Councilman Pleads Guilty to $82,000 Tax Fraud. He Has No Plans to Quit.
Federal prosecutors in Manhattan announced on Thursday that a New York City councilman had pleaded guilty to federal tax evasion for failing to pay $82,000 in taxes and deducting fraudulent business expenses related to his real estate management company.
The councilman, Chaim Deutsch, a Democrat of Brooklyn, could face up to a year in prison. But there’s one thing Mr. Deutsch may not have to worry about: getting kicked out of his job.
Under the public officers law, a Council member faces automatic expulsion if they plead guilty to a felony or a crime related to their elected role. But City Council officials said that because Mr. Deutsch pleaded guilty to a misdemeanor, he would probably be allowed under the law to serve out the remainder of his term, which expires this year.
Still, Corey Johnson, the speaker of the City Council, called on Mr. Deutsch to resign. “When it comes to our jobs as elected officials, nothing is more important than the public trust. Council member Chaim Deutsch betrayed that public trust by committing tax fraud,” he said in a statement. “To protect the integrity of the City Council and his Brooklyn seat, he must resign.”
But Mr. Deutsch’s lawyer, Henry E. Mazurek, said his client’s guilty plea would not interfere with his ability to carry out his Council duties. “He intends to fulfill the will of the voters and complete the term for which he was elected,” he said.
Mr. Deutsch will face disciplinary measures if he remains in the Council, said Jennifer Fermino, a spokeswoman for Mr. Johnson.
“We are looking at removing Council member Deutsch from all his committees, including his position as chair of the Veterans Affairs Committee, as well as his role dispersing discretionary funding,” she said.
The Council has had its issues trying to discipline some of its problematic members.
In October, the Council finally expelled Andy King, a Democrat from the Bronx, after an investigation substantiated charges of harassment, discrimination and conflicts of interest.
The year before, investigators found evidence that Mr. King violated New York City’s anti-harassment policy and used Council funds to plan a retreat in the Virgin Islands at the same time as the wedding of his wife’s daughter. That resulted in a 30-day suspension.
Rubén Díaz Sr., a councilman from the Bronx, had his committee dissolved after making homophobic comments in 2019. Kalman Yeger, a Brooklyn councilman, was removed from the immigration committee in 2019 after saying that Palestine did not exist.
Last year, Mr. Deutsch, who was first elected to the Council in 2013, made an unsuccessful bid for Congress. He is limited by city law from running for a third consecutive term.
Mr. Deutsch agreed to the plea deal on March 26; news of the charges was revealed on Thursday when he was charged and pleaded guilty before Magistrate Judge James L. Cott.
“New York City Council member Chaim Deutsch admitted today that he defrauded the I.R.S. in connection with his real estate business,” Audrey Strauss, the United States attorney for the Southern District of New York, said in a statement. “As an elected official and community leader, Deutsch had a particular responsibility to follow the law. Instead, over a multiyear period, Deutsch concealed his true business income to avoid paying his fair share of taxes.”
According to Ms. Strauss’s office, Mr. Deutsch, 52, filed a false personal tax return for the year 2015 that included fraudulent information about business expenses related to Chasa Management, a firm that he solely owned. From 2013 to 2015, Mr. Deutsch failed to pay $82,076 in federal taxes, according to federal prosecutors.
City Council members were barred from earning outside income starting in January 2017 as part of a package of reforms to raise their salaries.
“It is dispiriting when a sitting City Council member is convicted of a crime,” said Margaret Garnett, commissioner of the city’s Department of Investigation. “Rather than set an example of integrity and fidelity to the rule of law, this city councilman’s actions placed personal advantage over the public interest, and undermined public trust in elected officials.”
Mr. Deutsch did not immediately return a call for comment. Mr. Mazurek said that Mr. Deutsch “accepts responsibility for his actions” and will repay the taxes he owes.
According to the plea agreement, Mr. Deutsch must file amended tax returns and repay the $82,076 in evaded taxes with interest. When he is sentenced on July 29, Mr. Deutsch could face the maximum of a year in prison and a $100,000 fine.
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