Sheepshead Bay Councilmember Chaim Deutsch pled guilty to charges of tax fraud on Thursday morning, admitting to evading thousands in taxes over three years — a result of a falsified tax return in 2016, where he hid outside income he received from his real estate business, prosecutors said.
“New York City Council Member Chaim Deutsch admitted today that he defrauded the IRS in connection with his real estate business,” said US Attorney Audrey Strauss. “As an elected official and community leader, Deutsch had a particular responsibility to follow the law. Instead, over a multi-year period, Deutsch concealed his true business income to avoid paying his fair share of taxes.”
The 52-year-old term-limited councilmember, who represents Sheepshead Bay and other surrounding areas, made the guilty plea to a single count of filing a false tax return in the Southern District of New York, where he copped to filing fake tax returns between 2014 and 2016, for the tax years of 2013 to 2015, when he was sole owner of Brooklyn-based Chasa Management — approximately evading $82,076 in money owed to the federal government.
The independently wealthy council rep — who often billed himself as a champion of law and order — pledged to divest from his real estate earnings, where he made between $100,000 to $249,999 on top of his $148,000 Council salary, in 2017 ahead of a new law forbidding councilmembers to receive outside income that was slated to go in effect January 2018.
Deutsch agreed to pay back the money owed plus interest, and faces a maximum sentencing of up to one year imprisonment, one year of supervised release and a maximum fine of $100,000 in addition to an order of restitution.
A City Council spokesperson said in a statement that councilmembers are working to dispose Deutsch of his committee assignments including his roles as chair of the Veterans Affairs Committee and dispersing city funding.
“No one is above the law, not even Council Members and this tax fraud misdemeanor is incredibly troubling news,” said Jennifer Fermino. “As a result, 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.”
Pleading guilty to a misdemeanor unrelated to his office, Deutsch is not required to step down for his position and plans to complete his full term ending Dec. 31, according to his attorney.
“Today, my client pled guilty to a one-count misdemeanor tax offense of making false statements on a tax return. He accepts responsibility for his actions and intends to fully repay the $82,000 in taxes he owes,” said Henry E. Mazurek. “Mr. Deutsch’s dedication to public service will not be diminished, and he looks forward to completing his elected term.”
But late Thursday, Council Speaker Corey Johnson called for Deutsch to step down.
“When it comes to our jobs as elected officials, nothing is more important than the public trust,” he said in a statement. “Council Member Chaim Deutsch betrayed that public trust by committing tax fraud. Our constituents rightly expect the people they vote for to uphold the law. Deutsch failed them. To protect the integrity of the City Council and his Brooklyn seat, he must resign. He can no longer serve his constituents in good faith.”
Southern Brooklynites are no strangers to acts of corruption by their elected officials, with former State Senator Carl Kruger pleading guilty to charges of bribery and former Assemblywoman Pamela Harris who was charged with stealing federal emergency funds after Superstorm Sandy. Former Assemblymember and current City Council candidate Alec Brook-Krasny was also accused of committing healthcare fraud, but was acquitted in July 2019.
The politician’s sentencing hearing is scheduled for July 29 at 10 am. He did not respond to a request for comment.
Clarification (4:20 pm): This story has been updated to make clear that former Assemblymember Alec Brook-Krasny was acquitted last summer. An additional statement from Council Speaker Corey Johnson has also been included.