USA V Michael Grimm - US Government Recommendation On Sentencing

Case 1:14-cr-00248-PKC-RML Document 94 Filed 06/19/15 Page 1 of 14 PageID #: 514
U.S. Department of Justice
United States Attorney

Eastern District of New York
DAS:JDG/NR
F. #2014R00763
271 Cadman Plaza East

Brooklyn, New York 11201
June 19, 2015
By ECF
The Honorable Pamela K. Chen
United States District Judge
United States District Court
225 Cadman Plaza East
Brooklyn, New York 11201
Re:
United States v. Michael Grimm

Criminal Docket No. 14-248 (PKC)
Dear Judge Chen:

The government respectfully submits this letter in connection with the
sentencing of the defendant Michael Grimm. On December 23, 2014, the defendant pleaded
guilty to Count Four of the Indictment in the above-referenced case, which charged him with
aiding and assisting in the preparation of a false and fraudulent tax return for his restaurant,
in violation of 26 U.S.C. 7206(2). The defendant is scheduled to be sentenced on July 17,
2015 at 10:00 a.m. For the reasons set forth below, the government respectfully submits that
the defendant should be sentenced to a term of incarceration within the applicable advisory
United States Sentencing Guidelines (the Sentencing Guidelines or the Guidelines) range
of 24 to 30 months of imprisonment.
I.
Background
A.
Offense Conduct and the Indictment
On April 28, 2014, a twenty-count Indictment was unsealed that charged the
defendant with a series of crimes stemming from his ownership and operation of Granny
Sayz LLC d/b/a Healthalicious (Healthalicious), a restaurant located in New York, New
York. While operating the restaurant, the defendant engaged in schemes to under-report the
true amount of the restaurants earnings and the wages paid to its workers, thereby
fraudulently lowering the federal and state taxes and the amount of workers compensation
insurance premiums the restaurant owed and paid. Specifically, Grimm fraudulently

June 19, 2015
Page 2
underreported the restaurants sales, concealing over $900,000 in gross receipts from the
Internal Revenue Service (IRS) and the New York State Department of Taxation and
Finance (the New York State Tax Department). (Pre-sentence Investigation Report
(PSR) 5). Additionally, the defendant paid workers at the restaurant many of whom
were not lawfully permitted to be employed within the country either wholly or partially
off the books in cash, thereby fraudulently reducing restaurants federal and state payroll
taxes. (PSR 6). The defendant also under-reported Healthalicious payroll to the New
York State Insurance Fund (NYSIF), thereby defrauding NYSIF of workers compensation
premiums. (PSR 7). To further and conceal his schemes, Grimm caused over 20 false
corporate and personal tax filings to be made with the IRS and the New York State Tax
Department from 2007 through June 2010. (See PSR 9).
In connection with his scheme to cause false federal tax filings, the Indictment
charged Grimm with impeding and obstructing the due administration of the Internal
Revenue Law in violation of 26 U.S.C. 7212 (Count One), conspiring to defraud the United
States of federal payroll taxes in violation of 18 U.S.C. 371 (Count Two) and aiding and
assisting in the preparation of false Healthalicious tax returns in violation of 26 U.S.C.
7206(2) (Counts Three through Five). The defendant was also charged with five counts of
wire fraud and three counts of mail fraud, in violation of 18 U.S.C. 1341 and 1343
(Counts Seven through Sixteen); all relating to his scheme to defraud New York State of
sales tax revenue. The Indictment also charged the defendant with health care fraud in
connection with his scheme to defraud NYSIF, in violation of 18 U.S.C. 1347 (Count Six).
Additionally, Grimm was also charged with employing individuals who were not authorized
to be employed in the United States in violation of 8 U.S.C. 1324a and 1324(a) (Count
Twenty).
Moreover, on January 30, 2013, Grimm testified falsely under oath during a
deposition in Regino Perez and Carlos Perez v. Granny Sayz, Healthalicious, Bennett Orfaly
and Michael Grimm, Docket No. 11 CIV 8736 (CM), a federal lawsuit in the United States
District Court for the Southern District of New York (the Civil Action). (See PSR 11).
The Civil Action had been brought by two of the defendants former employees at
Healthalicious, alleging that he and others had violated federal and state labor laws while
operating the restaurant. Specifically, and among other things, the defendant falsely testified
that: (1) he had not paid Healthalicious employees in cash; (2) he had not generally used
email in conducting Healthalicious business; and (3) that, to the extent he did use email, he
had used a Yahoo email account which he could no longer access. (Id.). In fact, the
defendant had accessed, and continued to access at the time of his testimony, an AOL
email account which he did not identify during the deposition and which contained many
emails regarding the restaurant. (Id.). The Indictment accordingly charged the defendant
with two counts of perjury in violation of 18 U.S.C. 1623 (Counts Seventeen and Eighteen)
and obstructing an official proceeding in violation of 18 U.S.C. 1512(c)(2) (Count
Nineteen).

June 19, 2015
Page 3
B.
The Defendants Guilty Plea and Stipulation of Facts
On December 23, 2014, Grimm pleaded guilty to Count Four of the Indictment
pursuant to a plea agreement with the government dated December 22, 2014 (the Plea
Agreement). (PSR 1). That count charged the defendant with aiding and assisting the
preparation of a false and fraudulent tax return filed with the IRS, specifically the United
States Return of Partnership Income Form 1065 (Form 1065) for Healthalicious. In
particular, Count Four alleged that the defendant willfully aided and assisted in the
preparation of Healthalicious 2009 Form 1065 which substantially under-reported the
restaurants gross receipts as well as the salaries and wages paid to the restaurants
employees for that tax year. (Id.).
As part of the Plea Agreement, Grimm stipulated and agreed to a Factual Basis
for Guilty Plea, a stipulation of facts executed by the defendant on December 22, 2015 and
incorporated in the Plea Agreement by reference (the Stipulation of Facts or Stip.). The
Stipulation of Facts is attached to this letter as Exhibit A. In the Stipulation of Facts, the
defendant admitted all of the conduct underlying the charges in the Indictment. Among other
admissions, the defendant stipulated that he:
Oversaw the day-to-day operations of Healthalicious while a member in the
restaurant from 2007 through 2009 (Stip. 1);
Concealed over $900,000 in Healthalicious gross receipts from the accountant
who prepared and filed the restaurants tax returns, who then used the false
information the defendant provided to prepare and file false federal and state
tax returns (Stip. 3);
Failed to report the off the books cash wages he was paying to
Healthalicious workers, which resulted in the restaurant paying lower federal
and state payroll taxes. The defendant caused the payroll processing
companies to report to the IRS and the New York State Tax Department less
than half of the wages Healthalicious actually paid its employees (Stip. 4);
Caused false personal federal and New York State income tax returns to be
filed with the IRS and the New York State Tax Department on his behalf
(Stip. 5);
Under-reported Healthalicious payroll to NYSIF, lowering the monthly
workers compensation premium the restaurant paid to NYSIF (Stip. 6);
Caused numerous false documents to be filed with federal and state tax
authorities between 2007 and 2010, including: (1) Form 941 Employers

June 19, 2015
Page 4
Quarterly Federal Tax Returns for Healthalicious; (2) Form 1065 U.S. Return
of Partnership Income tax returns for Healthalicious; (3) Forms W-2 reported
annual wages of Healthalicious employees; (4) his Form 1040 U.S. Individual
Income Tax Returns and Form IT-201 Resident Income Tax Returns; and (5)
New York State Form ST-100 Quarterly Sales and Use Tax Returns
(Stip. 7);
Caused, in total, federal and New York State tax and NYSIF premium losses
between $80,000 and $200,000 (Stip. 8); and
Testified during the deposition in the Civil Action to things that, at the time, he
knew to be false. Specifically, the defendant admitted that he falsely testified
about how the restaurants workers were paid, the extent to which he used
email in operating his business, and what email account he used (Stip. 10).
II.
Argument
For the reasons that follow, the Court should sentence the defendant to a term
of incarceration within the advisory Sentencing Guidelines range of 24 to 30 months.
A.
Legal Standard
Sentencing courts have the authority to fashion a reasonable and appropriate

sentence in each case. In so doing, a sentencing court must consider the Guidelines in
formulating such a sentence. United States v. Booker, 543 U.S. 220, 259-62 (2005).
The Guidelines should be the starting point and the initial benchmark when fashioning a
sentence. Gall v. United States, 552 U.S. 38, 49 (2007). Next, a sentencing judge should
consider all of the factors in 18 U.S.C. 3553(a) to determine the appropriate sentence in
each case. Id. at 49-50. Those factors include, among other things, the nature and
circumstances of the offense; the history and characteristics of the defendant; and the need
for the sentence imposed to reflect the seriousness of the offense, to afford adequate
deterrence to criminal conduct, and to protect the public from further crimes of the
defendant.
B.
The Applicable Guidelines Range
For the reasons set forth below, the government respectfully submits that the
Court should determine that the Guidelines range of imprisonment applicable to the
defendant is 24 to 30 months, based upon an adjusted offense level of 17. (See PSR 65
(determining that the defendant falls within Criminal History Category I)).

June 19, 2015
Page 5
1.
Base Offense Level
The defendant has stipulated that under U.S.S.G. 2T1.4, 2T4.1 and 1B1.3,
his appropriate base offense level is 16, reflecting a tax loss of more than $80,000 and less
than $200,000. (See Plea Agreement, dated December 23, 2014 (the Plea Agreement) 2;
Stip. 8). The Probation Department reached the same conclusion with respect to the
applicable tax loss. (PSR 18).
2.
Role Enhancement Adjustment
Section 3B1.1 of the Sentencing Guidelines provides for an increase in a

defendants offense level based on his role in the criminal activity at issue.1 The Probation
Department determined that a four-level enhancement under Section 3B1.1(a) is appropriate
in this case. (PSR 21). The defendant submitted a letter to the Probation Department dated
May 26, 2015 objecting to the PSRs Guidelines calculations (the Defendants PSR
Objections Letter or Def.s PSR Objections Ltr.). Among other objections, the defendant
asserts that no role enhancement should apply. The gravamen of the defendants argument to
the Probation Department is that he exercised no control over the individual described in the
Indictment as the Manager (see Ind. 17, 33), whom the defendant contends was his
equal in running the restaurant from the beginning. (Def.s PSR Objections Ltr. at 1). The
defendant also contended that it was the Manager, acting on behalf of another individual, a
partner of Grimms, who instructed and trained the defendant regarding operating the
restaurant, including its payroll processes. (Id.). As set forth below, the government
respectfully submits that a two-level role adjustment under Section 3B1.1(c) is appropriate
here, consistent with the governments Guidelines estimate in the Plea Agreement, in light of
the defendants control over others involved in his criminal schemes.
In United States v. Cramer, the Second Circuit has identified the criteria for
the application of the two-level role enhancement pursuant to Section 3B1.1(c).
Pursuant to the Guidelines, a defendants offense level may be
increased by two levels if the defendant was an organizer,
leader, manager, or supervisor of a participant in a criminal
activity, where that activity involved fewer than five
1
Section 3B1.1(a) calls for a four-level increase in offense level where the
defendant was an organizer or leader of a criminal activity that involved five or more
participants or was otherwise extensive, and Section 3B1.1(b) calls for a three-level increase
in such cases where the defendant was a manager or supervisor (but not an organizer or
leader). Section 3B1.1(c) requires a two-level increase in cases where the defendant was an
organizer, leader, manager or supervisor in any criminal activity other than described in
[subsections] (a) or (b).

June 19, 2015
Page 6
participants. U.S.S.G. 3B1.1(c). A defendant is properly
considered a manager or supervisor if he exercised some
degree of control over others involved in the commission of the
offense or played a significant role in the decision to recruit or
to supervise lower-level participants. United States v. Hertular,
562 F.3d 433, 448 (2d Cir. 2009) (internal quotation marks
omitted). Moreover, a defendant need only manage or supervise
one other participant to warrant a role enhancement. See United
States v. Garcia, 413 F.3d 201, 223 (2d Cir. 2005). If such
management or supervision is found, the adjustment is
mandatory. United States v. Burgos, 324 F.3d 88, 92 (2d Cir.
2003).
United States v. Cramer, No. 14-761-cr, 2015 WL 527565, *2 (2d Cir. Feb. 15, 2015)
(unpublished summary order). Here, there are ample facts to support a finding that Grimm
exercised control over others involved in his criminal activity, including the Manager.
Accordingly, a two-level role enhancement under Section 3B1.1(c) is warranted and
appropriate in this case.
The defendants email communications with the Manager and others belie any
claim that he and the Manager were equals and that the defendant was not a manager or
supervisor in his criminal activity involving the operation of Healthalicious. For example,
the email exchange between the defendant and the Manager on January 4, 2010, attached as
Exhibit B, demonstrates the nature of their relationship and the Managers role in the
defendants restaurant. In the emails, the Manager thanks the defendant for letting me be a
part of your business and promises to do his best to support and help [the defendant] run a
successful business (emphasis added). The defendant responds by noting that he was going
to draft a document adding [the Manager] officially as a 10% partner in Granny Sayz llc,
and states that he is very proud and fortunate to have you as a partner and as a friend.2
More generally, the emails attached as Exhibit C further underscore the
defendants supervisory role. Between March and June 2010, the defendant sent eight emails
to the Manager detailing payroll information for Healthalicious employees, including hours
2
It is noteworthy that these emails show that the defendant offered the Manager
a 10% ownership interest in Healthalicious in January 2010, in light of the fact that, in the
defendants interview with the Probation Department, he stated that he sold his share in the
restaurant for $75,000 in 2009. (See PSR 55). Moreover, at the January 2013 deposition in
the Civil Action, the defendant testified under oath that he had sold his ownership interest in
the restaurant in April 2009. Therefore, the defendant either offered the Manager an
ownership interest that the defendant no longer owned or he lied about the date of the sale of
his ownership interest during the deposition or during his interview with the Probation
Department.

June 19, 2015
Page 7
worked, rates of pay, and significantly, the breakdown of off the books cash payments and
payments made by paycheck that were sent from the defendant to the Manager. Such emails
belie any claim that he did not exercise a degree of control over the Manager who
participated in the defendants tax fraud schemes.
Similarly, in an April 3, 2010 email exchange attached as Exhibit D, the
Manager updates the defendant on the restaurants operations and indicates that he is holding
closing envelopes and the payroll journal as well as vouchers for checks. The defendant
responds by thanking the Manager and tasks the Manager with follow-ups regarding
Workers Comp and getting my name off the Health Dept. This is a priority. These
communications are not the communications of equals, but rather of a supervisor receiving
information from and directing his subordinate.
Furthermore, on February 6, 2010, in an email from the defendant to a
campaign staffer discussing concerns regarding his Congressional race and attached here as
Exhibit E, the defendant described his managerial role in the running of the restaurant. He
wrote:
I left the FBI in 2006 and in 2007 I opened the restaurant with 2
partners. 1 partner opened 18 restaurants and had a successful
chain in Manhattan that he franchised. I went in thinking that I
know nothing about being in business and nothing about the
restaurant business at all. So, I waited for the partners to step up
and listen to the consulting chef and the people that worked for
the partner's other restaurants. Nothing was getting done to my
standards and finally I took over everything, even though I was
originally only responsible for the accounting and legal. I
learned how to cook, how to take orders and I worked like a dog
to learn every aspect of the business myself and i put new
systems in place. within 3 months of my deciding to take
charge, we started to make money. To this day, my partner uses
my systems in his other restaurant. moral of the story is that
experts and consultants don't always know best for what I need
to succeed.
So why am I telling you this:
Because my instincts have never been wrong and in the past
when I tried to do things the way others do them, I was
unsuccessful and lost time and money.

June 19, 2015
Page 8
The defendants statement that he took over everything is consistent with the evidence
supporting his supervisory role in the fraud schemes and belies any attempt to minimize the
extent of his own criminal conduct.3
The Court should accordingly find that a two-level enhancement to the
defendants base offense level pursuant to Section 3B1.1(c) for his role in managing the
criminal schemes involving Healthalicious is appropriate.
3.
Adjustment for Obstruction of Justice
Section 3C1.1 of the Sentencing Guidelines provides for a two-level increase

in the defendants offense level:
If (1) the defendant willfully obstructed or impeded, or
attempted to obstruct or impede, the administration of justice
with respect to the investigation, prosecution, or sentencing of
the instant offense of conviction, and (2) the obstructive conduct
related to (A) the defendants offense of conviction and any
relevant conduct; or (B) a closely related offense[.]
U.S.S.G. 3C1.1. The Probation Department concluded that this enhancement was
applicable here based on the defendants false deposition testimony in the Civil Action in
January 2013. (PSR 15, 22).
In applying this enhancement, the PSR cites Application Notes 1 and 4(b) to
Section 3C1.1. (PSR 15). Application Note 1 states that obstructive conduct that occurred
prior to the start of the investigation of the instant offense of conviction may be covered by
this guideline if the conduct was purposefully calculated, and likely, to thwart the
investigation or prosecution of the offense of conviction. Further, Application Note 4(b)
states that the obstruction adjustment should apply to conduct including: committing,
suborning, or attempting to suborn perjury, including during the course of a civil proceeding
if such perjury pertains to conduct that forms the basis of the offense of conviction.
In order to apply the obstruction enhancement here, the Court must make
specific findings that the defendant intentionally gave false testimony which was material to
the proceeding in which it was given, that the testimony was made willfully, i.e., with the
specific purpose of obstructing justice, and that the testimony was material to the instant
3
This contemporaneous email also suggests that the defendants claims to the
Probation Department that he often had pay his employees out of his own pocket and that
he made no profits from the restaurant (PSR 55), are self-serving and unsubstantiated
attempts to minimize his conduct.

June 19, 2015
Page 9
offense. United States v. Zagari, 111 F.3d 307, 329 (2d Cir. 1997). The Court therefore
must find that not only was the defendants false testimony in the Civil Action was material
as to that action, it must also find that it is material to this case. See id.
The defendant has objected to the Probation Departments application of the
obstruction enhancement. He argues that because his false testimony in the Civil Action
predated the governments investigation of his crimes involving Healthalicious, there is no
connection between the Civil Action and the offense conduct. (Def.s PSR Objections Ltr.
at 4). The defendant therefore asserts that he had no specific intent to obstruct justice when
he lied in his deposition. (Id. at 5 (claiming that the defendant did not believe, and should
not have reasonably believed that his false statements in his deposition testimony would
tangentially relate to the investigation that resulted in his arrest and conviction)). The
defendant further argues that his lies in the deposition were immaterial to both the Civil
Action and the tax fraud for which he was convicted. (Id. at 5-6). The defendants
objections to the inclusion of the obstruction enhancement in the PSRs Guidelines
calculation are wrong on both counts.
a.
The Defendants False Testimony Was Material
Grimms perjury during the deposition was material to both the Civil Action
and to the instant offense. The Civil Action was a collective action under the Fair Labor
Standards Act brought on behalf of the plaintiffs and other similarly situated employees of
the defendants restaurant alleging, among other things, that the defendant did not pay them
the proper minimum and overtime wages. (See Exhibit F (Complaint filed Dec, 1, 2011
(Compl.))). Therefore any emails, such as those later obtained by the government through
the execution of search warrants for the defendants AOL account, which identified other
restaurant workers and their hours and rates of pay (see Exhibit C) would have been material
with respect to identifying other potential class members and corroborating the plaintiffs
claims that workers were not being compensates according to applicable labor laws. The
defendants false statements under oath in the Civil Action regarding the extent to which he
used email in operating his business and what email account he used (he claimed he used a
Yahoo rather than an AOL email account (see Stip. 10)) were therefore designed to
thwart discovery about material issues in the Civil Action.
In addition, the Civil Action plaintiffs specifically alleged that they were paid
in cash during 2010 and later in a combination of cash and check during a period in 2010 and
2011. (See Compl. 44, 58). In his September 27, 2012 Answer in the Civil Action,
attached as Exhibit G, the defendant denied having sufficient knowledge or information to
admit or deny the allegations in these paragraphs, and further denies any knowledge about
the plaintiff Carlos Perez. (Answer 1, 44, 50-63). Had the defendant answered truthfully
during the deposition, i.e., if he admitted that he paid his workers in cash, he would have
been admitting certain of the plaintiffs allegations. Moreover, had the defendant been
truthful, he would have identified a source of discoverable material his AOL email account

June 19, 2015
Page 10
which contained emails that, among other things, included payroll spreadsheets sent to the
Manager that included both the names Carlos and Regino, and listed rate of pay for those
two individuals as $4.60 per hour: $0.05 per hour less than the plaintiffs alleged in the
Complaint. (See, e.g., June 8, 2010 and June 15, 2010 emails from Grimm to the Manager
attaching payroll spreadsheets, attached hereto as part of Exhibit C). These spreadsheets also
showed that Carlos and Regino were being paid in cash. The defendants current claims
that his false statements designed to avoid damning admissions and obfuscate discoverable
material that corroborated central claims by the plaintiffs and made plain that the defendant
was not been truthful in his filed Answer were not material to the Civil Action are
accordingly wholly without merit.
Furthermore, it is clear that the defendants false deposition testimony was
material to his offense conduct. The defendants maintenance of an off the books cash
payroll was central to his tax fraud. It enabled him to evade taxes on the wages paid to his
workers and hide the existence of his workers from NYSIF. Far from being tangential to his
offense conduct, the defendants cash payroll and his associated opaque recordkeeping was a
centerpiece of his criminal fraud scheme.
b.
The Defendant Intended to Obstruct Justice
Grimms perjury in the deposition was also intended to obstruct justice.

Application Note 1 to Section 3C1.1 expressly contemplates that obstructive conduct prior to
the start of the investigation of the offense conduct may be covered by the guideline if
purposefully calculated, and likely, to thwart the investigation or prosecution of the offense
of conviction. The defendant was well aware that he was the subject of a government
investigation in advance of his deposition in the Civil Action. Press accounts from 2012
support this conclusion. In one article, attached as Exhibit H, the defendants then-counsel in
connection with the investigation was quoted regarding the defendants ownership interest in
the restaurant, approximately four months before the defendants deposition in the Civil
Action. (See Exhibit H at p. 2). Simply put, it strains credulity that the defendant, a former
law enforcement agent, attorney and a sitting member of the House of Representatives, did
not believe that admitting criminal conduct or identifying discoverable materials in the Civil
Action that would reveal his criminal conduct would likely result in an investigation or
otherwise influence an existing government inquiry. Accordingly, the defendants conduct
was willfully designed both to frustrate and obstruct the civil plaintiffs lawsuit and to thwart
investigation into his conduct at the restaurant conduct which ultimately became the
subject of the instant investigation.
The Court should find that the defendants perjury during the Civil Action was
material to both that action and this case, and that his lies were the product of his intent to
obstruct justice. Accordingly, the two-point obstruction enhancement to the defendants
Guidelines offense level set forth in Section 3C1.1 is applicable here.

June 19, 2015
Page 11
*
For all of the foregoing reasons, the Court should apply a two-level role
enhancement pursuant to U.S.S.G. 3B1.1(c) and a two-level obstruction enhancement
pursuant to U.S.S.G. 3C1.1, resulting in an adjusted offense level of 17 and a Guidelines
sentencing range of incarceration of 24 to 30 months.
C.
Section 3553(a) Analysis
For the reasons below, a consideration of the sentencing factors set forth in
Title 18, United States Code, Section 3553(a) supports imposition of a term of incarceration
within the advisory Guidelines range.
1.
Nature and Circumstances of the Offense
Grimm chose lies and deception over honest dealings with authorities and his
employees quarter after quarter, and year after year while he owned and operated
Healthalicious. His fraud, in which he hid over $900,000 in the restaurants gross receipts,
was designed to conceal his income and enrich himself. The defendant admitted that he
hired unauthorized workers whom he paid off the books in cash, took deliberate steps to
obstruct the federal and state governments from collecting taxes he properly owed, cheated
New York State out of workers compensation insurance premiums, caused numerous false
business and personal tax returns to be filed for several years, and that he lied under oath
about his crimes. The defendants fraudulent conduct was not by happenstance or
unexpected opportunity. It was fraud by design. It involved tracking workers hours, for
which workers were paid entirely off the books, versus those paid only partially in cash,
and ensuring that his weekly cash payroll was prepared and distributed. The defendants
schemes required him to take the step of fabricating his restaurants monthly gross receipts in
e-mails to his accountant. Had the defendant simply printed out the sales reports from his
cash register, his fraud would have been exposed.
When called to account for his actions in running Healthalicious, the defendant
lied under oath. He lied to frustrate the Civil Action being pursued by his former employees
and lied in the hope that his extensive fraudulent conduct at the restaurant would escape the
attention of investigators. The defendants offense is serious precisely because it reveals a
pattern and repeated practice of fraud and deception. The defendants criminal conduct
involves years of fraudulent statements and, when confronted with his fraud, his considered
course of action was to cover up his crimes with additional lies. Accordingly, the serious
nature of the defendants offenses weighs in favor of an sentence of incarceration within the
applicable Guidelines range. See 18 U.S.C. 3553(a)(1), (a)(2)(A).

June 19, 2015
Page 12
2.
History and Characteristics of the Defendant
Grimms history and characteristics also favor a sentence within the

Guidelines range. See 18 U.S.C. 3553(a)(1). There is no doubt that the defendants history
of public service as a member of the United States Marine Corps, an FBI special agent, and a
member of the House of Representatives, is laudable and deserves consideration by the
Court. The defendant, however, was not a simple small businessman overwhelmed by the
complexity of the tax laws or one confused by the accounting necessary to run a restaurant.
He is sophisticated. He graduated from law school and was admitted to practice in New
York and Connecticut. (PSR 50). He conducted fraud investigations on Wall Street during
his time as a FBI special agent. (PSR 7). Even now, in the wake of his conviction, he
earns $10,000 per month as a consultant to start-up companies. (PSR 52).
The defendant chose to run his business fraudulently from its inception. His
business practices were designed to hide the restaurants income and his subsequent and
repeated lies were designed to conceal the fraud from federal and New York State
authorities. Further, when confronted, the defendants first and consistent instinct has been
to lie. He lied under oath in the Civil Action. When he was indicted, he feigned indignation
at being the target of an improper government investigation. (See Exhibit I at 4 (describing
the governments investigation as a vendetta and a witch hunt)). Even his statements to
the Probation Department in advance of sentencing, which sought to diminish his criminal
conduct and place the responsibility for his crimes on others (see supra, pp. 6 n.2 and 8 n.4),
illustrate that he has failed to fully come to terms with his criminal conduct.
3.
Need to Promote Respect for the Law, Provide

Just Punishment and Afford Adequate Deterrence
Moreover, a sentence of incarceration within the Guidelines range would be

sufficient, but not greater than necessary, to meet the goals of sentencing. As discussed
above, such a sentence is appropriate given the nature of the criminal conduct and the
defendants characteristics. Further, it will serve the goals of specific and general deterrence.
See 18 U.S.C. 3553(a)(2).
The defendants offense conduct is particularly troubling in light of the fact
that he held positions as an FBI special agent and as a member of Congress in which he
swore an oath to support and defend the laws of this country. As such, a term of
incarceration within the applicable Guidelines range will promote a respect for the law that
the defendants conduct has revealed is plainly absent in him.
Furthermore, a Guidelines sentence will have a meaningful deterrent effect. A
significant prison sentence will make clear to the defendant that engaging in a pattern of
lying and cheating will be met with a meaningful punishment. An incarceratory sentence

June 19, 2015
Page 13
will also signal to other business owners that engaging in similar fraudulent conduct will be
met with significant consequences.
III.
Restitution
Pursuant to the terms of the Plea Agreement, the defendant agreed to pay
restitution to the IRS and the New York State Tax Department in connection with
Healthalicious and his personal federal and state tax liabilities, plus interest and penalties,
to be calculated at the time of sentencing. The defendant also agreed to pay restitution to
NYSIF in connection with the restaurants workers compensation insurance premiums for
the years 2007 to 2010 in an amount to be calculated at the time of sentencing. (Plea
Agreement 6).
The government respectfully requests that the Court order restitution in the
following amounts: (i) $6,700 in unpaid premiums to NYSIF, (ii) $78,211 to the IRS
(consisting of lost personal income tax revenue and lost employment tax revenue) and
(iii) $110,304.90 to the New York State Tax Department (consisting of lost personal income
tax revenue and lost sales tax revenue). In accordance with the Plea Agreement, the
government requests that the Court order the defendant to pay interest and penalties on the
amounts due to those entities.4
Both the IRS and New York State Tax Department have informed the
government that it is their standard procedure to determine interest and penalties on the loss
amounts, in consultation with the defendant and his counsel, subsequent to the imposition of
judgment.

June 19, 2015
Page 14
IV.
Conclusion
For the foregoing reasons, the government respectfully submits that the Court
should sentence Michael Grimm to a term of incarceration within the applicable advisory
Sentencing Guidelines range of 24 to 30 months.
Respectfully submitted,
KELLY T. CURRIE
Acting United States Attorney
By:
cc:
/s/
James D. Gatta
Nathan Reilly
Assistant U.S. Attorneys
Defense Counsel (by ECF)

Clerk of the Court (PKC) (by ECF)
Patricia Sullivan, Senior U.S. Probation Officer (by e-mail)
Case 1:14-cr-00248-PKC-RML Document 94-1 Filed 06/19/15 Page 1 of 7 PageID #: 528
EXHIBIT A
DAS:AMC/JDG/NR
F.#2011R00532
UNITED STATES DISTRICT COURT
-- --EAS'FERNBiffFRIGT0FNEW-Y:0R::&------------------------- ----------------------
----------------~
UNITED STATES OF AMERICA

14 CR 248 (PK.C)
- against MICHAEL GRIMM,

Defendant.
----------------~
FACTUAL BASIS FOR GUILTY PLEA

The UNITED STATES OF AMERICA and the defendant MICHAEL
GRIMM hereby stipulate and agree to the following facts in support of GRIMM's guilty plea
in the above-captioned case.
1.
From 2007 through 2009, MICHAEL GRIMM was a member in
"Healthalicious/' a restaurant located in New York, New York that operated through a
corporate entity named Granny Sayz, LLC. In that capacity, GRIMM oversaw the day-today operations of the restaurant. Specifically, GRIMM reported the Healthalicious
employees' pay-rates and their hours worked to the payroll processing companies retained to
manage the restaurant's payroll, and he also distributed wages to employees. When GRIMM
was not present at Healthalicious, he delegated those responsibilities to others.
2.
From 2007 to 2010, MICHAEL GRIMM under-reported to federal and
state tax authorities the true amount of money Healthalicious earned and used a portion of
the restaurant's unreported receipts to pay the restaurant's employees' wages "off the books"
2
in cash. Healthalicious, with GRIMM's knowledge, employed individuals who were not
- -lawfully-admitted-for-permanent-residence -and-not-authorized-to-work-in-the-Bnited-States-:- ---3.
.-------
Specifically, MICHAEL GRIMM under-reported the gross receipts
Hcalthalicious earned to both the Internal Revenue Service ("IRS") and the New York State
Department of Taxation and Finance ("the NYS Tax Department"), thereby lowering the
federal and state income taxes owed and paid by Healthalicious partners. GRIMM concealed
over $900,000 in the restaurant's gross receipts from an accountant who prepared and filed
tax returns on behalf of Healthalicious (the "Accountant"). The Accountant used the
information provided by GRIMM to prepare and file false federal and state tax returns for
Healthalicious. These false returns were filed from Brooklyn, New York.
4.
Additionally, MICHAEL GRIMM did not report to the IRS and the
NYS Tax Department the cash or "off the books" wages he paid to Healthalicious workers,
thereby lowering the restaurant's federal 'and state payroll taxes. Some Healthalicious
employees received at least half their wages in cash. Other Healthalicious employees
received all of their wages in cash. GRIMM maintained electronic spreadsheets which
detailed the restaurant's true payroll information, including the cash wages, while concealing
such cash wages from the payroll processing companies retained by Healthalicious. By
under-reporting employee wages and concealing the existence of some employees, GRIMM
-----~caused. --the-paY-t:olLpwcessing.....c..ompanie.sio.......r..e_
p...o.rt..to......the..lR&....anclthe
NYS Iax_D_ep...artmen..t._ _ _ _ _ _ __
less than half of the wages Healthalicious actually paid its employees.
- l
- l
3
5.
Further, as a result of the above, MICHAEL GRIMM caused false
- -- --------------perst'JnaHedera1-and-Nework- Stateincometax-returns-tobe-filed-with-the-I-RS-and-the---------- ---- - -- NYS Tax Department on his behalf. These personal tax returns falsely under-reported
Grimm's partnership income from Healthalicious.
6.
In addition to under-reporting wages and gross receipts to the IRS and
the NYS Tax Department, MICHAEL GRI1\1M also under-reported the amount of
Healthalicious payroll to the New York State Insurance Fund (''NYSIF"), lowering the
monthly workers' compensation premium the restaurant paid to NYSIF.
7.
In connection with the above, from 2007 through June 2010,
MICHAEL GRI1\1M caused the following false filings to occur:

a.
Form 941 Employer's Quarterly Federal Tax Returns filed with
the IRS for Healthalicious;

b.
Form 1065 U.S. Return of Partnership Income tax returns filed
with the IRS for Healthalicious;

c.
Forms W-2 reporting annual wages ofHealthalicious employees
d.
GRIMM's Form 1040 U.S. Individual Income Tax Returns filed
submitted to the IRS;
with the IRS;
_ _ _ _ _ _ _ _ _ _ _ _ _e _ _ New- Y--0rk.State.Eorm ST-1 OQ__Quartercy:_sales..andlls.e.Iax~------

Retums filed with the NYS Tax Department; and
4
f.
GRIMM's New York State Fonn IT-201 Resident Income Tax
- - R:eturns-fi-led-with-the-NS-'Fax-Bepartment.
8.
--------- - -- - -
As a result of MICHAEL GRIMM's above-described conduct,
GRIMM caused federal and New York State tax and NYSIF premium losses of more than
$80,000 and less than $200,000.
9.
MICHAEL GRIMM knowingly and intentionally engaged in the
conduct described in paragraphs 1 through 8 above, understanding his actions were unlawful
and with the intent to secure an unlawful benefit, specifically, to secure a lower tax burden
for Healthalicious.
10.
On or about January 30, 2013, MICHAEL GR.IMM testified under oath
in a deposition in connection with a civil lawsuit pending in the United States District Court
for the Southern District of New York. During the deposition, GRIMNI testified that
Healthalicious employees had not been paid in cash. GRIMM also testified that he did not
generally correspond through email regarding the business ofHealthalicious. GRIMM
further testified that, to the extent he used email in connection with Healthalicious, he used a
"Yahoo" account to which he no longer had access. In fact, GRIMM knew at the time of the
deposition that Healthalicious employees had been paid by cash, as detailed above. In
addition, at the time of the deposition, GRIM:M knew that he had sent and received many
------j~fn--a-ils-F~latd-tG-l:I-ealt-h.a1-i.ciGus-ar:i..d-had-accessed...al'.ld-Continued..to-use-an_A_Q_Lemail_ _ _ _ _ _ _ _ __
account which he did not identify in the deposition and which contained many emails related
to Healthalicious.
- I
5
11.
The government is in a position to prove all of the above beyond a
--- ------reasonabledoubt:----'Fhefacts--detai-led-above-serve-only-as-a-summary-of---t he -evidence-were- ---- -------- -this case to proceed to trial and are not intended to be an exhaustive account of all the
. ~~----
,__ - - --
- --- ----- I
the above-captioned case.
Dated:
Brooklyn, New York

Dece111 ber l.2., 2014
LORETTA E. LYNCH
United States Attorney
By:
Anff cmy M. Capozzolo
rm es D. Gatta
Nathan Reilly
Assistant United States Attorneys
~rnv-
'HAEL GRIMM
Defendant
.j(..Wjf.J~~f1'--
- . Neiman, Esq.
L. Rashbaum, Esq.
Stuart N. Kaplan, Esq.
Joseph G. Sconzo, Esq.
Counsel to Defendant
EXHIBIT B

Re: Mailer
http://mail.aol.com/38366- I l l/aol-6/en-us/mail/PrintMessage.aspx
To
Subject: Re: Mailer
Date: Mon, Jan 4, 2010 1:27 pm
Excellent!
Give me the info on who and where I send a check for the mailer & I will send it out today.
I will draft a document adding you officially as 10% partner in Granny Sayz lie.
As of Jan 1, whatever money I take out of Healthalicious, you will get 10% .. . I will dis~erson.
I am very proud and fortunate to have you as a partner and as a friend, so thank you Michael
Sent from my Verizon Wireless BlackBerry
From:
Date: Mon, 04 Jan 2010 13:19:57 -0500
To:
?Yaol.com>
Subject: Mailer
~~--~~--
Michael ,
..
--------- - - - -- - - -- - ----------------Hope everything is well, once again I wanted to Thank you for your generosity on letting me be part of your
business and promise you that I will do my best to support and help you run a successful restaurant.
I am working on the menu mailer and I wanted to ask you when do you want the coupons to expire? also how
soon do you want the 10 000 menus in the mail?
- - -----GaR-we-- give-some-$$$+-toward-s-the-ma-i-linJ.
------------------ - - ----- - ---------~------------------
--- - - - --
The electric conection in the basement has been alreday re directed to our meter.
Let me know if there is anything else that i can help you with
Regards,
---
- ------- - - - -- - ------ -- ---- - -- - - --- -- ------- - - - - - - ------------ - -------
- - - - - - - - ------- - - - - - - - - - - - - - - -- -- - --- ..- - - - - - - -
I of I
EXHIBIT C
- -~_j
-"'"~----
1~::.-~-
From :
To :
Cc:
Bee:
Subject:
Date:
Attachments:
Thanks!
Healthalcious payroll
Tue Mar 23 2010 17:36:50 EDT
Payroll 3-14 - 3-20-201 O.xls
t-~
-=.::,..._,,.
J::i,,.-,_~~
-- _,... -..-:_.
WORK SCHEDULE
TOTAL
HRS
Serqio
fA.leiandro
3/14/10- 3/20/10
RATE
TO PAY NET PAY
CHECK
salarv
$800.00
$800.00
$400.00
$400.00
salarv
$650.00
$.,
$300.00
Miquel
36.0
$9.00
$324.00
$324.00
$0.00
$324.00
Reqino
58 .5
$4.60
$269.10
$269.10
$0.00
$269.10
Jesus
16.5
$4.60
$151.80
$75.90
$75.90
16.5
$4.60
$75.90
$75.90
Luis
50.0
$4.60
$230.00
$1 .
$_30.00
Uose Luis
0.0
$4.60
$0.00
Ricardo
56 .5
$4.60
$259.90
Elisio
24,5
$4.60
25.5
$4.60
Karla
42 .0
$11.00 $462.00
Roneld
18.0
$9.50
171
19.0
$9.50
$180.50
Ivan
Lina
Riao
Mike
$0.00
$259.90
$259.90
$11 .
$117.30
0.0
$8.00
. $0.00
34 .5
$8.00
$276.00
0.0
$15.00
$0.00
16.0
$8.00
$128.00
16.0
$8.00
$128.00
$4.60
$0.00
Huao
$0.00
$462.00
$0.00
$462.00
$351.50
$171.00
$180.50
$276.00
$0.00
$276.00
$0.00
$256.00
$0.00
$128.00
$0.00
$128.00
$0.00
' -~"
$0.00
$0.00
$0.00
0.0
$0.00
$0.00
$3 022.70
$3,022 .70
'"'.~---
__
.::..:- ,
.;f___-_.-._
..,._
-..;:'-..;
~- -c.. ~"'""-"--'--..,..""-
== -
j z-"'C"~~.='"--
I
From :
To:
Cc:
Bee:
Subject:
Date:
Attachments:
healthalicious
Tue Apr 06 2010 12:58:09 EDT
Payroll 3-28 - 4-03-2010.xls
Sr. muchas gracias!
_:
~- ....
__-~ _[ J. __ -Case 1:14-cr-00248-PKC-RML Document 94-3 Filed 06/19/15 Page 5 of 17 PageID #: 541
=-"'
~ . . ~-.""""~-
WORK SCHEDULE
TOTAL
HRS
Seraio
3/28/10- 4/03/10
----
"...,,,c; TO PAY
\IET PAY
:;HECK
salarv
$800.00
$800.00
$400.00
$400.00
salarv
$650.00
$650.00
$350.00
$300.00
$387.00
--
~lejandro
Miauel
43.0
$9.00
$387.00
$387.00
$0.00
Regino
60.0
$4.60
$276.00
$276.00
$0.00
Uesus
17.0
$4.60
$78.20
$156.40
$78.20
$78.20
17.0
$4.60
$78.20
Luis
51 .5
$4.60
$236.90
$_36.90
$0.00
$236.90
Uose Luis
0.0
$4.60
$0.00
Ricardo
40.5
$4.60
Elisio
24.5
'
$276.00
$0.00
$0.00
$186.30
$186.30
$186.30
$4.60
$112.70
$ 2 .40
24.5
$4.60
$112.70
Karla
41 .5
$11.00 $456.50
$456.50
$0.00
$456.50
Roneld
18.0
$9.50
171
$342.00
$171 .00
$171.00
18.0
$9.50
$171 .00
0.0
$8.00
$0 .00
$260.00
$0.00
$260.00
32.5
$8.00
$260.00
Lina
0.0
$15.00
$0.00
Riao
15.0
$8.00
$120.00
15-1)
<J:R nn
$124.00
$4.60
$0.00
Ivan
Huao
$112.7
$0.00
$244.00
$11-.7
$0.00
$120.00
$0.00
$124.00
$0.00
rl.
Mike
.-
$0.00
$0.00
$0.00
$4 220.50
$4 ,220.50
$1 231 .90
$2 988.60
$2 ,988.60
$4 ,220.50
0.0
$0.00
$0.00
I---~
From :
To:
Cc:
Bee:
Subject:
Da.te:
Attachments:
payroll - healthalicious
Tue Apr 13 2010 16:40:26 EDT
Payroll 4-04 - 4-10-2010.xls
Sr. I attached the payroll but Karla already took hers out of the register because she had an
emergency and needed cash so do not pay her and get her to sign her check back to us.
She put the envelopes and pay checks in a bag for you.
THANKS and sorry I wasn't there to do it for you.
Michael
I .
:...:....:.__
:_:___
--
--~-=:-..,._-.;--
.1
WORK SCHEDULE
4/04/10- 4/10/10
TOTAL
HRS
U.T! fOPAY
NET PAY
:HECK
Sergio
salarv
$800.00
$800.00
$400.00
$400.00
Alejandro
salary
$650.00
$650.00
$350.00
$300.00
\/liquel
45.0
$9.00
$405.00
$405.00
$0.00
$405.00
Reqino
57 .5
$4.60
$264.50
$264.50
$0.00
$264.50
Jesus
16.0
$4.60
$73 .60
$149.50
$73.60
$75.90
16.5
$4.60
$75.90
49 .0
$4 .60
$225.40
$225.40
$0.00
$225.40
Jose Luis
0.0
$4.60
$0.00
Ricardo
55 .5
$4.60
Elisio
~UiS
$0.00
$0.00
$255.30
$255.30
$255.30
24.0
24.0
$4.60 . $110.40
$4.60 $110.40
$220.80
$110.40
$110.40
Karla
42 .0
$11 .00 $462.00
$462.00
$0.00
$462.00
Roneld
17.0
$327.75
$161.50
$166.25
17.5
$9.50
$9.50
$166.25
0.0
$8.00
$0.00
$276.00
$0.00
$276.00
34.5
$8.00 $276.00
$15.00 $0.00
Ivan
Lina
0.0
Riao
15.0
. 14.5
Huao
161 .5
$8.00
$120.00
$8.00
$116.00
$4.60
$0.00
$0.00
$0.00
$236.00
$120.00
$116.00
$0.00
$0.00
3I
Mike
$0.00
$0.00
$0.00
$4 272.25
$4,272 .25
$1 215.50
$3 056.75
$3,056.75
$4,272.25
0.0
$0.00
$0.00
I-;:_
......
~..,.-.:'
-..:o:-"'
_.;:-.
. l ._._ - --
,,_ .,.
..:::.....::.
From:
To:
Cc:
Bee:
Subject:
Date:
Attachments:
healthalicious
Wed Apr 21 2010 11:05:11 EDT
Payroll 4-11 - 4-17-2010.xls
I
:. I
I-
WORK SCHEDULE
TOTAL
HRS
Sergio
~leiandro
4/11/10- 4/17 /10
RATE
TO PAY NET PAY
CHECK
salary
$800.00
$800.00
$400.00
$400.00
salarv
$650.00
$650.00
$350.00
$300.00
Miouel
49 .0
$9.00
$441.00
$441.00
$0.00
$441.00
Reoino
61 .0
$4.60
$280.60
$280.60
$0.00
$280.60
Uesus
18.0
$4.60
$82.80
$165.60
$82.80
$82.80
18.0
$4.60
$82.80
Luis
51.0
$4.60
$234.60
$234.60
$0.00
$234.60
Uose Luis
0.0
$4.60
$0.00
Ricardo
53 .0
$4.60
Elisio
24.0
24.0
Karla
42 .0
Rone Id
18.5
17.5
0.0
van
$0.00
$0.00
$243.80
$243.80
$243.80
$4.60
$110.40
$220.80
$110.40
$110.40
$4.60
$110.40
$11 .00 $462.00
$462.00
$0.00
$462.00
$9.50
175.75
$342.00
$175.75
$166.25
$9.50
$166.25
$8.00
$0.00
$272.00
$0.00
$272.00
34.0
$8.00
$272.00
Lina
0.0
$15.00
$0.00
Rigo
15.5
$8 .00
$124.00
14.5
$8.00
$116.00
$4.60
$0.00
Hugo
$0.00
$240.00
$0.00
$124.00
$0.00
$116.00
$0.00
I_~
Mike
ILL.
$0.00
$0.00
$0.00
$4 352.40
$4,352.40
$1 242.95
$3 109.45
$3,109.45
$4,352.40
0.0
$0 .00
$0.00
-"'"
-- .
- I
.:-
1~'!>5!.:~.=:- ---- - -
'..;,,._
~--"=""
----
-- - -I
From :
To:
Cc:
Bee:
Subject:
Date:
Attachments:
healthalicious
Tue Apr 27 2010 12: 16:23 EDT
Payroll 4-18 - 4-24-201 O.xls
Sr.
Karla will send the checks and envelopes to Pita Grill.
Thanks!
Did we order the waffle maker?
MgG
_-J
-I
~=-"'~-..,.-=---'
~="-' >~
- -
--~---
'
I-
~-I"'
WORK SCHEDULE
TOTAL
HRS
ISeraio
4/18/10- 4/24/10
..... _... TO PAY \IET PAY
8HECK
salarv
$800.00
$800.00
$400.00
$400.00
salarv
$650.00
$650.00
Alejandro
~-
.0
f---"'-"
Miguel
55.0
$9.00
$495.00
$495.00
$0.00
$495.00
Regino
60.0
$4.60
$276.00
$276.00
$0.00
$276.00
Jesus
16.5
$75.90
$151.80
$75.90
$75.90
16.5
$4.60
$4.60
47.5
$4.60
$218.50
$... 1 ....
$ .
~uis
$75.90
$... 1 .
I
Jose Luis
0.0
$4.60
$0.00
Ricardo
52 .5
$4 .60
$241.50
$241.50
Elisio
23.0
$4.60
$105.80
$213.90
$105.80
$108.10
23.5
$4.60
$108.10
Karla
40.5
$11 .00 $445.50
$445.50
$0.00
$445.50
Rone Id
17.0
$9.50
161 .5
$337.25
$161.50
$175.75
18.5
$9.50
$175.75
0.0
$8.00
$0 .00
$248.00
$0.00
$248.00
31 .0
$8.00
$248.00
Lina
0.0
$15.00
$0.00
~iao
14.0
$8.00 $112.00
<l:R nn _$1?n nn
van
15.0
Huao
\/like
$4.60
$0.00
,-,
$0.00
$0.00
$241.5
$0.00
$232.00
$0.00
$112.00
$0.00
$120.00
$0.00
$0.00
$0.00
$0.00
$4 309.45
$4 ,309.45
$1 205.20
$3 104.25
$3,104.25
$4,309.45
0.0
$0.00
$0.00
- I
~--=
-;:~_
"'
....
___;__ I
From:
To:
Cc:
Bee:
Subject:
Date:
Attachments:
Tue May 11201017:11 :25 EDT

Payroll 5-01 - 5-07-2010.xls
forgot the attachment
-I
- I
-
:__ ':.:..'.:.
___:.._, _
_;.__
WORK SCHEDULE
TOTAL
HRS
Seraio
---
5/01/10- 5/07/10
~~~~:
TO PAY \JET PAY
CHECK
salarv
$800.00
$800.00
$400.00
$400.00
salary
$650.00
$650.00
$350.00
$300.00
Alejandro
r-
Miguel
30 .0
$9.00
$270.00
$270.00
$0.00
$270.00
Regino
61.5
$4.60
$282.90
$282.90
$0.00
$282.90
Jesus
17.0
$4.60
$78.20
$156.40
$78.20
$78.20
17.0
$4.60
$78.20
.... uis
43 .5
$4.60
$200.10
$200.10
$0.00
$200.10
Jose Luis
0.0
$4.60
$0.00
$v.
Ricardo
63 .0
$4.60
$289.80
$289.80
Elisio
23.5
$4.60
$108.10
$216.20
$108.10
$108.10
$108.10
$0.00
$289.80
23.5
$4.60
Karla
40.5
$11.00 $445.50
$445.50
$0.00
$445.50
Roneld
18.5
$9.50
175.75
$351 .50
$175.75
$175.75
18.5
$9 .50
$175.75
0.0
$8.00
$0.00
$260.00
$0.00
$260.00
32.5
$8 .00
$260.00
.... ina
0.0
$15.00
$0.00
Riao
16.0
t5_,5
$8.00
$128.00
no
$124.00
Ivan
Huao
$R
$4.60
$0 .00
$0.00
$252.00
$0.00
$128.00
$0.00
$124.00
$0.00
1
Mike
$0.00
$0.00
$0.00
$4 174.40
$4,174.40
$1 240.05
$2 934.35
$2 ,934.35
$4,174.40
0.0
$0.00
$0.00
I , __ -. . __ ,_; __ I
.
':1
From :
To:
Cc:
Bee:
Subject:
Date:
Attach men ts:
Payroll
Tue Jun 08 2010 19:20:09 EDT
Payroll 5-30 - 6-05-2010.xls
Sr.
I am sorry but I can't make it into the city tonight.I will text you the details
Thanks as always!
Michael
---~---1
..:.>o .,...,. .:--
1~..,,~..,----
_,_
~---~I
WORK SCHEDULE
TOTAL
HRS
Sergio
.,
KM..PE
TO PAY NET PAY

$800.00
$400.00
$400.00
salary
$650.00
23.5
$9.00
$211.50
$418.50
23.0
$9 .00
$4.60
$207.00
$207.00
$266.80
$4.60
$0.00
0.0
$4.60
$0.00
48.0
$4.60
$220.80
$ 20.80
$'.
$4.60
$4.60
$4.60
$96.60
$96.60
$241 .50
$193.20
$96.60
Ricardo
21 .0
21 .0
52 .5
$_4
Elisio
24.0
$4.60
$110.40
$223.10
$110.40
$112.70
24.5
$4.60
$112.70
Karla
65.5
$11.00 $720.50
$720.50
$0.00
$720.50
Roneld
0.0
$9.50
$0.00
$0.00
$0.00
0.0
$9.50
$0.00
0.0
$8.00
$0.00
$260.00
$0.00
$260.00
32 .5
$8.00
19.0
$8.50
$260.00
$161 .50
$327.25
$161 .50
$165.75
19.5
$8 .50
$165.75
15.5
1.S. ()
$8 .00
$124.00
$244.00
$124.00
$120.00
ctQ . ()()
~1-2-0 . nn
$4.60
$0.00
Freddy
~eaino
Uesus
Carlos
Lauro
Velazque~
Ivan
ca lease
Riao
58.0
Hugo
-
Mike
_..._ .
~t;._~~
~HECK
$800.00
Alejandro
5/30/10- 6/05/10
salary
. .,
.0
$0.00
$211.50
$266.80
$0.00
$266.80
$0.00
$0.00
$0.00
$2
.8
$96.60
$_~1.
.v
$0.00
$0.00
$0.00
$0.00
$0.00
$4 772.65
$4,772 .65
$1 242.50
$3116.15
$3,116.15
$4 ,358.65
0.0
$0.00
$0.00
'
..I
From :
To:
Cc:
Bee:
Subject:
Date:
Attach men ts :
sorry it took so long - thank you Sr!!!

Tue Jun 15 2010 17:10:16 EDT
Payroll 6-06 - 6-12-2010.xls
Karla has everything ready in a bag and the checks! Thanks as always my friend - say a prayer that
the land lord is willing to bargain.
~-
I ..
----- I
.- -- -- - -- -'
--
J 1-- -
__ J
J.....:;
WORK SCHEDULE
6/06/10- 6/12/10
TOTAL
HRS
~ATE
rro PAY NET PAY
:HECK
ISeroio
salarv
$800.00
$800.00
$400.00
$400.00
Aleiandro
salarv
$650.00
$j ~0.0
$350.00
$300.00
25.5
$9.00
$229.50
$454.50
$0.00
$229.50
25.0
$9.00
$225.00
$225.00
62 .5
$4.60
$287.50
$287.50
$0.00
$287.50
$4 .60
$0.00
$0.00
$0.00
$0.00
0.0
$4.60
$0.00
Carlos
48 .0
$4.60
$220.80
$ 20.80
$0.00
$220.80
Lauro Velazque.
$4.60
$4.60
$4 .60
$96.60
$103.50
$241 .50
$200.10
$96.60
Ricardo
21.0
22.5
52 .5
$241.50
Elisio
26 .5
$4.60
$121.90
$243.80
26 .5
$4.60
$121 .90
Karla
65 .0
$11 .00 $715.00
Rone Id
0.0
$9 .50
0.0
$9.50
$0.00
Freddv
Reaino
Uesus
Ivan
ca lease
Riao
0.0
$8.00
$0.00
31.5
$8.00
$252.00
16.5
$8 .50
$140.25
16.5
$8.50
$140.25
16.0
$8.00
15 _n
<l'O
$128.00
<1:1 ')R nn
Huqo
Mike
nQ_
$4.60
$0.00
II
$1
..
$241.50
$12 .
II
$ 1_ 1.
$715.00
$0.00
$715.00
$0.00
$0.00
$0.00
$252.00
$0.00
$252.00
$280.50
$140.25
$140.25
$256.00
$128.00
$128.00
$0.00
$0.00
$0.00
$0.00
$0.00
$4 826.70
$4,826.70
$1 236.75
$3 139.95
$3 ,139.95
$4 ,376.70
0.0
$0.00
$0.00
..
r-::-
EXHIBITD
:>::--
- I
__
-I
\-----~
Re : Update
!-_:.
http: //mail.aol.com/38366- l l l/aol-6/en-us/mail/PrintMessage.aspx
Subject: Re: Update

Date: Sat, Apr 3, 2010 4:24 pm
Sr.
Thank you! I think we may just want to switch from LCK to whomever you are using ... obviously they are having
problems and we need to have our filings done on time. Did you ever find out why our Worker's Comp went up
stating our failure to provide info?
Please get my name off the Health Dept. That is a priority.
Again, thank you and I will send the check to Doug.
Feliz Pasqua
MgG
Sent from my Verizon Wireless BlackBerry
- - --------- - - - -
- - - - - - - -
Sr. Grim
Hope everything is well, I just want a keep you updated:
a) The mailing is ready to go, Doug need $2300.00 in advance of the 4k for the total price of the mailing
b) I am having a meeting with LCK on Wednesday at Healthalicious at 2:30pm if you happen to be free it will be
good if you can join us. All I want to go over is about them pulling out the money automatically which hasn't been
done since they change the bank they were dealing with, also I need to see who is in charge of the proper filling
of payroll taxes since we receive a notice of failure on filling the NYS 45
C) Also I am creating an employee file which once I have it completed I will give it to you and will include:
Employee information, W2 form, 1-9 form, and a copy of their SS
------- - - - - - - - - - - - - - - - - - - -
- __ [))-1 alsQ__0c:1s_ ttilnkingthll_f!1ay~e-~~_f~rl_L!~ the -~lt_:Gril! e.rnpioye~ ~andbookT6Thealfhalicfous~ we-wTlfjUst

need to customize accordingly.
- - -- -- - -- --- - -- -- - E) If I get to see you sometime this week I have to give you some of the closing envelopes that I am holding as
well as the payroll journal and also I have to give you the vouchers of the checks that I have issued since I have
the checkbook in my hands so that you can be able to update your books.
As always if there is anything else I can do feel free to let me know, now I have more free time .
Have a great holiday.
Regards,
1 ofl
. 1,.
EXHIBIT E
Bee:
Subject:
Date:
Attachments:
e same mistakes and I need you to understand why I am frustrated

e nee o avo1
Sat Feb 06 2010 02:34:17 EST
Page 2 of 5
I -
- I
I - ..->
I left the FBI in 2006 and in 2007 I opened the restaurant with 2 partners. 1 partner opened 18
restaurants and had a successful chain in Manhattan that he franchised . I went in thinking that I know
nothing about being in business and nothing about the restaurant business at all. So, I waited for the
partners to step up and listen to the consulting chef and the people that worked for the partner's other
restaurants . Nothing was getting done to my standards and finally I took over everything , even though I
was originally only responsible for the accounting and legal. I learned how to cook, how to take orders
and I worked like a dog to learn every aspect of the business myself and i put new systems in place.
within 3 months of my deciding to take charge, we started to make money. To this day, my partner
uses my systems in his other restaurant. moral of the story is that experts and consultants don't always
know best for what I need to succeed .
So why am I telling you this :
Because my instincts have never been wrong and in the
do them, I was unsuccessful and losttime and money.
Page 3 of 5
i -- -
Page 4 of 5
MgG
Page 5 of 5
~- -
EXHIBIT F

Case 1: 11 -cv-08736-CM Document 1
'.:
MICHAEL f AILLACE
Filed 12/01 /11
11
cw
& ASSOCIATES, P.C.
Michael A. Faillace [MF-8436]

110 East 59th Street, 32"d Floor
New York, New York 10022
Telephone: (212) 317-1200
Facsimile:
(212) 317-1620
Attorneys for Plaintiffs
SOUTHERN DISTRICT OF NEW YORK
--~--------~-----------------------------------------)(
REGINO PEREZ, and CARLOS PEREZ,

individually and on behalfof others similarly
situated,
Plaintiffs,
COMPLAINT
COLLECTIVE ACTION UNDER
29 u.s.c. 216(b)
-againstECF Case
GRANNY SAYZ LLC, HEALTHALITIOUS

NYC INC. (di b/a HEALTHALICIOUS),
BENNETT ORFALY and MICHAEL
GRIMM,
Defendants.
-------------------------------------------------------)(
Plaintiffs Regino Perez and Carlos Perez, individually and on behalf of others similarly
situated (collectively the "Plaintiffs,,), by and through their attorneys, Michael Faillace &
Associates, P.C., upon their knowledge and belief, and as against Defendants Granny Sayz LLC
and Healthalitious NYC Inc. (d/b/a Healthalicious) (each a Corporate Defendant, and
-~-----'~c_ollectiYeh
the "Defendant Co orations"), and Bennett Orfaly and Michael Grimm, (together
with Defendant Corporations, the "Defendants"), allege as follows:

Case 1: 11-cv-08736-CM Document 1
Filed 12/01 /11
Page 2 of 19
NATURE OF THE ACTION

I.
Plaintiffs are former employees of Defendants Granny Sayz LLC, Healthalitious
NYC Inc., Bennett Orfaly and Michael Grimm.

2.
Defendants owned, operated, and/or controlled a health food takeout restaurant
located at 1594 2nd Avenue, New York, New York 10028, under the name Healthalicious. 3.
Upon information and belief, Individual Defendants Michael Grimm and Bennett
Orfaly , serve or served as owners, managers, principals or agents of Corporate Defendants

Granny Sayz LLC and Healthalitious NYC Inc., and, upon information and belief, these
corporate entities operate or operated the restaurant known as Healthalicious as a joint or unified
enterprise.
4.
Plaintiffs are former employees of the Defendants. They were primarily
employed as deliverymen. However, each position often entailed additional, extensive

responsibilities that were not related to the principal duties of each job.
5.
At all times relevant to this complaint, Plaintiffs worked for Defendants in excess
of forty (40) hours per week, without appropriate compensation for the hours over forty (40) per
week that they worked. Rather, Defendants failed to maintain accurate recordkeeping of their
hours worked, failed to pay Plaintiffs appropriately for any hours worked over forty (40), either
at the straight rate of pay, or for any additional overtime premium. Further, Defendants failed to
pay Plaintiffs the required "spread of hours" pay for any day in which they had to work over ten
~~~~~+(l~O}Ju1urs~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-
6.
At all times relevant to this complaint, Defendants maintained a policy and
practice of requiring Plaintiffs and other employees to work in excess of forty (40) hours per
-2-

Filed 12/01 /1 1 Page 3 of 19
week without paying them the minimum wage and overtime compensation required by federal
and state law and regulations.
7.
Defendants employed and accounted for all Plaintiffs as deliverymen in their
payroll, but in actuality their duties included greater or equal time spent in non-delivery, nontipped functions such as maintenance, cleaning, receiving and stocking incoming deliveries, and
kitchen assistance.
8.
Defendants paid these Plaintiffs at the lower tip-credited rate.
9.
However, under both the FLSA and NYLL Defendants were not entitled to take a
tip credit because Plaintiffs' non-tipped duties exceeded 20% of each workday, or 2 hours per
day (whichever was less in each day) (12 N.Y.C.R.R. 146).
10.
Upon infonnation and belief, Defendants employed the policy and practice of
disguising Plaintiffs' actual duties in payroll records to avoid paying Plaintiffs at the minimum
wage rate, and to enable them to pay Plaintiffs at the lower tip-credited rate by designating them
deliverymen instead of non-tipped employees.
11.
Defendants' conduct extended beyond the Plaintiffs to all other similarly situated
employees.
12.
Plaintiffs now bring this action on behalf of themselves, and other similarly
situated individuals, for unpaid minimum wages and overtime wages pursuant to the Fair Labor
Standards Act of 1938, 29 U.S.C. 201 et seq. ("FLSA"), and for violations of the N.Y. Labor
Law 190 et seq. and 650 et seq. (the "NYLL"), and the "spread of hours" and overtime wage
orders of the New York Commissioner of Labor codified at N.Y. COMP. CODES .
REGS. Tit.
12, 137-1.7 (2006) (herein the "Spread of Hours Wage Order"), including applicable liquidated
damages, interest, attorneys' fees, and costs.
- 3-
,_
'-~

13.
Filed 12/01 /11
Page 4 of 19
Plaintiffs seek certification of this action as a collective action on behalf of
themselves, individually, and all other similarly situated employees and former employees of the
Defendants pursuant to 29 U.S.C. 216(b).
JURISDICTION AND VENUE

14.
This Court has subject matter jurisdiction under 28 U.S.C. 1331 (federal
question) and the FLSA, and supplemental jurisdiction of Plaintiffs' state law claims under 28
U.S.C. 1367(a).
15.
Venue is proper in this District under 28 U.S.C. 139l(b) and (c) because all or a
substantial part of the events or omissions giving rise to the claims occurred in this district.
Upon information and belief, the Defendants maintain their corporate headquarters and offices
within this district. Defendants operate a health food takeout restaurant within this district.
Further, Plaintiffs were employed by Defendants in this district.
THE PARTIES
Plaintiffs
16.
Plaintiff Regino Perez ("Plaintiff Perez" or "Mr. Perez'') is an adult individual
residing in Kings County, New York. Plaintiff Perez was employed by Defendants from
approximately April 2007 until on or about March 25, 2011.
17.
Plaintiff Carlos Perez ("Plaintiff Carlos" or "Mr. Carlos") is an adult individual
residing in .Kings County, New York. Plaintiff Carlos was employed by.Defendants from
approximately March 2010 until on or about March l 0, 2011.
-4-

Case 1:11-cv-08736-CM Document 1
Filed 12/01 /11
Page 5 of 19
Defendants
18.
At all relevant times, Defendants owned, operated, and/or controlled a health food
takeout restaurant located at 1594 2nd Avenue, New York, New York 10028, under the name of
Healthalicious.
19.
Upon information and belief, Granny Sayz LLC, ("Granny Sayz") is a domestic
corporation organized and existing under the laws of the State of New York. Upon infonnation
and belief, it maintains as its principal place of business a health food takeout restaurant located
at 1594 2nd Avenue, New York, New York 10028, under the name of Healthalicious.
20.
Upon information and belief, Healthalitious NYC Inc. ("Healthalitious") is a
domestic corporation organized and existing under the laws of the State of New York. Upon
information and belief, it maintains as its principal place of business a health food takeout
restaurant located at 1594 2nd Avenue, New York, New York 10028, under the name of
Healthalicious.
21.
Defendant Michael Grimm is an individual engaging (or who was engaged) in
business in this judicial distric.t during the relevant time period. Defendant Michael Grimm is
sued individually in his capacity as an owner, officer and/or agent of the Defendant
Corporations. Defendant Michael Grimm possesses or possessed operational control over
Defendant Corporations, an ownership interest in Defendant Corporations, or controlled
significant functions of Defendant Corporations. He determined the wages and compensation of
the employees of Defendants, including Plaintiffs, and established the schedules of the
employees, maintained employee records, and had the authority to hire and fire employees.
22.
Defendant Bennett Orfaly is an individual engaging (or who was engaged) in
business in this judicial district during the relevant time period. Defendant Bennett Orfaly is
- 5-

Filed 12/01 /11
Page 6 of 19
sued individually in his capacity as an owner, officer and/or agent of the Defendant
Corporations. Defendant Bennett Orfaly possesses or possessed operational control over
Defendant Corporations, an ownership interest in Defendant Corporations, or controlled
significant functions of Defendant Corporations. He detennined the wages and compensation of
the employees of Defendants, including Plaintiffs, and established the schedules of the
employees, maintained employee records, and had the authority to hire and fire employees.
FACTUAL ALLEGATIONS
Defendants Constitute Joint Employers

23.
Defendants operate a health food takeout restaurant located in the Upper East Side
of Manhattan, under the name Healthalicious.

24.
The Individual Defendants Michael Grimm and Bennett Orfaly possess or
possessed operational control over Defendant Corporations, possess or possessed an ownership

interest in Defendant Corporations, and control or controlled significant functions of Defendant
Corporations.
25.
Defendants are associated and joint employers, act in the interest of each other
with respect to employees, pay employees by the same method, and share control over the
employees.
26.
Each Defendant possessed substantial control over the Plaintiffs' (and other
similarly situated employees') working conditions, and over the policies and practices with
- - - - - -re-speet-te-the-employment.and-compensation_oflh_e
individuals, referred to herein.
-6-
ai tiffs and all similarl situated

27.
Filed 12/01 /11
Page 7 of 19
Defendants jointly employed the Plaintiffs, and all similarly situated individuals,
and are Plaintiffs' (and all similarly situated individuals') employers within the meaning of 29
U.S.C. 201 et seq. and the NYLL.
28.
In the alternative, the Defendants constitute a single employer of the Plaintiffs
and/or similarly situated individuals.

29.
Upon information and belief, Individual Defendant Michael Grimm operates the
Defendant Corporations, as either an alter ego of himself, and/or fails to operate the Defendant
Corporations as an entity legally separate and apart from himself, by, among other things:
a. failing to adhere to the corporate formalities necessary to operate Defendant
Corporations as separate and legally distinct entities;
b. defectively forming or maintaining Defendant Corporations, by among other
things failing to hold annual meetings or maintaining appropriate corporate
records;
c. transferring assets and debts freely as between all Defendants;
d. operating Defendant Corporations for his own benefit as the sole or majority
shareholder;
e. operating Defendant Corporations for his own benefit and maintaining control
over them as closed corporations or closely held controlled entities;
f.
intermingling assets and debts of his own with Defendant Corporations;
g. diminishing and/or transferring assets to protect his own interests; and

h. other actions evincing a failure to adhere to the corporate onn.
30.
Upon information and belief, Individual Defendant Bennett Orfaly operates the
Defendant Corporations, as either an alter ego of himself, and/or fails to operate the Defendant
-7-
.,

Filed 12/01 /11
Page 8 of 19
Corporations as an entity legally separate and apart from himself, by, among other things:
a. failing to adhere to the corporate formalities necessary to operate Defendant
Corporations as separate and legally distinct entities;
b. defectively forming or maintaining Defendant Corporations, by among other
things failing to hold annual meetings or maintaining appropriate corporate
records;
c. transferring assets and debts freely as between all Defendants;
d. operating Defendant Corporations for his own benefit as the sole or majority
shareholder;
e. operating Defendant Corporations for his own benefit and maintaining control
over them as closed corporations or closely held controlled entities;
f.
intermingling assets and debts of his own with Defendant Corporations;
g. diminishing and/or transferring assets to protect his own interests; and

h. other actions evincing a failure to adhere to the corporate form.
31.
At all relevant times, Defendants were the Plaintiffs' employers within the
meaning of the FLSA and New York Labor Law. Defendants had the power to hire and fire
Plaintiffs, control the terms and conditions of employment, and determine the rate and method of
any compensation in exchange for Plaintiffs' services.
32.
In each year from 2005 to the present, the Defendants had gross annual sales of
not less than $500,000 (exclusive of excise taxes at the retail level that are separately stated).
33.
In addition, upon information and belief, the Defendants and/or their enterpnse
were directly engaged in interstate commerce. For example, numerous items that were used in
- 8-

Filed 12/01 /11
Page 9 of 19
the restaurant on a daily basis such as fruits, vegetables, bread, meat, dishwashing soaps, and
beverages were goods produced outside of the state of New York.
Individual Plaintiffs
34.
The Plaintiffs are former employees of the Defendants, who were ostensibly
employed as deliverymen. However, individual Plaintiffs were often required to perform

extensive additional duties beyond the scope of their primary job responsibilities. These
additional, non-related duties occupied a significant amount of Plaintiffs' time during each
workday.
35.
They seek to represent a class of similarly situated individuals under 29 U.S.C.
216(b).
Plaintiff Regino Perez

36.
Plaintiff Perez was employed by Defendants from approximately April 2007 until
on or about March 25, 2011.

37.
Defendants ostensibly employed Plaintiff Perez as a deliveryman.
38.
Plaintiff Perez's duties included making deliveries to customers, bringing things
up from the basement for the food preparer (approximately half an hour daily), bringing down
deliveries to the basement (approximately half an hour daily), and cleaning the restaurant
(approximately I hour and 30 minutes daily).
39.
Although Plaintiff Perez was ostensibly employed as a deliveryman, he spent
approximately 2 hours and 30 minutes on a daily basis performing non-delivery work throughout
his employment with Defendants.
40.
Plaintiff Perez regularly handled goods in interstate commerce, such as beverages
and cleaning supplies produced outside the State of New York.
-9-

41.
Filed 12/01/11
Page 10 of 19
Plaintiff Perez's work duties required neither discretion nor independent
judgment.
42.
Plaintiff Perez regularly worked in excess of 40 hours per week.
43.
From approximately April 2007 until on or about March 25, 2011, Plaintiff Perez
worked a schedule of Sundays through Fridays from l 0:00 a.m. to 9:00 p.m. (typically 66 hours
per week).
44.
Plaintiff Perez was paid at the rate of$4.65 per hour in cash from approximately
April 2007 to October 2010. He then was paid the same hourly rate in cash and check from
approximately October 2010 to February 2011.
45.
Plaintiff Perez was paid at the rate of $5.00 per hour i,n cash and check from
approximately February 2011 to on or about March 25, 2011.

46.
Although Plaintiff Perez received tips for deliveries he made to customers, he was
never notified by Defendants that his tips would be included as an offset for wages.
47.
Defendants did not account for these tips in any daily, weekly, or other
accounting of Plaintiff Perez's wages.

48.
Defendants did not provide Mr. Perez with any document or other statement
accounting for his actual hours worked, or setting forth the rate of pay for all of his hours
worked.
49.
No notification, either in the form of posted notices, or other means, was given to
Plaintiff Perez regarding overtime and wages under the FLSA and NYLL.
P/aintif!Carlos Perez
50.
Plaintiff Carlos was employed by Defendants from approximately March 2010
until on or about March 10, 2011.

- 10 -
'

Filed 12/01 /11
Page 11 of 19
51.
Defendants ostensibly employed Plaintiff Carlos as a deliveryman.
52.
Plaintiff Carlos's duties included making deliveries to customers, bringing things
up from the basement for the food preparer (approximately half an hour daily), bringing down
deliveries to the basement (approximately half an hour daily), and cleaning the restaurant
(approximately 1 hour and 30 minutes daily).
53.
Although Plaintiff Carlos was ostensibly employed as a deliveryman, he spent
approximately 2 hours and 30 minutes on a daily basis performing non-delivery work throughout
his employment
54.
Plaintiff Carlos regularly handled goods in interstate commerce, such as
beverages and cleaning supplies produced outside the State of New York.
55.
Plaintiff Carlos's work duties required neither discretion nor independent
judgment.
56.
Plaintiff Carlos regularly worked in excess of 40 hours per week.
57.
From approximately March 2010 until on or about March 10, 2011, Plaintiff
Carlos worked a schedule of Tuesdays through Saturdays from 5:00 p.m. to 12:00 a.m. and
Sundays from 10:00 a.m. to 9:00 p.m. (typically 46 hours per week).
58.
Plaintiff Carlos was paid at the rate of $4.65 per hour in cash from approximately
March 2010 to October 2010 and $4.65 per hour in cash and check from approximately October
2010 to February 2011.
59.
Plaintiff Carlos was paid at the rate of$5.00 per hour in cash and check from
approximately February 2011 to on or about March 10, 2011.

60.
Although Plaintiff Carlos received tips for deliveries he made to customers, he
was never notified by Defendants that his tips would be included as an offset for wages .
11 -

61.
Filed 12/01 /11
Page 12 of 19
Defendants did not account for these tips in any daily, weekly, or other
accounting of Plaintiff Carlos's wages.

62.
Defendant did not provide Mr. Carlos with any document or other statement
accounting for his actual hours worked, or setting forth the rate of pay for all of his hours
worked.
63.
No notification, either in the form of posted notices, or other means, was given to
Plaintiff Carlos regarding overtime and wages under the FLSA and NYLL.
Defendants' General Employment Practices

64.
Defendants regularly required the Plaintiffs to work in excess of forty (40) hours
per week without paying them the proper minimum and overtime wages or spread of hours
compensation.
65.
At all times relevant to this complaint, Defendants maintained a pol.icy and
practice of requiring the Plaintiffs and all similarly situated employees to work in excess of forty
(40) hours per week without paying them appropriate minimum wage and/or overtime
compensation, or spread of hours compensation, as required by federal and state laws.
66.
Defendants failed to post required wage and hour posters in Healthalicious, and
did not provide Plaintiffs with statutorily required wage and hour records or statements of their
pay received, in part so as to hide Defendants' violations of the wage and hour laws, and to take
advantage of Plaintiffs' relative lack of sophistication in wage and hour laws.
67.
All Plaintiffs were paid their wages wholly in cash until approximately October
2010 and in a combination of cash and check from approximately October 2010 to March 2011.
68.
Upon information and belief, these practices by Defendants were done willfully to
disguise the actual number of hours Plaintiffs (and similarly situated individuals) worked, and to
- 12 -

Filed 12/01 /11
Page 13 of 19
avoid paying Plaintiffs properly for (1) their full hours worked, (2) for overtime due, and (3) for
spread of hours pay.
69.
Defendants failed to infonn the Plaintiffs that did receive tips that Defendants
intended to take a deduction against Plaintiffs' earned wages for tip income, as required by the
NYLL before any deduction may be taken.
70.
Defendants failed to maintain a record of the tips earned by Plaintiffs for the
deliveries they made to customers.

71.
Defendants required Plaintiffs to perform the jobs of multiple employees in
addition to their primary responsibilities as deliverymen. These responsibilities included

everything from bringing specific food items to chefs from the basement, cleaning the restaurant,
receiving and accommodating incoming deliveries, cleaning tables, cleaning the windows, and
other maintenance functions. These extra responsibilities constituted a significant portion of
these Plaintiffs' hours worked.
72.
Defendants required Plaintiffs to perform the jobs of multiple employees in
addition to their primary responsibilities as deliverymen. These responsibilities included

everything from bringing specific food items to food preparers from the basement, cleaning the
restaurant, receiving and stocking incoming deliveries, cleaning tables, cleaning the windows,
and other maintenance functions. These extra responsibilities constituted a significant portion of
these Plaintiffs' hours worked.
73.
Several Plaintiffs were ostensibly employed as deliverymen (tipped employees)
by Defendants, although their actual duties included greater or equal time spent in non-delivery,
non-tipped functions such as maintenance, cleaning, receiving deliveries, and other duties.
- 13 -

74.
Filed 12/01 /11
Page 14 of 19
Defendants also failed to post at the workplace, or otherwise provide to Plaintiffs
and other employees, the required postings or notices to employees regarding the applicable
wage and hour requirements of the FLSA and NYLL.
FLSA COLLECTIVE ACTION CLAIMS
75.
Plaintiffs bring their FLSA minimum wage, overtime, and liquidated damages
claims as a collective action pursuant to FLSA Section 16(b), 29 U.S.C. 216(b), on behalf of all
similarly situated persons who are or were employed by Defendants or any of them, on or after
the date that is three years before the filing of the complaint in this case (the "FLSA Class
Period"), as employees of Defendants (the "FLSA Class").
76.
At all relevant times, Plaintiffs, and other members of the FLSA Class who are
and/or have been similarly situated, have had substantially similar job requirements and pay
provisions, and have been subject to Defendants' common practices, policies, programs,
procedures, protocols and plans of willfully failing and refusing to pay them at a one and onehalf their regular rates for work in excess of forty (40) hours per workweek, and willfully failing
to keep records required by the FLSA.
77.
The claims of Plaintiffs stated herein are similar to those of the other employees.
FIRST CAUSE OF ACTION

(VIOLATION OF THE MINIMUM WAGE PROVISIONS OF THE FLSA)
78.
Plaintiffs repeat and reallege all paragraphs above as though fully set forth herein.
79.
At all times relevant to this action, Defendants were Plaintiffs' employers within
the meaning of the Fair Labor Standards Act, 29 U.S.C. 203(d). Defendants had the power to
- 14 -
'
---

Filed 12/01 /11
Page 15 of 19
hire and fire Plaintiffs, control the tenns and conditions of employment, and detennine the rate
and method of any compensation in exchange for their employment.
80.
At all times relevant to this action, Defendants were engaged in commerce or in
an industry or activity affecting commerce.

81.
Defendants constitute an enterprise within the meaning of the Fair Labor
Standards Act, 29 U.S.C. 203 (r-s).

82.
Defendants failed to pay Plaintiffs at the applicable minimum hourly rate, in
violation of 29 U.S.C. 206(a).

83.
Defendants' failure to pay Plaintiffs at the applicable minimum hourly rate was
willful within the meaning of29 U.S.C. 255(a).

84.
Plaintiffs have been damaged in an amount to be detennined at trial.
SECOND CAUSE OF ACTION

(VIOLATION OF THE OVERTIME PROVISIONS OF THE FLSA)
85.
86.
Defendants, in violation of the FLSA, failed to pay Plaintiffs overtime
compensation at rates of one and one-half times the regular rate of pay for each hour worked in
excess of forty hours in a workweek, in violation of29 U.S.C. 207(a)(I).
87.
Defendants' failure to pay Plaintiffs and the putative FLSA Class members
overtime compensation was willful within the meaning of29 U.S.C. 255(a).
88.
Plaintiffs have been damaged in an amount to be determined at trial.
THIRD CAUSE OF ACTION

(VIOLATION OF THE NEW YORK MINIMUM WAGE ACT)
89.
Plaintiffs repeat and reallege all paragraphs above as though fully set forth herein .
15 -

90.
Filed 12/01 /11
Page 16 of 19
At all times relevant to this action, Defendants were Plaintiffs' employers within
the meaning of the N.Y. Lab. Law 2 and 651. Defendants had the power to hire and fire
Plaintiffs, control their terms and conditions of employment, and determine the rates and
methods of any compensation in exchange for their employment.
91.
Defendants, in violation of the NYLL, paid Plaintiffs less than the minimum wage
in violation ofNYLL 652(1) and the supporting regulations of the New York State Department
of Labor.
92.
Defendants' failure to pay Plaintiffs the minimum wage was willful within the
meaning ofN.Y. Lab. Law 663.

93.

FOURTH CAUSE OF ACTION
(VIOLATION OF THE OVERTIME PROVISIONS OF THE
NEW YORK STATE LABOR LAW)
94.
95.
Defendants, in violation of the NYLL and associated rules and regulations, failed
to pay Plaintiffs overtime compensation at rates of one and one-half times the regular rate of pay
for each hour worked in excess of forty hours in a workweek, in violation ofN.Y. Lab. Law
190 et seq. and supporting regulations of the New York State Department of Labor.
96.
Defendants failed to pay Plaintiffs in a timely fashion, as required by Article 6 of
the New York Labor Law.

97.
Defendants' failure to pay Plaintiffs overtime compensation was willful within the
meaning ofN.Y. Lab. Law 663.

98.
- 16-
_I
- I

Filed 12/01 /11
Page 17 of 19
FIFTH CAUSE OF ACTION

(VIOLATION OF THE SPREAD OF HOURS WAGE ORDER
OF THE NEW YORK COMMISSIONER OF LABOR)
99.
100.
Defendants failed to pay Plaintiffs one additional hour's pay at the basic
minimum wage rate before allowances for each day Plaintiff's spread of hours exceeded ten
hours in violation of New York Lab. Law 190 et seq. and 650 et seq. and the wage order of
the New York Commissioner of Labor codified at N.Y. COMP. CODES R. & REGS. Tit. 12, 1371.7 and 137-3.11.
101.
Defendants' failure to pay Plaintiffs an additional hour's pay for each day
Plaintiffs' spread of hours exceeded ten hours was willful within the meaning of New York Lab.
Law 663.
102.
Plaintiffs have been damaged in an amount to be determined at tri~I.

PRAYER FOR RELIEF
WHEREFORE, Plaintiffs respectfully request that this Court enter judgment against
Defendants:
(a)
Designating this action as a collective action and authorizing prompt issuance of
notice pursuant to 29 U.S.C. 216(b) to all putative class members, apprising them of the
pendency of this action, and permitting them promptly to file consents to be Plaintiffs in the
FLSA claims in this action;
) -Beclaring-that-Befendants-have-vielated-the-mini-mum-wagG-pre-v-isionS-Qf,anu--- - - - - - associated rules and regulations under, the FLSA as to Plaintiffs (including the prospective
collective class members);
- 17 -
,__ _

(c)
Filed 12/01/11
Page 18of19
Declaring that Defendants have violated the overtime wage provisions of, and
associated rules and regulations under, the FLSA as to Plaintiffs (including the prospective
collective class members);
(d)
Declaring that the Defendants have violated the recordkeeping requirements of,
and associated rules and regulations under, the FLSA with respect to Plaintiffs' (and the
prospective collective class members') compensation, hours, wages, and any deductions ot
credits taken against wages;
(e)
Declaring that Defendants' violations of the provisions of the FLSA were willful
as to Plaintiffs (including the prospective collective class members);
(f)
Awarding Plaintiffs (including the prospective collective class members) damages
for the amount of unpaid minimum and overtime wages, and damages for any improper
deductions or credits taken against wages under the FLSA as applicable;
(g)
Awarding Plaintiffs (including the prospective collective class members)
liquidated damages in an amount equal to 100% of their damages for the amount of unpaid
minimum and overtime wages, and damages for any improper deductions or credits taken against
wages under the FLSA as applicable pursuant to 29 U.S.C. 216(b);
(h)
Declaring that Defendants have violated the minimum wage provisions of, and
rules and orders promulgated under, the NYLL as to Plaintiffs;

(i)
Declaring that Defendants have violated the overtime wage provisions of, and
rules and orders promulgated under, the NYLL as to Plaintiffs;
G)
Declaring that Defendants have violated the Spread of Hours Wage Order of the
New York Commission of Labor as to Plaintiffs;

(k)
Declaring that the Defendants have violated the recordkeeping requirements of

- 18 -
_,_I
I ' .o -----

Case 1: 11-cv..:08736-CM Document 1
Filed 12/01 /11
Page 19 of 19
the NYLL with respect to Plaintiffs' compensation, hours, wages; and any deductions or credits
taken against wages;
(1)
Declaring that Defendants' violations of the New York Labor Law and Spread of
Hours Wage Order were willful _as to Plaintiffs;

(m)
Awarding Plaintiffs damages for the amount of unpaid minimum and overtime
wages, damages for any improper deductions or credits taken against wages, as well as awarding
spread of hours pay under the NYLL as applicable;
(n)
Awarding Plaintiffs liquidated damages in an amount equal to twenty-five percent
(25%) of the total amount of minimum vvage, spread of hours pay, and overtime compensation
shown to be owed pursuant to NYLL 663 as applicable;
(o)
Awarding Plaintiffs (including the prospective collective class members) pre-
judgment and post-judgment interest as applicable;

(p)
Awarding Plaintiffs (including the prospective collective class members) the
expenses incurred in this action, including costs and attorneys' fees; and
(q)
All such other and further relief as the Court deems just and proper.
Dated: New York, New York
\ '":d-- '-..-""'
MICHAEL FAILLACE & ASSOCIATES, P.C.
By:
Michael Faillace [MF-8436]
110 East 59 111 Street, 32nd Floor
w York New York I 0022
Telephone: (212) 317-1200
Facsimile: (212) 317-1620
Allorneys.for Plaint{ffs
- 19 -
EXHIBIT G
; I
I ---
-1
, __ -- -
- -

Filed 09/27/12 Page 1 of 17

SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------x:
REGINO ,PEREZ, et. al.,
Plaintiffs,
11 Civ. 08736-CM
vs.
GRANNY SAYZ LLC, et. al.,
Defendants.
---------------------------------------------------------------x:
DEFENDANT MICHAEL GRIMM'S ANSWER AND DEFENSES TO
PLAINTIFFS' COMPLAINT
Defendant Michael Grimm (Defendant), hereby submits this Answer and Defenses to the
Complaint ("Complaint") of Plaintiffs Regino Perez et. al. ("Plaintiffs"), in accordance with the
numbered paragraphs thereof, as follows:
1.
Ex:cept to admit that Plaintiff Regino Perez was employed by one or more of the
corporate defendants for a period of time, and to deny that he has sufficient knowledge or
information to admit or deny whether Plaintiff Carlos Perez was ever employed by any
1
individual or entity, Defendant denies the allegations contained in Paragraph 1 of the Complaint.
2.
Ex:cept to admit that Granny Sayz LLC operated a health food restaurant located
at 1594 2nd Avenue, New York, New York under the name Healthalidous, Defendant denies the
allegations contained in Paragraph 2 of the Complaint.
3.
Paragraph 3 of the Complaint states a legal conclusion to which no response is
required. To the ex:tent a response is required Defendant denies the allegations contained in
Paragraph 3 of the Complaint.
.. I
-~
~1;;;o,....._~ -~
--~--=- --~ J
I-
0'

4.
Except to admit that Plaintiff Regino Perez was employed as a delivery person by
one or more of the corporate defendants for a period of time, and to deny that he has sufficient
knowledge or information to admit or deny whether Plaintiff Carlos Perez was ever employed by
any individual or entity, Defendant denies the allegations contained in Paragraph 4 of the
Complaint.
5.
Defendant denies the allegations contained in Paragraph 5 of the Complaint.
6.
7.
8.
required. To the extent a response is required Defendant denies the allegations contained in
9.
IO.
11 .
Except to aver that he does not have sufficient knowledge or information to admit
or deny any allegations regarding the period from May of2009 to the present, Defendant denies
the allegations contained in Paragraph 11 of the Complaint.
12.
Paragraph 12 of the Complaint states legal conclusions to which no response is
required. To the extent a response is required Defendant denies that he has sufficient knowl~dge
or information to admit or deny why Plaintiffs brought this action and whether they do so for any
other individuals, denies the remaining allegations contained in Paragraph 12 of the Complaint,
and denies that the Plaintiffs are entitled to any damages of any kind or nature.
""'"....,-;
= ....
I-
--
-'>?

13.
required. To the extent a response is required Defendant denies that he has sufficient knowledge
or information to admit or deny whether Plaintiffs seek certification of this action and whether
they do so for any other individuals, and denies the remaining allegations contained in Paragraph
13 of the Complaint.
14.

I
15.
16.
Defendant denies knowledge or information sufficient to form a belief as to
Plaintiff Regino Perez' current place of residence. Defendant denies the remaining allegations
contained in Paragraph 16 of the Complaint.
17.
Defendant denies that he has any information about Plaintiff Carlos Perez and
therefore denies having sufficient knowledge or information to admit or deny the allegations in
18.
Except to admit that Granny Sayz LLC operated a health food restaurant located
at 1594 2nd Avenue, New York, New York under the name Healthalicious, Defendant denies the
19.
Except to admit that Granny Sayz LLC was a New York domestic corporation
which operated as a health food restaurant located at 1594 2nd Avenue, New York, New York
,--:
~'""-
'""":
------.,,._
-'-~--
i ----
_-::-:-~

under the name Healthalicious, Defendant denies having sufficient knowledge or information to
admit or deny the allegations in Paragraph 19 of the Complaint.
20.
Except to admit that Healthalicious operated as a health food restaurant located at
1594 2nd Avenue, New York, New York, Defendant denies having sufficient knowledge or
information to admit or deny the allegations in Paragraph 19 of the Complaint.
21.
22.
Defendant denies having sufficient knowledge or information to admit or deny the
allegations in Paragraph 22 of the Complaint.

23.
24.
25 .
26.

27.
Filed 09/27 /12 Page 5 of 17
28.
29.
30.
Defendant denies having sufficient knowledge or information to admit or deny the
allegations in Paragraph 30 of the Complaint.

31.
32.
Except to aver that he has sufficient knowledge or information to admit or deny
any allegations regarding the period from May of 2009 to the present, Defendant denies the
33.
34. Except to deny that he has any information about Plaintiff Carlos Perez and therefore
denies having sufficient knowledge or information to admit or deny the allegations in Paragraph
- - I i--Case 1:14-cr-00248-PKC-RML Document 94-7 Filed 06/19/15 Page 7 of 18 PageID #: 587

~-
Filed 09/27 /12 Page 6 of 17
34 of the Complaint about Carlos Perez, Defendant denies the allegations contained in Paragraph
34 of the Complaint.
35.
or information to admit whether Plaintiffs seek to represent anyone else, including a class of
individuals.
36.
Except to admit that Plaintiff Regino Perez was employed as a delivery person by
one or more of the corporate defendants for a period of time, Defendant denies that he has
sufficient knowledge or information to admit or deny the remaining allegations contained in
37.
38.
Except to admit that Plaintiff Regino Perez' duties including making deliveries
and occasionally assisting in moving items including deliveries, Defendant denies the allegations
39.
40.
41.
42.
Defendant denies that he has sufficient knowledge or information to admit or
deny the allegations contained in Paragraph 42 of the Complaint.
... --
,.I
--'?.:.
t ':.
.:-
J_.-. --
..~~....:..~
-I
I ,

43.
Filed 09/27/12 Page 7of17

44.

45.

46.
47.

48.
49.
50.
"
51.
(
52.
therefore denies having sufficient know,ledge or information to admit or deny the allegations in
53.
J.
I , _ -
i - ":
I -
-----

54.
55 .
56.
57.
58.
59.
60.
- j 1-
---- --- ~-- __,.,_. I
I ,_ -I
- I - - -- ---
61.
62.
63.
64.
65.
66.
67.

68.
69.
70.
71.
72.
73.
74.
75.

Filed 09/27 /12 Page 10 of 17
.or infonnation to admit or deny why Plaintiffs brought this action and whether they do so for any
other individuals.
76.
77.

FIRST CAUSE OF ACTION
78.
Defendant repeats and incorporates by reference his responses to Paragraphs 1
through 77 of the Complaint as if fully stated herein.

79.
80.
81.
82.
83.
....-
.-~-
..,-- - -=---~-
~-.,_-
I
I
84.
Filed 09/27 /12 Page 11 of 17
required. To the extent a response is required Deferidant denies the allegations contained in
Paragraph 84 of the Complaint and denies that Plaintiffs are entitled to any damages of any kind
or nature.
SECOND CAUSE OF ACTION
85.
Defendant repeats and incorporates by reference his responses to Paragraphs I
through 84 of the Complaint as if fully stated he.rein.

86.
87.
87.
Paragraph 87 of the Complaint states legal conclusions to which no
response is required. To the extent a response is required Defendant denies the allegations
88.
Defendant denies the allegations contained in Paragraph 88 of the Complaint and
denies that Plaintiffs are entitled to any damages of any kind or nature.
THIRD CAUSE OF ACTION
89.

86.
--- I
- ----=~-/
' I
..:;'
'c~-~....,,__.-
...
-~
I -- '
-~-""=-
90.
Filed 09/27 /12 Page 12 of 17
91.
92.
93.
FOURTH CAUSE OF ACTION
94.

95 .
96.
97.
j. ;--::__
-I . -- .

98.
FIFTH CAUSE OF ACTION
99.
through 98 of the
100.
Compl~int
as if fully stated herein.
Paragraph I 00 of the Complaint.
101.
Paragraph I 01 of the Complaint.
102.
PRAYER FOR RELIEF
Defendant denies that Plaintiffs are entitled to any relief of any kind from Defendants,
including the remedies described and the relief requested in the Prayer for Relief, including in
sub-paragraphs (a) through (q) inclusive.
JURY DEMAND
Defendant objects to any demand for trial by jury to the extent Plaintiff seeks equitable
remedies, as those remedies are to be decided by the Court.
GENERAL DENIAL
Defendant denies each and every allegation in the Complaint not specifically admitted
herein.
':;:
I.
1--
=-

Case 1:11-cv-08736-CM Document21
DEFENSES
At this time, Defendant asserts the following defenses to the claims in the Complaint:
FIRST DEFENSE
(Failure to State a Cause of Action)
1.
Neither the Complaint as a whole nor the causes of action alleged therein state
facts sufficient to constitute a cause of action upon which relief can be granted against
Defendant.
SECOND DEFENSE
(Statutes of Limitations)
2.
The claims of Plaintiff and of each putative class member are barred in whole or
in part by any and all applicable statutes of limitations, including, but not limited to 29 U.S.C.
section 255(a).
THIRD DEFENSE
(Accord and Satisfaction)
3.
in part by the doctrine of accord and satisfaction, and payment.

FOURTH DEFENSE
(Release and Waiver of Claims)
4.
in part because such claims have been waived, discharged, and/or released.
FIFTH DEFENSE
(Laches)
5.
The claims of Plaintiff and of eacn putative c~e-barredin-whote-or-------
in part by the doctrine of laches.

SIXTH DEFENSE
(Unclean Hands)
1. , _ -

6.
Filed 09/27/12 Page 15 of 17
in part by the doctrine of unclean hands.
SEVENTH DEFENSE
(Estoppel)
7.
in part by the doctrine of estoppel.
EIGHTH DEFENSE
(Failure to Meet Requirements for Collective Action)
8.
Plaintiff and/or the putative class members do not meet the requirements of 29
U.S.C. Section 216(b), and thus this action cannot be maintained as a collective action.
NINTH DEFENSE
(Not Appropriate for Collective Action)
9.
The types of claims alleged in the Complaint on behalf of Plaintiff and the
purported class and subclass are matters in which individual questions predominate and,
accordingly, Plaintiff fails to satisfy any of the prerequisites for collective certification as to any
cause of action.
TENTH DEFENSE
(Inadequate Representative)
10.
The Complaint fails to the extent it asserts a collective action because Plaintiff i ;
not an adequate representative of the purported class or any subclass.
ELEVENTH DEFENSE
(Setoff and Recoupment)
- - - - - - - - -1Hll-..,. -If-aB-damag-eS-ha.v-e-beensustainedhy_Elaintifand/or any_m~em

~
h~
er.__o
=f.__t=
h=
e _ _ _ _ _ _ _ _ __
putative collective action, although such is specifically denied, Defendant is entitled under the
equitable doctrine of setoff and recoupment to a credit for all amounts paid to Plaintiffs,
including for all tips, bonuses, loans and other payments they received.
- I , '"
---~~
-- -

Filed 09/27/12 Page 16 of 17
TWELFTH DEFENSE
(Conduct Reasonable and In Good Faith/Not Willful)
12.
If Defendant is found to have failed to pay Plaintiff, or any putative collective
action member, any amount due, which allegations Defendant denies, Defendant acted at all
times on the basis of a good faith and reasonable belief that Defendant's conduct was not willful
within the meaning of any federal wage and hour law.
THIRTEENTH DEFENSE
(Acts or Omissions Made in Good Faith)
13.
As a separate defense to the Complaint, Defendant contends that neither Plaintiff
nor any putative collective action member is entitled to liquidated damages because any alleged
act or omission by Defendant was in good faith and Defendant had reasonable grounds for
believing that its conduct did not violate any wage and hour laws.
RESERVATION OF RIGHTS
Defendant reserves the right to assert such additional defenses that may appear and prove
applicable during the course of this litigation.
Dated: Febrnary 28, 2012

New York, New York

Case 1:11-cv-08736-CM Document21
CERTIFICATE OF SERVICE
I hereby ce1tify that I caused to be served a trne and correct copy of Defendant Michael
Grimm's Answer and Defenses to Plaintiffs Complaint, by regular mail this 28th day of
February, 2012 on:
Michael Faillace
Michael Faillace & Associates, P.C.
110 East 59th Street, 32nd Floor
New York, NY 10022
!..-__
~:-
EXHIBITH
.
I'
METRO
SI pol's partner is
capo's good pal
October 8, 2012 I 4:0Dam
By Mitchel Maddux
SUSP ICIOUS: Shady restaurant owner Bennett Orfaly went into business with Staten Island Rep.
Michael Grimm (above). a former FBI agent.
Staten Island Rep. Michael Grimm

investigated th e Gambino clime family as an
FBI agent - before opening a restaumnt with
a business partner so close to one of the mob
clan's capos, he considers him an "uncle,"
according to sources and court documents.
Bennett Orfaly (Gregory P. Mango)
The first-term Republican's ex-business

partner, Bennett Orfaly, regularly travels to
the federal lockup in Fort Dix, NJ, to visit his
pal Anthony "Fat Tony" Morelli, Brooklyn
SUSPICIOUS : Shady restaurant owner Bennett Orfaly (left) went into business with Staten
Island Rep. Michael Grimm (right), a former FBI agent. (
)
federal prosecutors said.

Morelli's mob assignments included overseeing the family's investments in
pornography, labor racketeering and illegal dumping, law-enforcement sources said.
tatl,-GmnbimrbmsJ'o'hlrtYottt-purlrimirrcharge-ofthe-t.rmily's-Hoiid:Hacl{ets, 0ne- somce said.
Morelli, who is
source said.
sen~ng
time on several com~ctions, is "like an uncle" to Orfaly, another
Asked about his Gambino connections, Orfaly declined to comment. Grimm is under
investigation for alleged fund-raising irregularities in his 2010 campaign.
As an FBI a_~ent , (}ri1!1m wa~~esp011sible for keep_i_n_~ t:~bs on Joh.n _Go!ti's ~i:_other
Peter. He also worked undercover on lffi~eJ1jYEf~il!'<f~lfiltiN'11'1ijSJpft1i~@~
soldier Greg DePalma.
after NJ bus crash
Other characters in the bizarre saga include:

*An Israeli named Ofer Bi ton, who until recently was jailed on an a charge of
immigration fraud.
He was released to house arrest on a $i.5 million bond after Oifaly posted his stake in
several restaurants co-owned with Biton, according to court papers.
Biton's lawyer, .John Meringolo, says the feds are threatening his client with more
serious charges unless he testifies against Grimm in the fund-raising probe.
* A mystic rabbi named Yoshiyahu Yosef Pinto, who heads an Upper East Sicle.
congregation.
Its members are among those suspected of making illegal donations to Grimm. Bi ton
was once a top aide to the rabbi.
Grimm, an ex-Marine, insists his campaign is clean and denies knowing anything about
his ex-partner's mob associations, said his lawyer, William McGinley.
Before his election to Congress in 2010, Grimm and Orfaly had been partners in an
Upper East Side eatery, Healthalicious.
McGinley says that prior to making his run, Grimm sold his share of that business to
Otfaly.
But three sources familiar "~th the ongoing probe, told Th e Post the purchaser was
Biton. Either way, Biton now 0"~1 s Healthalicious outright, sources said - and he is
partners with Orfaly in several Manhattan pita restaurants.
As far as Bi ton goes , prosecutors claim that a decade ago, he was a member of an
ecstasy ring in California and was 'A-iretapped talking to a senior Israeli organizedcrime associate. Bi ton was never charged with any drug crime.
In addition to his problems with the feds, Grimm also faces a civil lawsuit by
Healthalici011s workers, alleging wage violations when he was part-owner.
A lawyer for the workers, Michael Faillace, said they settled with Orfaly, but Grimm
asked that an agreement \\~th him be postponed until after the election.
Grimm has denied his employees were cheated out of overtime.
f-
EXHIBIT I
m11e.Nt\tJ !tJo,rk athut~
I http://nyti.ms/1 rES04n
N.Y. I REGION
Grimm, Staten Island Lawmaker, Is Charged

With Fraud
By STEPHANIE CLIFFORD APRIL 28,
2014
For more than two years, federal investigators delved into the background of
Representative Michael G. Grimm, a Republican from Staten Island now in his
second term. They looked into his campaign finances, and examined the potential
mob ties of one business associate and the illegal doings of another.
On Monday, Mr. Grimm was indicted in Federal District Court in Brooklyn, but
the charges arose not from his career in Congress, but from his earlier one - as a
health-food restaurateur.
In a 20-count indictment, Mr. Grimm was accused of underreporting wages and
revenue while running an Upper East Side restaurant, essentially keeping two sets of
records. The fraudulent records, prosecutors said, went to his accountant, leading to
inaccurate tax forms being filed with the government.
Pros~cutors say that Mr. Grimm concealed more than $1 million in gross
receipts for the restaurant, and failed to report hundreds of thousands of dollars in
employee wages, thus fraudulently lowering his federal and state tax payments.
According to the indictment, unsealed on Monday, he also lied under oath in a
deposition taken in January 2013, while he was a member of Congress.
Mr. Grimm was charged with, among other things, perjury, wire fraud, mail
fraud, obstruction of justice, employment of illegal immigrants, obstructing and
impeding tax laws, and conspiracy to defraud the United States.
Mr. Grimm, 44, is a former Federal Bureau of Investigation agent and Marine
who emphasized his upright image while he ran for Congress, where he represents
Staten Island and parts of Brooklyn. He surrendered to F.B.I. agents early on
Monday, and pleaded not guilty in court later in the day.
He was released on $400,ooo bail, secured by his house on Staten Island, and
left the courthouse saying he would return to work and to his campaign for a third
term.
"After two and a half years of just being deluged and bombarded with allegation
after allegation after allegation, I haven't been able to fully defend myself," Mr.
Grimm said at a news conference after his arraignment. While he declined to
comment onthe charges, he said he would "fight tooth and nail" against them.
Mr. Grimm also informed the House speaker, John A. Boehner, that he was
stepping aside from his position on the Financial Services Committee. A spokesman
for the speaker said Mr. Boehner believed that the move was "appropriate under the
circumstances."
The indictment creates potential problems for the Republican Party, which has
backed Mr. Grimm, the only Republican in the New York City delegation, in his bid
for a third congressional term this November against the Democratic challenger,
Domenic M. Recchia Jr. The deadline to turn down his party's nomination passed
two weeks ago, meaning that Mr. Grimm is highly likely to stay on the ballot no
matter what happens with the federal case.
Though the investigation, by the United States attorney's office for the Eastern
District of New York and the F.B.I., began by focusing on fund-raising, it took a turn
midcourse to focus on the restaurant. Two fund-raisers on Mr. Grimm's campaign
have been charged: Diana Durand of Houston, who was accused of illegally giving
more than $10,000 to his campaign, and Ofer Biton, who was being investigated to
determine whether he had helped Mr. Grimm get around campaign-donation limits.
Mr. Biton has pleaded guilty to visa fraud charges.
Mr. Biton and another man, Wayne Muratore, a certified public accountant
from Brooklyn, were involved in both Mr. Grimm's 2010 campaign and his
restaurant business, providing a possible link that could have turned investigators
from looking at the campaign to looking at Healthalicious. Mr. Muratore has not
been charged.
,_
r----
Loretta E. Lynch, the United States attorney for the Eastern District of New
York, did not detail why the investigation had changed. "Whenever there's an
investigation into someone's business activities, it is usually very broad-reaching,"
she said, adding that a larger investigation was continuing.
But, she said, Mr. Grimm had a sophisticated understanding of the law and
finance, thanks in part to his background as an F.B.I. agent, where he did undercover
work on Wall Street.
An F.B.I. assistant director, George Venizelos, said revisiting Mr. Grimm's F.B.I.
work, given the charges, is "something we definitely will look at."
At the heart of Mr. Grimm's indictment was a "very simple scheme," Ms. Lynch
said. After leaving the F.B.I. in 2006, Mr. Grimm opened Healthalicious, a salad-and
-wrap restaurant on Second Avenue near East 83rd Street.
Between 2007 and 2010, the indictment says, Mr. Grimm paid "a significant
portion" of employees' wages in cash, with many workers receiving about half their
pay through direct deposit or check, and the other half in cash. He kept two sets of
payroll records, and concealed the electronic spreadsheets that detailed what he was
actually paying from payroll-processing companies and an accountant, the
indictment says. That led to the payroll companies' inadvertently filing erroneous tax
forms, since the forms were based on the fake records.
In some cases, the indictment says, Mr. Grimm paid employees entirely in cash
so that the payroll processors had no records of those workers at all.
The indictment describes how, from March 2010 to June 2010, Mr. Grimm sent
emails to the restaurant manager that had "excerpts from the second set of payroll
records, detailing how much cash each Healthalicious employee should receive for a
particular week." Those emails, as well as the mailed tax returns that were said to be
based on inaccurate information, resulted in the wire and mail fraud charges.
The concealment, perjury and obstruction of justice charges come in connection
with a January 2013 deposition given by Mr. Grimm as part of a lawsuit by two
former Healthalicious employees who accused him of not paying them minimum
wages or overtime.
The indictment accuses Mr. Grimm oflying under oath about whether he paid
employees in cash, whether he corresponded through an email account regarding the
Healthalicious business, and whether he still had access to such an account.
!~
Speaking after his arraignment, Mr. Grimm described the investigation as a

"vendetta" and a "witch hunt" meant to "assassinate my character and remove me
from office."
"I will not abandon my post," he said, "and then, on top of all that, I have an
election to win."
Mr. Grimm's comments came after a brief, but bizarre, chase scene outside
court. His lawyers, Elizabeth S. Kase and John L. Kase of Kase & Druker, had
indicated he would talk to the news media, but when the congressman left the
courthouse, he ignored dozens of cameras and the shouts of reporters, and walked
away.
Mr. Grimm would be talking in 15 minutes, the lawyers explained, but at a
location of their making: a lectern they had set up in front of a nearby veterans'
plaza, the lectern decorated with the Great Seal of the United States.
Alison Leigh Cowan and William K. Rashbaum contributed reporting.
A version of this article appears in print on April 29, 2014, on page A 19 of the New York edition with the
headline: Grimm, Staten Island Lawmaker, Is Charged With Fraud.
2015 The New York Times Company

USA V Michael Grimm - US Government Recommendation On Sentencing

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

USA V Michael Grimm - US Government Recommendation On Sentencing

Încărcat de

Drepturi de autor:

Formate disponibile

Case 1:14-cr-00248-PKC-RML Document 94 Filed 06/19/15 Page 1 of 14 PageID #: 514

U.S. Department of Justice

United States Attorney

271 Cadman Plaza East

June 19, 2015

United States v. Michael Grimm

Dear Judge Chen:

Offense Conduct and the Indictment

Case 1:14-cr-00248-PKC-RML Document 94 Filed 06/19/15 Page 2 of 14 PageID #: 515

The Honorable Pamela K. Chen

Case 1:14-cr-00248-PKC-RML Document 94 Filed 06/19/15 Page 3 of 14 PageID #: 516

The Honorable Pamela K. Chen

The Defendants Guilty Plea and Stipulation of Facts

Case 1:14-cr-00248-PKC-RML Document 94 Filed 06/19/15 Page 4 of 14 PageID #: 517

The Honorable Pamela K. Chen

Sentencing courts have the authority to fashion a reasonable and appropriate

The Applicable Guidelines Range

Case 1:14-cr-00248-PKC-RML Document 94 Filed 06/19/15 Page 5 of 14 PageID #: 518

The Honorable Pamela K. Chen

Base Offense Level

Role Enhancement Adjustment

Section 3B1.1 of the Sentencing Guidelines provides for an increase in a

Case 1:14-cr-00248-PKC-RML Document 94 Filed 06/19/15 Page 6 of 14 PageID #: 519

The Honorable Pamela K. Chen

Case 1:14-cr-00248-PKC-RML Document 94 Filed 06/19/15 Page 7 of 14 PageID #: 520

The Honorable Pamela K. Chen

Case 1:14-cr-00248-PKC-RML Document 94 Filed 06/19/15 Page 8 of 14 PageID #: 521

The Honorable Pamela K. Chen

Adjustment for Obstruction of Justice

Section 3C1.1 of the Sentencing Guidelines provides for a two-level increase

Case 1:14-cr-00248-PKC-RML Document 94 Filed 06/19/15 Page 9 of 14 PageID #: 522

The Honorable Pamela K. Chen

The Defendants False Testimony Was Material

Case 1:14-cr-00248-PKC-RML Document 94 Filed 06/19/15 Page 10 of 14 PageID #: 523

The Honorable Pamela K. Chen

The Defendant Intended to Obstruct Justice

Grimms perjury in the deposition was also intended to obstruct justice.

Case 1:14-cr-00248-PKC-RML Document 94 Filed 06/19/15 Page 11 of 14 PageID #: 524

The Honorable Pamela K. Chen

Section 3553(a) Analysis

Nature and Circumstances of the Offense

Case 1:14-cr-00248-PKC-RML Document 94 Filed 06/19/15 Page 12 of 14 PageID #: 525

The Honorable Pamela K. Chen

History and Characteristics of the Defendant

Grimms history and characteristics also favor a sentence within the

Need to Promote Respect for the Law, Provide

Moreover, a sentence of incarceration within the Guidelines range would be

Case 1:14-cr-00248-PKC-RML Document 94 Filed 06/19/15 Page 13 of 14 PageID #: 526

The Honorable Pamela K. Chen

Case 1:14-cr-00248-PKC-RML Document 94 Filed 06/19/15 Page 14 of 14 PageID #: 527

The Honorable Pamela K. Chen

Defense Counsel (by ECF)

Case 1:14-cr-00248-PKC-RML Document 94-1 Filed 06/19/15 Page 1 of 7 PageID #: 528

Case 1:14-cr-00248-PKC-RML Document 94-1 Filed 06/19/15 Page 2 of 7 PageID #: 529

UNITED STATES OF AMERICA

- against MICHAEL GRIMM,

FACTUAL BASIS FOR GUILTY PLEA

From 2007 through 2009, MICHAEL GRIMM was a member in

From 2007 to 2010, MICHAEL GRIMM under-reported to federal and

Case 1:14-cr-00248-PKC-RML Document 94-1 Filed 06/19/15 Page 3 of 7 PageID #: 530

Specifically, MICHAEL GRIMM under-reported the gross receipts

Case 1:14-cr-00248-PKC-RML Document 94-1 Filed 06/19/15 Page 4 of 7 PageID #: 531

Further, as a result of the above, MICHAEL GRIMM caused false

- [))-1 alsQ0c:1s_ ttilnkingthll_f!1ay~e-~~_f~rl_L!~ the -~lt_:Gril! e.rnpioye~ ~andbookT6Thealfhalicfous~ we-wTlfjUst