Case 1:14-cr-00248-PKC-RML Document 100 Filed 06/30/15 Page 1 of 18 PageID #: 783

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK
----------------------------------------------------X
UNITED STATES OF AMERICA,

Cr. No. 14-00248 (PKC)

vs.
MICHAEL GRIMM,
Defendant.
----------------------------------------------------X

MICHAEL GRIMMS MEMORANDUM IN RESPONSE TO GOVERNMENTS

SENTENCING MEMORANDUM

Respectfully submitted by:

Daniel Lawrence Rashbaum
Jeffrey A. Neiman
Michael A. Pineiro
MARCUS NEIMAN & RASHBAUM LLP
2 South Biscayne Boulevard, Suite 1750
Miami, Florida 33131
Telephone: (305) 400-4260
Stuart Kaplan
Joseph Sconzo
KAPLAN SCONZO & PARKER, P. A.
3399 PGA Boulevard, Suite 180
Palm Beach Gardens, Florida 33410
Telephone: (561) 296-7900
Attorneys for Defendant Michael Grimm

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TABLE OF CONTENTS
I.

INTRODUCTION.1

II.

THE GOVERNMENTS ARGUMENTS REGARDING THE

GUIDELINES ENHANCEMENTS ARE UNFOUNDED...2
A. The Government Fails to Show That An Obstruction of Justice
Enhancement is Appropriate..2
B. The Government Fails to Show a Role Enhancement
Adjustment is Proper..6

III.

THE COURT SHOULD VARY DOWNWARD TO A NON-CUSTODIAL

SENTENCE...8
A. Nature and Circumstance of the Offense....9
B. Mr. Grimms History and Characteristics ....10
C. The Need for the Sentence Imposed.12
D. The Government Does Not Address the Disparity a Custodial Sentence
Would Create...13

IV.

CONCLUSION....14

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TABLE OF AUTHORITIES
Cases
Gall v. United States, 552 U.S. 38 (2007) .................................................................................... 10
Pepper v. United States, 562 U.S. 476 (2011) .............................................................................. 14
Perez v. Grimm, et al., No. 11-cv-8736 (S.D.N.Y.) ....................................................................... 3
Reyes v. Manuel Perez, et al., No. 7-cv-196-RJS (S.D.N.Y.) ........................................................ 7
Rodriguez v. Juan Manuel Perez, et al., No. 13-cv-463-DCF (S.D.N.Y.) ..................................... 7
United States v. Adelson, 441 F.Supp.2d 506 (S.D.N.Y. 2006) ................................................... 10
United States v. Chivers, 488 Fed.Appx. 782 (5th Cir. 2012) ................................................ 3, 4, 5
United States v. Fiore, 381 F.3d 89 (2d Cir. 2004) ........................................................................ 3
United States v. Greenfield, 44 F.3d 1141 (2d Cir. 1995) .............................................................. 8
United States v. Zagari, 111 F.3d 307 (2d Cir. 1997) .................................................................... 7
Statutes
18 U.S.C. 3553 .................................................................................................................... passim
United States Sentencing Guidelines
3B1.1 ............................................................................................................................ 5, 6, 10, 12
3C1.1 ................................................................................................................................ 2, 3, 4, 5

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Michael Grimm, through his counsel, respectfully submits this memorandum in response
to the Governments letter to the Court regarding Mr. Grimms sentencing on July 17, 2015.
I.

INTRODUCTION
In his sentencing memorandum, Michael Grimm showed this Court why he should receive

a sentence of probation for his offense. Specifically, he demonstrated that a multitude of factors
including his exemplary and upstanding background; his life of service to this country (which
includes combat on the front lines); his remorsefulness; the punishment that he has already
suffered; the hardship that would be endured by his mother and sister for whom he is the sole
caretaker; and the prevalence of probationary sentences for similar defendants in similar cases
warrant a downward variance to a non-custodial sentence.

Conversely, in its sentencing

submission, the Government argues for a Guidelines range sentence of 24-30 months of
imprisonment. For several reasons, however, the Governments papers do not support or justify
its recommendation and fail to meaningfully refute Mr. Grimms showing.
First, the Government argues for unsupported Guidelines enhancements by proffering an
incomplete version of the pertinent facts and promulgating strained interpretations of the law. The
Court should deny those enhancements because they are unsupported. Second, the Government
asks for a Guidelines sentenceand argues against a downward variancebased upon a
tendentious and skewed discussion of the sentencing factors under 18 U.S.C. 3553(a).
Specifically, it sensationalizes a rather unexceptional and common tax violation, and, more
importantly, glosses over key aspects of Mr. Grimms background that strongly warrant a
downward variance to a non-custodial sentence. Third, and possibly most significantly, the
Governments memorandum altogether omits from discussion one of the overriding factors that

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counsels for a non-custodial sentencethat in this District and others, similar defendants
convicted of similar or worse tax offenses consistently receive non-custodial sentences.
Taking all this into consideration, the Court should not accord significant weight to the
Governments memorandum, for its description of this caseand of Mr. Grimmcannot be relied
upon in reaching a fully-informed sentencing decision. It is Mr. Grimms submission that properly
provides the Court with a full view of his life, and with an accurate portrayal of who he truly is:
an individual who has dedicated his life to others and to serving his country, who made a mistake
his first ever criminal offensethat he very much regrets, that has humbled him, and for which he
will be paying the rest of his life. For the reasons detailed in his memorandum, Mr. Grimm
respectfully asks for the leniency of this Court in imposing a sentence of probation, and submits
that a full consideration of the 3553(a) sentencing factors warrants such leniency.
II.

THE GOVERNMENTS ARGUMENTS REGARDING THE GUIDELINES

ENHANCEMENTS ARE UNFOUNDED
As shown in his sentencing memorandum, Mr. Grimms Guidelines range should be 12-18

months because neither an aggravating role enhancement under 3B1.1 of the Sentencing
Guidelines nor an obstruction of justice enhancement under 3C1.1 are appropriate in this case.
See Grimm Sentencing Memorandum (the Memorandum) at 22-31.
A.

The Government Fails to Show That An Obstruction of Justice Enhancement

Is Appropriate

Mr. Grimm should not receive a 3C1.1 obstruction of justice enhancement based on
deposition testimony he gave in January 2013 in a private civil action preceding and unrelated to
the investigation of the offense conduct. See Memorandum at 27-31. In its memorandum, the
Government pushes for this enhancement by proffering an unfounded interpretation of 3C1.1.

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However, as shown below, to impose a 3C1.1 enhancement under these circumstances would
massively stretch and distort the well-circumscribed boundaries of the enhancement.
In pertinent part, the 3C1.1 enhancement requires that the defendant willfully obstructed
or impeded, or attempted to obstruct or impede, the administration of justice with respect to the
investigation . . . of the instant offense of conviction. See Guidelines 3C1.1 (emphasis added).
Where the allegedly obstructive conduct occurs before the start of the investigation of the offense
conduct, 3C1.1 applies if the conduct was purposefully calculated, and likely, to thwart the
investigation . . . of the offense of conviction. See 3C1.1, Application Note 1 (emphasis added).
Although the enhancement can apply when a defendant falsely testifies in a prior civil proceeding,
see 3C1.1, Application Note 4(B), the connection between the prior civil proceeding and criminal
investigation must be quite close. See United States v. Fiore, 381 F.3d 89, 95 (2d Cir. 2004).
More precisely, there must be some existing or expected connection between the prior civil
proceeding and the later government-led investigation. See United States v. Chivers, 488
Fed.Appx. 782, 787 (5th Cir. 2012) (emphasis added). This is why the 3C1.1 enhancement
generally applies to prior civil enforcement actions or other regulatory proceedings brought by a
government entity that result in subsequent criminal investigations. See Memorandum at 30.
In his Memorandum, Mr. Grimm clearly demonstrates that his January 2013 deposition in
Perez v. Grimm, et al., No. 11-cv-8736 (S.D.N.Y.), a private action under the Fair Labor Standards
Act, 29 U.S.C. 201 et seq., brought by Healthalicious employees for minimum and overtime
wage violations (the Civil Action), could not have been purposefully calculated to thwart the
investigation of the instant offense. The Civil Action was a stand-alone private lawsuit that had
nothing to do with whether Mr. Grimm had violated the tax laws: the civil allegations of wage
underpayments by the plaintiffs were completely distinct and apart from violations of criminal tax

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laws, and the plaintiffs never reported any tax-related allegations (or anything whatsoever) to the
authorities. Moreover, it is undisputed that at the time of the deposition, the Government had not
initiated its criminal investigation into the instant offense; in fact, the IRS first approved of the tax
investigation in September 2013nine months after the deposition. See Memorandum at 28. Nor
were there any other contemporary government-led civil investigations or other proceedings into
Mr. Grimms offense conduct underway at the time of the deposition. See Chivers, 488 Fed.Appx.
at 788. Thus, at the time of Mr. Grimms deposition, there was not an existing or expected
connection between the Civil Action and the future investigation of the instant offense, see id. at
787, and his testimony could not possibly have been intended to obstruct the instant investigation.
Faced with these overwhelming facts against the imposition of this enhancement, the
Government relies on specious arguments. It suggests that Mr. Grimm was well aware that he
was the subject of a government investigation [not of the instant offense] in advance of his
deposition in the Civil Action. See Governments Sentencing Memorandum (Gov. Mem.) at
10. However, Mr. Grimms awareness of other government investigations relating to completely
separate matters is of no import because to establish willfulness the allegedly obstructive conduct
must be directed towards the investigation . . . of the instant offense of conviction. See 3C1.1;
id., Application Note 1. A defendants awareness of investigations into matters wholly unrelated
to the offense conduct is not pertinent for the purposes of this enhancement.

Indeed, the

Government does not cite to a single case where a court imposed this enhancement against a
defendant under that rationale.
The Government also notes:
It strains credulity that the defendant . . . 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.
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See Gov. Mem. at 10 (emphasis added). But again, here, the Government makes an argument
unsupported by the law. Application Note 1 to 3C1.1 makes clear that it is not enough that Mr.
Grimms deposition testimony could have led to a hypothetical investigation in the future; rather,
it must have been purposefully calculated to thwart a government-led investigation into Mr.
Grimms tax violation that was expected based on the Civil Action. See Chivers, 488 Fed.Appx.
at 789. And as we have shown, the investigation of the instant offense was completely unexpected
and was unrelated to the Civil Action.

To accept the Governments argumentthat the

enhancement applies to a false statement in a prior civil proceeding relevant to an unexpected and
unrelated future investigationwould expand the scope of 3C1.1 well beyond its accepted
contours and effectively abrogate the willfulness requirement. Indeed, the Government has not
submitted any case law or other authority supporting such a monumental expansion of 3C1.1.
In sum, the Court should find that the willfulness component of the 3C1.1 enhancement
is not satisfied and, thus, it does not apply.1

Mr. Grimm also respectfully submits that he did not willfully obstruct the instant investigation because his deposition
testimony in the Civil Action did not relate to information pertinent to his tax violation. The Government points to emails from Mr. Grimms AOL e-mail account in 2010 that enclosed Healthalicious payroll spreadsheets, to show that
Mr. Grimm withheld information in his deposition that would have revealed his tax violation. See Gov. Mem. at 910. However, it was stipulated that the deposition would pertain only to the time period that Mr. Grimm owned the
restaurant, which was from 2007 through April 2009, when he sold his entire interest in Healthalicious. Thus, when
Mr. Grimm testified about the use of his AOL account at the deposition, he was not intentionally withholding
information regarding e-mails from 2010 that were relevant to his tax violation because it was not within the scope of
his testimony. Moreover, this also affects the Courts materiality analysis, because the Governments reliance on Mr.
Grimms e-mails from 2010 and records of cash payments to Healthalicious employees in 2010 to establish the
materiality of his testimony in the Civil Action is therefore misplaced. Finally, although in no way changing the fact
that Mr. Grimm made false statements, which he has admitted to, it should be noted that Mr. Grimm, of his own
accord, did not sign and thereby certify his deposition in the Civil Action because he was aware it contained
misstatements and could not allow his mistake to go any further.

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B.

The Government Fails To Show A Role Enhancement Adjustment Is Proper

Mr. Grimm objects to the PSRs four-point aggravating role enhancement under 3B1.1(a)
because he was not a leader, organizer, manager, or supervisor of any criminal activity
encapsulated by his relevant conduct and because the criminal activity at issue did not involve five
or more participants. See Memorandum at 23-27. In its memorandum, the Government reiterates
its position in the plea agreement that the four-point 3B1.1(a) enhancement recommended by the
PSR does not apply, effectively agreeing with Mr. Grimm that the criminal activity did not involve
five or more participantsspecifically the Healthalicious workers who received their wages in
cash. See Gov. Mem. at 5. Indeed, the Government makes no reference whatsoever to those
workers in connection with its discussion of 3B1.1.
Instead, the Government seeks a 2-point enhancement under 3B1.1(c) on the basis of Mr.
Grimms alleged control over Manuel Perez, a former manager and co-owner at Healthalicious
who also co-owned separate franchise restaurants with Healthalicious co-owner, Bennett Orfaly.
However, as shown below, that enhancement also is improper because Mr. Perez organized the
offense conduct, and was never controlled or supervised by Mr. Grimm at Healthalicous.
In support of its claims that Mr. Grimm enlisted Mr. Perez to join and supervised him in
the commission of the offense conduct, the Government focuses the Courts attention solely on emails between Mr. Grimm and Mr. Perez from January 2010 through June 2010. See Gov. Mem.
at 6-7; Ex. B-D. These e-mails, however, capture but only a few of countless interactions between
Mr. Grimm and Mr. Perez from 2007 through 2010, and thus fail to provide an accurate depiction
of their complete relationship and of Mr. Perezs full involvement in Healthalicious.

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As discussed in the Memorandum, Mr. Grimm had no experience operating a restaurant

before Healthalicious. In forming the restaurant, he partnered with Mr. Orfaly because Mr. Orfaly
had extensive experience in running over a dozen franchises throughout New York and New
Jersey. From the very outset, in establishing the restaurant, Mr. Orfaly tasked Mr. Perez, his
minority partner in other restaurants, with implementing the operational and administrative
processes used at their franchises at Healthalicious, and with training Mr. Grimm on all aspects of
managing the restaurant, including those aspects relating to the offense conduct. It was Mr. Perez
who provided Mr. Grimm with all of the restaurants accounting and payroll paperwork, including
samples of the payroll spreadsheets used by Mr. Orfalys franchise restaurants and attached to the
Governments memorandum as evidence of Mr. Grimms offense conduct. See Gov. Mem., Ex.
C. It was Mr. Perez who trained Mr. Grimm on the weekly payroll processes and how to pay
employees partly or entirely in cash. And it was Mr. Perez who directly hired the employees who
were paid off-the-books, determined the wages for those employees, and decided what portion
of their wages would be paid in cash.
All of this training and organizational assistance was provided by Mr. Perez throughout the
entire relevant timeframe not as a subordinate for Mr. Grimm, but on behalf of Mr. Orfaly and as
Mr. Grimms equal. Indeed, Mr. Perezs role in the offense conduct is corroborated by the lawsuits
filed against him for violations of the FLSA by employees of the franchise restaurants he co-owned
with Mr. Orfaly. See Memorandum at 25-26. In those lawsuits, Mr. Perez was sued as an owner
and general manager of the franchise restaurants, and the plaintiffs, who were employees of the
restaurants, alleged that he paid at least part of their wages in cash. See Reyes v. Manuel Perez, et
al., No. 7-cv-196-RJS (S.D.N.Y.) (DE 20 at 51) (Defendants paid Plaintiffs at times wholly or
partly in cash . . . .); see also Rodriguez v. Juan Manuel Perez, et al., No. 13-cv-463-DCF

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(S.D.N.Y.) (DE 2 at 70) (Plaintiff received a check for the first 40 hours and cash for the hours
over 40 at the base rate.). These lawsuits, one of which pertains to conduct predating the
formation of Healthalicious, establish that Mr. Perez engaged in the payroll practices that form the
offense conduct in his other restaurants, and lends credence to Mr. Grimms account that Mr. Perez
organized and instructed him on how to commit the offense conduct.
Given these facts, Mr. Grimm could not have recruited Mr. Perez to join, or have
supervised him in, the criminal activity because Mr. Perez was involved in it from the very
beginning as an organizerindeed, he helped organize Mr. Grimms very involvement in the
offense conduct. In its submission, the Government simply ignores these facts. To the exclusion
of all other pertinent facts, it instead points to just a small sampling of Mr. Grimms e-mails with
Mr. Perez during the January-June 2010 timeframe as dispositive evidence of Mr. Perezs
subordinate role to Mr. Grimm. But the Government cannot adequately support its position by
marshalling only evidence favorable to it and ignoring all other pertinent information, as the Court
must examine the totality of Mr. Perezs involvement in Healthalicious from 2007 through 2010
in properly assessing his role vis vis Mr. Grimm. And with the benefit of the complete picture
as set forth above, the appropriate conclusion is that Mr. Grimm and Mr. Perez were equals in the
criminal activity and, thus, the 2-point enhancement does not apply.

See United States v.

Greenfield, 44 F.3d 1141, 1146 (2d Cir. 1995) ( 3B1.1 does not apply where two participants
bear equal responsibility for organizing their own commission of the crime).
III.

THE COURT SHOULD VARY DOWNWARD TO A NON-CUSTODIAL

SENTENCE
In his memorandum, Mr. Grimm establishes that consideration of the 3553(a) sentencing

factors strongly supports a downward variance to a sentence of probation. The Government, on

the other hand, pursues a Guidelines sentence. However, the Governments analysis of the
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3553(a) factors does not support the Guidelines sentence it seeks. Its memorandum overstates the
nature of the offense and does not fully assess crucial aspects of Mr. Grimms personal
background; does not make note of the punishment that Mr. Grimm has already received as a result
of his crime; and, most notably, does not address the fact that the sentence it seeks is wholly
disproportionate to that received by similar defendants convicted of similar or worse offenses.
A.

Nature And Circumstances Of The Offense

Mr. Grimm, in his Memorandum and elsewhere, has expressly acknowledged that he
committed a crime that cannot be taken lightly. He is incredibly remorseful for what he has done.
However, it should be noted that in its description of Mr. Grimms offense conduct, the
Government submits a rather sensational depiction of what is a relatively unexceptional and
extremely common tax violation by a restaurant ownerlikely with the intended aim of inflaming
the Court over a tax violation that typically results in (at worst) a sentence of probation. Below
we set forth the problems with the Governments account of the facts.
First, the Government claims that Mr. Grimm committed the tax offense to enrich
himself. See Gov. Mem. at 11. There are several problems with that statement. As stated at his
plea allocution, Mr. Grimm did not personally retain any of the cash receipts that he failed to
report. He used the unreported cash receipts to pay the restaurants vendors who offered discounts
for cash payments and to pay employee salaries, all in order to keep a struggling restaurant afloat.
See Memorandum at 34. This obviously in no way negates Mr. Grimms offense, but certainly,
this is far from a situation where a wealthy defendant conceals gratuitous amounts of taxable
income or assets to further enrich himself. Moreover, the Government attempts to exaggerate the
amount of money at issue. It does this by referring to the fact that Mr. Grimm under-reported US
$900,000 in gross receipts, but omitting from its discussion the only number that really matters:

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the tax loss caused by Mr. Grimm. Presumably, this is because the tax loss in this action
approximately US $166,000is far from an outrageous number; it is actually on the low end of
the Guidelines tax table, and pales in comparison to other criminal tax offense cases where
defendants received probationary sentences. See Memorandum at 34 (citing the Warner and
Olenicoff cases, where defendants evaded millions in taxes and received probation sentences); at
46-53 (citing various cases with tax losses much higher than that caused by Mr. Grimm, where
defendants received non-custodial sentences).
Second, in its papers, the Government provides a description of the steps taken by Mr.
Grimm in connection with the tax offense and notes that it was a fraud by design, without
properly informing the Court as to Mr. Grimms role in the offense. See Gov. Mem. at 11. Putting
aside the fact that by definition all fraud is by design, Mr. Grimm obviously acknowledges that
he participated in a fraud that involved deliberate steps. See id. However, the Government
nowhere discussed some of the key mitigating facts regarding the offense conductthat Mr.
Grimm did not conceive of the plan to under-report taxes on the restaurant and pay its employees
off-the-books, and that it was Mr. Orfaly, his partner, who implemented the payroll and reporting
processes which form the offense conduct. By omitting these facts, the Government provided the
Court with a one-sided account of the offense conduct. The Court, however, must weigh all
relevant facts concerning Mr. Grimms involvement in the activity.
B.

Mr. Grimms History and Characteristics

The Governments discussion of the 3553(a) factors is also flawed because it basically
asks the Court to abdicate its responsibility to accord substantial weight to Mr. Grimms unique
and upstanding personal background. See Gall v. United States, 552 U.S. 38, 52 (2007). Indeed,
although an appropriate sentencing decision should seriously consider all of the good [Mr.

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Grimm] has done in his life, see United States v. Adelson, 441 F.Supp.2d 506, 513-14 (S.D.N.Y.
2006), the Government gives exceedingly short shrift to Mr. Grimms sacrifices for those in need
and for this country, especially through his voluntary enlistment as a U.S. Marine.
For example, while the Government notes that Mr. Grimms history of public service as
a member of the United States Marine Corps, an FBI special agent, and a member of the U.S.
House of Representatives, is laudable and deserves consideration by the Court, see Gov. Mem. at
12, this is the only reference in its entire submission about factors that clearly support a substantial
downward variance for Mr. Grimm. In essence, the Government has taken a life of generosity,
compassion, and service, and reduced it to one mere sentence in its brief. Obviously, that is not
the proper weight that should be accorded to Mr. Grimms history and background. Moreover, the
Government does not at least acknowledge the long-standing jurisprudence that defendants with
Mr. Grimms history of military service, which includes decorated combat service in the First Gulf
War, should receive special leniency at sentencingobviously a very important consideration in
Mr. Grimms sentencing. See Memorandum at 36-37.
The Government also misrepresents Mr. Grimms disposition regarding his offense. It
contends that Mr. Grimm has sought to diminish his criminal conduct and place the responsibility
for his crimes on others and that he has failed to fully come to terms with his criminal conduct.
See Gov. Mem. at 12. In support of this assertion, the Government cites to a New York Times
article quoting Mr. Grimm following his initial arraignment in this matter, before he pled guilty to
the offense. See Gov. Mem., Ex. I. But, clearly, Mr. Grimms statements at that stage of these
proceedings, and in that context, are not evidence of lack of remorse. And if they are, then every
single defendant who initially contests criminal proceedings against him, and later pleads guilty,
would be deemed unremorseful regardless of his conduct following his plea allocution.

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The Government also tries to support its contention regarding Mr. Grimms remorsefulness
by implying that because he is contesting the factual basis for an aggravating role enhancement
under 3B1.1, Mr. Grimm is not taking responsibility for his offense. But this is patently unfair
and could not be further from the truth. Mr. Grimm has fully accepted responsibility for what he
has done, and he should be permitted to contest the 3B1.1 enhancement without that somehow
diminishing his contrition. By pointing out that he did not control Mr. Perez, Mr. Grimm is not
disclaiming responsibility; he is merely submitting the facts pertinent to the enhancement.
Finally, the Government also tries to support its characterization of Mr. Grimms remorse
by insinuating that he may have misled the Probation Office that he sold his interest in
Healthalicious in April 2009. See id. at 12 (citing id. at 6 n. 2). That is false. In April 2009, Mr.
Grimm sold his full interest in Healthalicious to Mr. Orfaly, and spent the next year fully
extricating himself from the business. See Sale Agreement, Exhibit A. As shown in the enclosed
Sale Agreement, there is no dispute about when Mr. Grimm sold his interest in business.
In sum, as shown in the Memorandum, Mr. Grimms personal history merits a downward
variance to a sentence of probation. The Government, in its papers, has not refused that.
C.

The Need For The Sentence Imposed

The Government also claims that a Guidelines sentence is necessary to accomplish the aims
of sentencing under 3553(a)(2), specifically to promote respect for the law, provide just
punishment, and afford adequate deterrence. It argues that [a] significant prison sentence will
make clear to the defendant that engaging in a pattern of lying and cheating will be met with
meaningful punishment. See Gov. Mem. at 12. But the Governments rationale overlooks all
that Mr. Grimm has lost and sufferedand will suffer in the futureas a result of his offense.

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In assessing the need for deterrence and respect for the law, the Court should look to all of
the adverse consequences that Mr. Grimm has and will suffer due to his conviction.
Memorandum at 43.

See

Among other things, he has resigned from his position as a U.S.

Representative after being overwhelmingly re-elected to a third term in office (a year before his
Congressional pension vested); has been suspended by the New York and Connecticut Bar
Associations and faces disbarment proceedings pending a judgment in this case; is in severe
financial debt; has massively diminished employment prospects for the rest of his life; has agreed
to pay US $166,000 in restitution; and, as a public figure, has suffered severe humiliation in the
public eye. His lifewhich he built through hard work dating back to his childhood and through
service to this countryhas been forever altered by this conviction.
With a felony tax violation of this nature and given the harsh consequences of a felony
conviction, this District has often disagreed with the Governments stance here and found that a
non-custodial sentence is sufficient, but not greater than necessary, to satisfy the purposes of
sentencing. See Memorandum at 46-53 (listing defendants convicted of 26 U.S.C. 7206 in this
District and the Southern District of New York sentenced to probation). Because Mr. Grimm has
already lost so much, we ask that this Court reach the same conclusion here.
D.

The Government Does Not Address The Disparity A Custodial Sentence

Would Create

In deciding upon a sentence for Mr. Grimm, the Court must consider the need to avoid
unwarranted sentencing disparities among defendants with similar records who have been found
guilty of similar conduct. See 3553(a)(6). In his Memorandum, Mr. Grimm established that
defendants convicted of violating 7206, causing more tax loss, engaging in more serious offense
conduct, and with less upstanding backgrounds, commonly receive sentences of probation. See
Memorandum at 46-53. Specifically, the Memorandum identifies over one hundred and eighty
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(180) cases in this District and the Southern District of New York alone where defendants
convicted of violating 7206 received non-custodial sentences. See id., Ex C.
Moreover, the memorandum shows that against a backdrop of thousands of instances of
similar misconduct by similar businesses that were addressed through civil regulatory proceedings,
Mr. Grimms case appears to be the only criminal tax case brought by the Government against a
defendant who owned restaurant in this District in the last ten years or more. This only serves to
further emphasize the propriety and proportionality of a non-custodial sentence for Mr. Grimm.
The Governments submission is entirely silent as to this sentencing factorperhaps
because it so clearly runs counter to the imposition of a Guidelines sentence. The Court, however,
should seriously examine this factor in deciphering the appropriate outcome, as it unambiguously
supports a non-custodial sentence for Mr. Grimm.
IV.

CONCLUSION
The Government fails to justify its pursuit of a Guidelines sentence. In its memorandum,

the Government seeks enhancements that do not apply, and sets forth an incomplete and skewed
discussion of the 3553(a) factors. Most significantly, the Government has failed to explain why
it is seeking a Guidelines sentence for Mr. Grimm, when similar defendants convicted of more
serious tax offenses usually receive sentences of probation.
In the end, Mr. Grimm has shown that consideration of the 3553(a) factors warrants a
downward variance to a non-custodial sentence. Applying the well-establishing principle that the
punishment should fit the offender and not merely the crime, see Pepper v. United States, 562
U.S. 476, 488-489 (2011), Mr. Grimm submits that a non-custodial sentence is the appropriate,
reasonable, and fair result in this case.

14

Case 1:14-cr-00248-PKC-RML Document 100 Filed 06/30/15 Page 18 of 18 PageID #: 800

Dated: June 30, 2015

Respectfully submitted,
/s/ Daniel Lawrence Rashbaum
Daniel Lawrence Rashbaum (DR-4037)
drashbaum@mnrlawfirm.com
Jeffrey A. Neiman
Florida Bar No. 54469
jneiman@mnrlawfirm.com
Pro Hac Vice Admitted
MARCUS NEIMAN & RASHBAUM LLP
2 South Biscayne Boulevard, Suite 1750
Miami, Florida 33131
Telephone: (305) 400-4260
Fax: (866) 780-8355
Counsel for Michael Grimm

15

Case 1:14-cr-00248-PKC-RML Document 100-1 Filed 06/30/15 Page 1 of 5 PageID #: 801

EXHIBIT A

Case 1:14-cr-00248-PKC-RML Document 100-1 Filed 06/30/15 Page 2 of 5 PageID #: 802

SALE AGRE.EMENT
Agreement macle
of
Avenue, ,Or"" .rs
an acrdress

April 31, 2009., between

Michael G- Grimm
residing at S0 Borman
."r..;;;;;l, -r,"nu"r,,).

rit i:J:?"iereinarter
**t o^i :?,;:
Company having
"B enn

rr") "iru
u" J .io

(herernafLrculte

WHEREAS,

APt'
rnem

Bennei

r.

z, n"ffi;::
--rl ?#l
u rv"* vo*
oz +s

WITNESSETH:

BCruT

';*-tiiil"ffi

*.rJ,H'T""0"*',',u::i.i:;.,i;

WHEREAS, Michael
owns 45"/" of the
Company, hereinafter
referred to as: "Proper\r,,,

and

Buver"y.TTi3l"fi:tffrjires

to sell to Benne*
his pro erry and Benre*
herearrer

"r,""-llllti"ff:,::i":"

Benne* his

pr

erry pursuan*o a

,,rhe

separare

NOVtr THEREFORE,
in consider
other good and varuabre
considerurror.,

of the mufual promises

hereinafter contained,
u,rtto,
; set forth herein,
and
the parties agree
as follows:

1.

2.

"il^,k*
1'594 second
ou," New york |'"rirttffi
Avenue,
"rrr,t ,rno
s.cornp arry,,).
irs principa,

SALE. Benneft,agrees
to purchase from
to fhe Bennett the
aforesaio=or,Michael his p operty and Michaer agrees ro serl
PURCHASEP
Hundred *;rfii;,Hi;i":il","t:,;,,o1"*, is sevenry
rwo rhousand. Five
a

Ten Thousand Doll

B

e,ure*

or wire rransrer, derivered

r i'ilif : || i:.|?iif ;::l
rry
purchase
price for th" rropu.ty
october 1,2009;

...'

"

:l :b*
>txty
Two TTrousan!,.

Fve Hundred Dollars

($62,500.00) r
paid by
,in,
or ocrober ,ool.be
"trn**

Benneft to Michaet
wirhin

Paoo t ^c ,

Case 1:14-cr-00248-PKC-RML Document 100-1 Filed 06/30/15 Page 3 of 5 PageID #: 803

3.

LEASE SECURITY DEPOSIT:

a.
b.
4.

The lease security deposit in the sum of $ 15,400.00 was advanccd by Bennett
with the signing of the Lease with George Rapoport dlbla Dael Realty as
landlord on September 5,1996. The expiraf ion of the lease is August 31,201.4.
Bernett shall retain all rights title and interest in the above lease security
deposit.

Michael warrants and represents (said warranties and representations to survive

closing) as follows:

a.

b.
c.

That the only debts owed by the Company have been fully disclosed to the
Buyer which include the regular supply vendors' outstanding invoices and a
Chase Credit Card with a balance due. Furthermore, no personal obligations
or debts currently exist, but all debts, obligations and invoices incurred after
the Closing shall be borne by the Company and by Berurett when so required.
lhat he is the owner of and has good and marketable title to his ownership in
the Company, free of all liens, claims and encumbraltces, except as may be set
forth herein.
No action, approval, consent or authorization of any goverrunental authority
is necessary for Bennett to consummate the transactions contemplated
hereby.

5.

Bennett warrants and represents (said warranties and representations to survive closing)
as follows:

a.
b.

There are no judgments, liens, tax liens, actions, or proceedings pending

against him.
Bennett has made no representation as to the gross income or profits derived,
or that may be derived, from the operation of the business or the expenses
attendant to its operation, and that the consideration payable hereunder to
Michael is not predicated upon any such representation as to income or
expenses.

c.

6.

Berurett acknowledges that this purchase does not entitle him to any
ownership interest whatsoever to the Trademark "Healthalicious" and only
retains the right of use of said Trademark subject to an agreement made
between the parties under separate cover.

Brokerage, The parlies hereto represent and warrant to each other that they have not
dealt with any broker or finder in connection with this agreement or the transactions
contemplated hereby, and no broker or any other person is entitled to receive any
brokerage commission, finder's fee or similar compensation in connection with this
agreement or the transactions contemplated thereby. Each party shall indemnify and

Page 2 of 4

Case 1:14-cr-00248-PKC-RML Document 100-1 Filed 06/30/15 Page 4 of 5 PageID #: 804

hold the other harmless from and against all liability, claim,

loss, damage or exPense/

including reasonable attorneys' fees, pertaining to any broker, finder or other Person
with whom such party has dealt. This representation shall surviye Closing.

7. Notice. All notices,

demands and other communications required or permitted to be

given hereunder shall be in writing and shall be deemed to have been properly given if
delivered by hand or by certified mail return receipt, with postage prepaid, to Michael
or to Buyer, as the case may be, at their addresses first above written, or at such other
addresses as they may designate by notice given hereunder.

B, The delivery of all papers and documents provided for herein, the payment of the
balance due under this agreement, shall take place at a time to be mutually agreed upon
between the parties, at the office of Lent & Abrams Esq., attorney for Buyers, at 286
Madison Avenue, Suite 2100, New York, NY 10017.

9.

tnitial-K

Representation by each part]. Michael hereby acknowledges that he is not represented

an attorney, and has been advised to seek representation, but has declined to do so.

Bennett hereby acknowledges that he is represented by Lent

Madison Avenue, Suite 2100, New York, NY 10017.

& Abrams,

Esqs, 286

The Escrow Agent shall hotd the certificates for Michael's interest in the
Company, purchased by Bennett in the Company duly endorsed, in escrow pending full
payment of the balance of the purchase price and reimbursement of the lease security
deposit or an uncured default under this Agreement.
Upon full payment of the balance due as above noted, the Escrow
Agent shall deliver the certificates to Bennett and thereupon be released and discharged
as Escrow Agent frorn any and all liability and obligations hereunder'
In the event either payment of the balance due under this
Agreement, the Escrow Agent shall, upon written notice of default from Michael or his
assigns, with satisfactory evidence that Bennett has received the 10 days written notice
by first class mail, by ax and by email; and has failed to cure such defaul shall deliver
the aforernentioned escrowed documents being held by said Escrow Agent to Michael or
his assigns, and thereupon be released and discharged as Escrow Agent from any and
all liability and obligations hereunder. The Escrow Agent shall incur no liability for any
action taken or failed to be taken in good faith and shall serve without fee' The Escrow
Agent may conclusively rely upon and shall be protected in acting uPon any notice,
reques! consenf instruction or other instrument believed by the Escrow Agent in good
faith to be genuine or to be signed by or presented by the ploper Person, or to be duly
authorized or properly made.
Jed Abrams having offices at 286 Madison Avenue, 21't Floor,
New York, N.Y. 10017 shall be the escrow agent.
fhe Escrow Agent shall not be responsible for any
of the representations or agreements contained herein or in the Security Agreement or
for the perforrnance of any such agreements, except the performance of Escrow Agent's

10. ESCROW

Page 3 of 4

Case 1:14-cr-00248-PKC-RML Document 100-1 Filed 06/30/15 Page 5 of 5 PageID #: 805

Parties hereto other than the Escrow Agent and the Escrow Agent may be replaced by
written noticc signed by all, but not less than all, of the parties hereto other than the
Escrow Agent.
L1. Entire Agreement. This agreement contains all of the terms agreed upon between Seller
and Purchaser with respect to the subject matter hereof. This agreement has been
entered into after full investigation. All prior oral or written statements, representations,
promises, understandings and agreements of Seller and Purchaser are merged into and
superseded by this agreemen! which alone fuIly and completely expresses their
. agreement,
1.2.

Governing Law. This agreement shall be govemed by and construed in accordance with
the laws of the State of New York. If any provisions of this agreement shall be
unenforceable or invalid, such unenforceability or invalidity shall not affect the
remaining provisions of this agreement.

13.

Binding Effect. This agreement shall not be considered an offer or an acceptance of an

offer, and shall not be binding until executed and delivered by both Bennett and by
Michael. Upon such execution and delivery, this agreement shall be binding upon and
inure to the benefit of the parties hereto and their respectve heirs, executors,
administrators, successors and permitted assigns.

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
the 31"t day of Apil,2009.

seals

:Companv
SAYZL

By: Bennett

!,

Seller:

Purchaser:

G. Grimm

Bennett Orfaly

STATE OF NEWVOTX
COUNTY OF NEW YO(

Svi

URN 'IrJ BEI'ORE iE

TH]S

fuAY

OT

>= L,N ?

JED ABRAMS
Notary Public, State of NewYork

No.01480007050
Qualified in Westchester CountY
Commission ExPires June 30, 2011

Page 4 of 4