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Staten Island Rep. Michael Grimm Pleads Not Guilty To 20-Count Indictment

NEW YORK (CBSNewYork/AP) -- Rep. Michael Grimm has vowed to stay in office after he pleaded not guilty Monday to a 20-count federal indictment that includes charges of mail, wire and tax fraud.

The Staten Island Republican was arraigned in Brooklyn and released on $400,000 bond.

"I will get right back to work as I always have -- with honor and distinction, I will serve," Grimm told reporters in Brooklyn on Monday. "And then, on top of all that, I have an election to win."

Grimm, a Republican and former Marine, said he will beat the charges, CBS 2's Marcia Kramer reported.

"Time and time again I have shown I don't abandon my post. I didn't abandon my post when I was fired on in combat. I didn't abandon my post when I thought my identity was compromised when I was deep undercover as an FBI agent. I'm not abandoning my post now," Grimm said.

Staten Island Rep. Michael Grimm Pleads Not Guilty To 20-Count Indictment

Grimm claims the government framed him. He said investigators couldn't make a campaign finance case against him stick, so they trumped up the fraud accusations.

"This political witch hunt was designed to do a couple of things, but first and foremost assassinate my character and remove me from office," Grimm told reporters, including 1010 WINS' Juliet Papa.

"I'm going to fight tooth and nail until I am exonerated,'' he added.

Staten Island Rep. Michael Grimm Charged In 20-Count Indictment

Grimm is charged with engaging in schemes to underreport wages for workers, including some who were in the country illegally, at an Upper East fast-food restaurant he co-owned. He's accused of concealing more than $1 million in sales and wages.

EXTRA: Read The Full Indictment

"In 2007, Michael Grimm, former Marine, former FBI agent, accountant and attorney, was poised for success as a small business owner," United States Attorney Loretta Lynch said. "Instead, as alleged, Grimm made the choice to go from upholding the law to breaking it."

Rep. Michael Grimm In Custody To Face Federal Charges

"As a former FBI agent, Rep. Grimm should understand the motto: fidelity, bravery, and integrity. Yet he broke our credo at nearly every turn," FBI Assistant Director George Venizelos said in a statement. "In this 20-count indictment, Rep. Grimm lived by a new motto: fraud, perjury, and obstruction."

The alleged fraud occurred from 2007 to 2010, when authorities said Grimm was one of the owners and the managing member of the restaurant called Healthalicious and oversaw the day-to-day operations of the restaurant.

Prosecutors said during that time, Grimm filed false state and federal tax returns to underreport more than $1 million in sales and wages by concealing gross receipts for cash purchases and paid workers hundreds of thousands of dollars off the books.

Michael Grimm Indicted
Loretta Lynch, United States Attorney for the Eastern District of New York, speaks at a press conference to announce a 20-count indictment against U.S. Representative Michael Grimm (R-NY, 11th District) on April 28, 2014 in New York City. (Photo by Andrew Burton/Getty Images)

"Healthalicious was a small business, and it sold casual food, so many people used cash, and it was this cash that Michael Grimm exploited, making over $1 million simply disappear," Lynch said. "Grimm took the cash from the register, used part of it to pay the workers off the books, never reporting it to the taxing authorities."

"When it came to this restaurant, Michael Grimm never met a tax he didn't lie to evade," Lynch added.

Authorities also say that when he was deposed by an attorney representing former employees in a lawsuit, Grimm lied under oath about his allegedly fraudulent business practices.

"Rep. Grimm billed himself as a patriot and an American hero,'' Venizelos said. "But Rep. Grimm was anything but an upstanding citizen. He cheated, evaded and then lied.''

Grimm is counting on his constituents to support him -- people like Robert Ollis. Grimm was with the Ollis family after their son, Army Staff Sgt. Michael Ollis, was killed in Afghanistan last year, Kramer reported.

"He sat and talked to us, told us he was there for us, prayed. He said God would help us," Robert Ollis said.

Politically, Republican congressman's future will be determined by the loyalty of his constituents and whether he can beat the charges. As CBS 2's Kramer reported, the Democrats are salivating, describing his seat as the one they have the best chance nationally of return to their column.

Grimm was elected in 2010 and took office in 2011.

For two years, investigators had been examining his fundraising in the 2010 race and his involvement in the restaurant. A House Ethics Committee announced in November that Grimm was under investigation for possible campaign finance violations.

"From the beginning, the government has pursued a politically driven vendetta against Congressman Grimm and not an independent search for the truth,'' Grimm's attorney, William McGinley, said in a statement Friday. "Congressman Grimm asserts his innocence of any wrongdoing.''

After the House Ethics Committee announced last fall that Grimm was under investigation, the panel said it would defer its inquiry because of a separate Department of Justice investigation.

Grimm made headlines in January after confronting a NY1 reporter who tried to question him about a long-running FBI investigation into campaign finance on a balcony in the Capitol.

After reporter Michael Scotto finished his report, Grimm stormed back, leaned into him and said, "Let me be clear to you. If you ever do that to me again, I'll throw you off this (expletive) balcony.''

Scotto, who was asking about fundraising during Grimm's first campaign, protested, saying he was asking "a valid question.''

Grimm later apologized to Scotto, calling it "an unfortunate incident that shouldn't have happened."

During the 2010 race, Grimm acknowledged receiving $250,000 to $300,000 in contributions from followers of an Israeli rabbi, Yoshiyahu Yosef Pinto.

Some members of Pinto's congregation subsequently said they made tens of thousands of dollars in illegal contributions, including gifts passed through straw donors.

Grimm has denied knowledge of any improprieties. The Israeli businessman who had served as Grimm's liaison to Pinto's followers, Ofer Biton, pleaded guilty in August to an immigration fraud charge.

Three days after that guilty plea, the FBI filed a sealed criminal complaint accusing a Houston woman named Diana Durand, who had been romantically involved with Grimm, of using straw donors to make illegal campaign contributions.

On Friday, Durand was indicted in Brooklyn on those charges. She also was charged with making false statements to the FBI when she said she didn't reimburse straw donors for their contributions to Grimm's campaign.

A House member who has been indicted does not lose any rights or privileges under federal law or the chamber's rules, according to a report by the nonpartisan Congressional Research Service.

Rules used by the two major political parties require indicted committee or subcommittee chairmen, or members of a party's leadership, to temporarily step aside. Grimm is not a chairman or a member of the leadership.

Grimm, whose district covers Brooklyn and Staten Island, was elected in 2010 with 51 percent of the vote.

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(TM and © Copyright 2014 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2014 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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