling Queens apartment portfolio
Wendy Silverstein (Credit: Getty Images)
Wendy Silverstein, co-head of WeWork’s real-estate fund, is out
Wendy Silverstein, co-head of WeWork’s real-estate fund, is out
(iStock)
Austin home market seen as hottest of 2021
Austin home market seen as hottest of 2021
Atria Senior Living promises vaccines to residents. (Getty, Atria)
Senior living operator promises vaccine with a lease
Senior living operator promises vaccine with a lease
The average price of a London home rose above 500,000 pounds, or roughly $685,000, for the first time. (Getty)
London home prices hit new high
London home prices hit new high
Atlantic City Mayor Marty Small supports Carl Icahn, who owns Trump Plaza Casino. (Getty, Marty Small via Instagram)
Carl Icahn pulls plug on auction to demolish Trump casino
Carl Icahn pulls plug on auction to demolish Trump casino
City planning chairperson Marisa Lago and Mayor Bill de Blasio. (Global Philanthropy Forum, NYC, Getty)
Ex-City Planning officials criticize “hollow” hotel permits proposal
Ex-City Planning officials criticize “hollow” hotel permits proposal
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...