Southern Brooklyn Council Member Chaim Deutsch pled guilty today for filing a false tax return related to outside income he received from his real estate company.
According to the office of Jonathan Larsen, U.S. Attorney’s Office for the Southern District of New York, around March 2016, Deutsch filed a personal tax return for the preceding year that included fraudulent information concerning his income and business expenses in connection with Chasa Management, his real estate management business.
From 2013 through 2015, the attorney’s office said, Deutsch’s failure to properly pay taxes on his income enabled him to evade approximately $82,076 in taxes.
Beginning January 2017, City Council Members were prohibited from earning most outside income, as part of a series of reforms that also raised the salary for the position.
Deutsch pled guilty to a single count of filing a false return for the 2015 tax year, and agreed to restitution in the amount of $82,076 plus interest. He is scheduled to be sentenced before U.S. Magistrate Judge James L. Cott on July 29th. The charge carries a maximum sentence of one year in prison.
“New York City Council Member Chaim Deutsch admitted today that he defrauded the IRS in connection with his real estate business,” U.S. Attorney Audrey Strauss said in a statement announcing the plea. “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.”
Deutsch, 52, took home roughly $130,000 a year as the president of Chasa Management real estate company.
By mid-afternoon on Thursday, City Council Speaker Corey Johnson had called on Deutsch to step down.
“When it comes to our jobs as elected officials, nothing is more important than the public trust,” Johnson 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.”
An earlier statement from City Council spokesperson Jennifer Fermino indicated the Council was considering removing Deutsch from “all his committees, including his position as Chair of the Veterans Affairs Committee, as well as his role dispersing discretionary funding.”
But under the state’s public officers law, Deutsch may not be required to step down, because the wrongdoing is not a felony or crime directly related to his office. And thus far, it does not appear that Deutsch plans to resign on his own accord.
“Today my client pled guilty to a one-count misdemeanor tax offense of making false statements on a tax return,” the Council Member’s lawyer, Henry Mazurek, told Bklyner in a statement. “He accepts responsibility for his actions and intends to fully repay the $82,000 in taxes he owes. Mr. Deutsch’s dedication to public service will not be diminished, and he looks forward to completing his elected term.”
Deutsch, a conservative Democrat whose district includes Brighton Beach, Sheepshead Bay and parts of Midwood, is already term-limited out of office by the end of this year, which may temper further efforts to remove him.
The City Council voted to oust Bronx Council Member Andy King last fall after accusations of sexual harassment and conflicts of interest, among other complaints. In 2008, Queens Council Member Dennis Gallagher resigned from his seat after pleading guilty to charges of sexual abuse and forcible touching.
Deutsch was first elected to his seat in 2013, and re-elected in 2017. He also ran and lost in a Congressional primary against incumbent Representative Yvette Clarke last year.
[4/22/21 – This story has been updated to include statements from Council Member Deutsch’s attorney, City Council Speaker Corey Johnson, and Council spokesperson Jennifer Fermino.]