usa v michael grimm - us government recommendation on sentencing

7/21/2019 USA v Michael Grimm - US Government Recommendation on Sentencing

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The Honorable Pamela K. ChenJune 19, 2015Page 2

underreported the restaurants sales, concealing over $900,000 in gross receipts Internal Revenue Service (IRS) and the New York State Department of TaxatiFinance (the New York State Tax Department). (Pre-sentence Investigation R(PSR) 5). Additionally, the defendant paid workers at the restaurant manywere not lawfully permitted to be employed within the country either wholly ooff the books in cash, thereby fraudulently reducing restaurants federal and sttaxes. (PSR 6). The defendant also under-reported Healthalicious payroll to tYork State Insurance Fund (NYSIF), thereby defrauding NYSIF of workers c

premiums. (PSR 7). To further and conceal his schemes, Grimm caused over corporate and personal tax filings to be made with the IRS and the New York StaDepartment from 2007 through June 2010. (See PSR 9).

In connection with his scheme to cause false federal tax filings, thcharged Grimm with impeding and obstructing the due administration of the InteRevenue Law in violation of 26 U.S.C. 7212 (Count One), conspiring to defrau

States of federal payroll taxes in violation of 18 U.S.C. 371 (Count Two) and aassisting in the preparation of false Healthalicious tax returns in violation of 26 U7206(2) (Counts Three through Five). The defendant was also charged with fivewire fraud and three counts of mail fraud, in violation of 18 U.S.C. 1341 and (Counts Seven through Sixteen); all relating to his scheme to defraud New Yorksales tax revenue. The Indictment also charged the defendant with health care frconnection with his scheme to defraud NYSIF, in violation of 18 U.S.C. 1347 Additionally, Grimm was also charged with employing individuals who were no

to be employed in the United States in violation of 8 U.S.C. 1324a and 1324(aTwenty).

Moreover, on January 30, 2013, Grimm testified falsely under oatdeposition in Regino Perez and Carlos Perez v. Granny Sayz, Healthalicious, Beand Michael Grimm, Docket No. 11 CIV 8736 (CM), a federal lawsuit in the UnDistrict Court for the Southern District of New York (the Civil Action). (See

The Civil Action had been brought by two of the defendants former employees Healthalicious, alleging that he and others had violated federal and state labor laoperating the restaurant. Specifically, and among other things, the defendant falthat: (1) he had not paid Healthalicious employees in cash; (2) he had not generaemail in conducting Healthalicious business; and (3) that, to the extent he did usehad used a Yahoo email account which he could no longer access. (Id.). In fa

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


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B. The Defendants Guilty Plea and Stipulation of Facts

On December 23, 2014, Grimm pleaded guilty to Count Four of thpursuant to a plea agreement with the government dated December 22, 2014 (theAgreement). (PSR 1). That count charged the defendant with aiding and assipreparation of a false and fraudulent tax return filed with the IRS, specifically thStates Return of Partnership Income Form 1065 (Form 1065) for Healthaliciouparticular, Count Four alleged that the defendant willfully aided and assisted in t

preparation of Healthalicious 2009 Form 1065 which substantially under-reportrestaurants gross receipts as well as the salaries and wages paid to the restaurantemployees for that tax year. (Id.).

As part of the Plea Agreement, Grimm stipulated and agreed to a Ffor Guilty Plea, a stipulation of facts executed by the defendant on December 22incorporated in the Plea Agreement by reference (the Stipulation of Facts or

Stipulation of Facts is attached to this letter as Exhibit A. In the Stipulation of Fdefendant admitted all of the conduct underlying the charges in the Indictment. admissions, the defendant stipulated that he:

Oversaw the day-to-day operations of Healthalicious while a memrestaurant from 2007 through 2009 (Stip. 1);

Concealed over $900,000 in Healthalicious gross receipts from th

who prepared and filed the restaurants tax returns, who then usedinformation the defendant provided to prepare and file false federatax returns (Stip. 3);

Failed to report the off the books cash wages he was paying toHealthalicious workers, which resulted in the restaurant paying loand state payroll taxes. The defendant caused the payroll processi

companies to report to the IRS and the New York State Tax Departhan half of the wages Healthalicious actually paid its employees (

Caused false personal federal and New York State income tax retufiled with the IRS and the New York State Tax Department on his(Stip 5);



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Quarterly Federal Tax Returns for Healthalicious; (2) Form 1065 Uof Partnership Income tax returns for Healthalicious; (3) Forms Wannual wages of Healthalicious employees; (4) his Form 1040 U.SIncome Tax Returns and Form IT-201 Resident Income Tax ReturNew York State Form ST-100 Quarterly Sales and Use Tax Retur(Stip. 7);

Caused, in total, federal and New York State tax and NYSIF prem

between $80,000 and $200,000 (Stip. 8); and

Testified during the deposition in the Civil Action to things that, aknew to be false. Specifically, the defendant admitted that he falsabout how the restaurants workers were paid, the extent to whichemail in operating his business, and what email account he used (S

II. Argument

For the reasons that follow, the Court should sentence the defendaof incarceration within the advisory Sentencing Guidelines range of 24 to 30 mo

A. Legal Standard

Sentencing courts have the authority to fashion a reasonable and asentence in each case. In so doing, a sentencing court must consider the Guideliformulating such a sentence. United States v. Booker, 543 U.S. 220, 259-62 (20The Guidelines should be the starting point and the initial benchmark when fassentence. Gall v. United States, 552 U.S. 38, 49 (2007). Next, a sentencing judgconsider all of the factors in 18 U.S.C. 3553(a) to determine the appropriate seeach case. Id. at 49-50. Those factors include, among other things, the nature ancircumstances of the offense; the history and characteristics of the defendant; an

for the sentence imposed to reflect the seriousness of the offense, to afford adequdeterrence to criminal conduct, and to protect the public from further crimes of tdefendant.

B. The Applicable Guidelines Range



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1. Base Offense Level

The defendant has stipulated that under U.S.S.G. 2T1.4, 2T4.1 his appropriate base offense level is 16, reflecting a tax loss of more than $80,00than $200,000. (See Plea Agreement, dated December 23, 2014 (the Plea AgreStip. 8). The Probation Department reached the same conclusion with respect applicable tax loss. (PSR 18).

2. Role Enhancement Adjustment

Section 3B1.1 of the Sentencing Guidelines provides for an increadefendants offense level based on his role in the criminal activity at issue.1 TheDepartment determined that a four-level enhancement under Section 3B1.1(a) isin this case. (PSR 21). The defendant submitted a letter to the Probation DepaMay 26, 2015 objecting to the PSRs Guidelines calculations (the Defendants Objections Letter or Def.s PSR Objections Ltr.). Among other objections, thasserts that no role enhancement should apply. The gravamen of the defendantsthe Probation Department is that he exercised no control over the individual descIndictment as the Manager (see Ind. 17, 33), whom the defendant contends equal in running the restaurant from the beginning. (Def.s PSR Objections Ldefendant also contended that it was the Manager, acting on behalf of another inpartner of Grimms, who instructed and trained the defendant regarding operatinrestaurant, including its payroll processes. (Id.). As set forth below, the governm

respectfully submits that a two-level role adjustment under Section 3B1.1(c) is ahere, consistent with the governments Guidelines estimate in the Plea Agreementhe defendants control over others involved in his criminal schemes.

In United States v. Cramer, the Second Circuit has identified the cthe application of the two-level role enhancement pursuant to Section 3B1.1(c).

Pursuant to the Guidelines, a defendants offense level may beincreased by two levels if the defendant was an organizer,leader, manager, or supervisor of a participant in a criminalactivity, where that activity involved fewer than five

1 S ti 3B1 1( ) ll f f l l i i ff l l h



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participants. U.S.S.G. 3B1.1(c). A defendant is properlyconsidered a manager or supervisor if he exercised somedegree of control over others involved in the commission of theoffense or played a significant role in the decision to recruit orto supervise lower-level participants. United States v. Hertular,562 F.3d 433, 448 (2d Cir. 2009) (internal quotation marksomitted). Moreover, a defendant need only manage or superviseone other participant to warrant a role enhancement. See United

States v. Garcia, 413 F.3d 201, 223 (2d Cir. 2005). If suchmanagement or supervision is found, the adjustment ismandatory. 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, 2(unpublished summary order). Here, there are ample facts to support a finding thexercised control over others involved in his criminal activity, including the ManAccordingly, a two-level role enhancement under Section 3B1.1(c) is warranted appropriate in this case.

The defendants email communications with the Manager and othclaim that he and the Manager were equals and that the defendant was not a mansupervisor in his criminal activity involving the operation of Healthalicious. Forthe email exchange between the defendant and the Manager on January 4, 2010,

Exhibit B, demonstrates the nature of their relationship and the Managers role indefendants restaurant. In the emails, the Manager thanks the defendant for lettpart of your business and promises to do his best to support and help [the defesuccessful business (emphasis added). The defendant responds by noting that hto draft a document adding [the Manager] officially as a 10% partner in Grannyand states that he is very proud and fortunate to have you as a partner and as a f

More generally, the emails attached as Exhibit C further underscodefendants supervisory role. Between March and June 2010, the defendant sento the Manager detailing payroll information for Healthalicious employees, incl

2 It is noteworthy that these emails show that the defendant offered a 10% ownership interest in Healthalicious in January 2010 in light of the fact th



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worked, rates of pay, and significantly, the breakdown of off the books cash papayments made by paycheck that were sent from the defendant to the Manager. belie any claim that he did not exercise a degree of control over the Manager whparticipated in the defendants tax fraud schemes.

Similarly, in an April 3, 2010 email exchange attached as Exhibit Manager updates the defendant on the restaurants operations and indicates that closing envelopes and the payroll journal as well as vouchers for checks. The

responds by thanking the Manager and tasks the Manager with follow-ups regardWorkers Comp and getting my name off the Health Dept. This is a priority.communications are not the communications of equals, but rather of a supervisorinformation from and directing his subordinate.

Furthermore, on February 6, 2010, in an email from the defendantcampaign staffer discussing concerns regarding his Congressional race and attacExhibit E, the defendant described his managerial role in the running of the restawrote:

I left the FBI in 2006 and in 2007 I opened the restaurant with 2partners. 1 partner opened 18 restaurants and had a successfulchain in Manhattan that he franchised. I went in thinking that Iknow nothing about being in business and nothing about therestaurant business at all. So, I waited for the partners to step up

and listen to the consulting chef and the people that worked forthe partner's other restaurants. Nothing was getting done to mystandards and finally I took over everything, even though I wasoriginally only responsible for the accounting and legal. Ilearned how to cook, how to take orders and I worked like a dogto learn every aspect of the business myself and i put newsystems in place. within 3 months of my deciding to take

charge, we started to make money. To this day, my partner usesmy systems in his other restaurant. moral of the story is thatexperts and consultants don't always know best for what I needto succeed.

So why am I telling you this:



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The defendants statement that he took over everything is consistent with the esupporting his supervisory role in the fraud schemes and belies any attempt to mextent of his own criminal conduct.3

The Court should accordingly find that a two-level enhancement tdefendants base offense level pursuant to Section 3B1.1(c) for his role in managcriminal schemes involving Healthalicious is appropriate.

3. Adjustment for Obstruction of Justice

Section 3C1.1 of the Sentencing Guidelines provides for a two-levin the defendants offense level:

If (1) the defendant willfully obstructed or impeded, orattempted to obstruct or impede, the administration of justicewith respect to the investigation, prosecution, or sentencing ofthe instant offense of conviction, and (2) the obstructive conductrelated to (A) the defendants offense of conviction and anyrelevant conduct; or (B) a closely related offense[.]

U.S.S.G. 3C1.1. The Probation Department concluded that this enhancement wapplicable here based on the defendants false deposition testimony in the Civil AJanuary 2013. (PSR 15, 22).

In applying this enhancement, the PSR cites Application Notes 1 aSection 3C1.1. (PSR 15). Application Note 1 states that obstructive conduct tprior to the start of the investigation of the instant offense of conviction may be this guideline if the conduct was purposefully calculated, and likely, to thwart thinvestigation or prosecution of the offense of conviction. Further, Application states that the obstruction adjustment should apply to conduct including: commsuborning, or attempting to suborn perjury, including during the course of a civilif such perjury pertains to conduct that forms the basis of the offense of convictio

In order to apply the obstruction enhancement here, the Court musspecific findings that the defendant intentionally gave false testimony which wathe proceeding in which it was given, that the testimony was made willfully, i.e.



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which contained emails that, among other things, included payroll spreadsheetManager that included both the names Carlos and Regino, and listed rate of two individuals as $4.60 per hour: $0.05 per hour less than the plaintiffs alleged Complaint. (See, e.g., June 8, 2010 and June 15, 2010 emails from Grimm to thattaching payroll spreadsheets, attached hereto as part of Exhibit C). These spreshowed that Carlos and Regino were being paid in cash. The defendants cuthat his false statements designed to avoid damning admissions and obfuscate dmaterial that corroborated central claims by the plaintiffs and made plain that the

was not been truthful in his filed Answer were not material to the Civil Action araccordingly wholly without merit.

Furthermore, it is clear that the defendants false deposition testimmaterial to his offense conduct. The defendants maintenance of an off the boopayroll was central to his tax fraud. It enabled him to evade taxes on the wages workers and hide the existence of his workers from NYSIF. Far from being tangoffense conduct, the defendants cash payroll and his associated opaque recordkecenterpiece of his criminal fraud scheme.

b. The Defendant Intended to Obstruct Justice

Grimms perjury in the deposition was also intended to obstruct juApplication Note 1 to Section 3C1.1 expressly contemplates that obstructive conthe start of the investigation of the offense conduct may be covered by the guide

purposefully calculated, and likely, to thwart the investigation or prosecution ofof conviction. The defendant was well aware that he was the subject of a goverinvestigation in advance of his deposition in the Civil Action. Press accounts frosupport this conclusion. In one article, attached as Exhibit H, the defendants thconnection with the investigation was quoted regarding the defendants ownershthe restaurant, approximately four months before the defendants deposition in thAction. (See Exhibit H at p. 2). Simply put, it strains credulity that the defendanlaw enforcement agent, attorney and a sitting member of the House of Representnot believe that admitting criminal conduct or identifying discoverable materialsAction that would reveal his criminal conduct would likely result in an investigaotherwise influence an existing government inquiry. Accordingly, the defendanwas willfully designed both to frustrate and obstruct the civil plaintiffs lawsuit ainvestigation into his conduct at the restaurant conduct which ultimately becam



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* * *

For all of the foregoing reasons, the Court should apply a two-leveenhancement pursuant to U.S.S.G. 3B1.1(c) and a two-level obstruction enhanpursuant to U.S.S.G. 3C1.1, resulting in an adjusted offense level of 17 and a Gsentencing range of incarceration of 24 to 30 months.

C. Section 3553(a) Analysis

For the reasons below, a consideration of the sentencing factors seTitle 18, United States Code, Section 3553(a) supports imposition of a term of inwithin the advisory Guidelines range.

1. Nature and Circumstances of the Offense

Grimm chose lies and deception over honest dealings with authoriemployees quarter after quarter, and year after year while he owned and operatedHealthalicious. His fraud, in which he hid over $900,000 in the restaurants growas designed to conceal his income and enrich himself. The defendant admittedhired unauthorized workers whom he paid off the books in cash, took deliberaobstruct the federal and state governments from collecting taxes he properly oweNew York State out of workers compensation insurance premiums, caused numbusiness and personal tax returns to be filed for several years, and that he lied un

about his crimes. The defendants fraudulent conduct was not by happenstance ounexpected opportunity. It was fraud by design. It involved tracking workers hwhich workers were paid entirely off the books, versus those paid only partialland ensuring that his weekly cash payroll was prepared and distributed. The defschemes required him to take the step of fabricating his restaurants monthly groe-mails to his accountant. Had the defendant simply printed out the sales reportscash register, his fraud would have been exposed.

When called to account for his actions in running Healthalicious, tlied under oath. He lied to frustrate the Civil Action being pursued by his formeand lied in the hope that his extensive fraudulent conduct at the restaurant wouldattention of investigators. The defendants offense is serious precisely because ipattern and repeated practice of fraud and deception. The defendants criminal c



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2. History and Characteristics of the Defendant

Grimms history and characteristics also favor a sentence within thGuidelines range. See 18 U.S.C. 3553(a)(1). There is no doubt that the defendof public service as a member of the United States Marine Corps, an FBI specialmember of the House of Representatives, is laudable and deserves considerationCourt. The defendant, however, was not a simple small businessman overwhelmcomplexity of the tax laws or one confused by the accounting necessary to run a

He is sophisticated. He graduated from law school and was admitted to practiceYork and Connecticut. (PSR 50). He conducted fraud investigations on Wall his time as a FBI special agent. (PSR 7). Even now, in the wake of his convicearns $10,000 per month as a consultant to start-up companies. (PSR 52).

The defendant chose to run his business fraudulently from its incebusiness practices were designed to hide the restaurants income and his subsequrepeated lies were designed to conceal the fraud from federal and New York Staauthorities. Further, when confronted, the defendants first and consistent instinto lie. He lied under oath in the Civil Action. When he was indicted, he feignedat being the target of an improper government investigation. (See Exhibit I at 4 the governments investigation as a vendetta and a witch hunt)). Even his stthe Probation Department in advance of sentencing, which sought to diminish hiconduct and place the responsibility for his crimes on others (see supra, pp. 6 n.2illustrate that he has failed to fully come to terms with his criminal conduct.

3. Need to Promote Respect for the Law, ProvideJust Punishment and Afford Adequate Deterrence

Moreover, a sentence of incarceration within the Guidelines rangesufficient, but not greater than necessary, to meet the goals of sentencing. As diabove, such a sentence is appropriate given the nature of the criminal conduct andefendants characteristics. Further, it will serve the goals of specific and generaSee 18 U.S.C. 3553(a)(2).

The defendants offense conduct is particularly troubling in light othat he held positions as an FBI special agent and as a member of Congress in wswore an oath to support and defend the laws of this country. As such, a term of


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will also signal to other business owners that engaging in similar fraudulent condmet with significant consequences.

III. Restitution

Pursuant to the terms of the Plea Agreement, the defendant agreedrestitution to the IRS and the New York State Tax Department in connection witHealthalicious and his personal federal and state tax liabilities, plus interest an

to be calculated at the time of sentencing. The defendant also agreed to pay restNYSIF in connection with the restaurants workers compensation insurance prethe years 2007 to 2010 in an amount to be calculated at the time of sentencing. (Agreement 6).

The government respectfully requests that the Court order restitutifollowing amounts: (i) $6,700 in unpaid premiums to NYSIF, (ii) $78,211 to the(consisting of lost personal income tax revenue and lost employment tax revenue(iii) $110,304.90 to the New York State Tax Department (consisting of lost persotax revenue and lost sales tax revenue). In accordance with the Plea Agreement,government requests that the Court order the defendant to pay interest and penalamounts due to those entities.4


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IV. Conclusion

For the foregoing reasons, the government respectfully submits thshould sentence Michael Grimm to a term of incarceration within the applicable Sentencing Guidelines range of 24 to 30 months.

Respectfully submitted,

KELLY T. CURRIEActing United States Attorney

By: /s/James D. GattaNathan ReillyAssistant U.S. Attorneys

cc: Defense Counsel (by ECF)Clerk of the Court (PKC) (by ECF)Patricia Sullivan, Senior U.S. Probation Officer (by e-mail)


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DAS:AMC/JDG/NR

F.#2011R00532

UNITED STATES DISTRICT COURT

--

--

EAS'FERNBiffFRIGT

0F

NEW-

Y:0R::

--

-------

-

----------

--

-

--

-

---

~

UNITED STATES OF AMERICA

- against -

14 CR 248

(PK.C)

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-to-

day 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



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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 restauran t's federal 'and state payroll taxes. Some Healthalicious

employees received at least

half

their wages in cash. Other Healthalicious employees

received all of heir 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-reportin g employee wages and concealing the existence

of

some employees, GRIMM

c u s e d --the-paY-t:olLpwcessing.....c..ompanie.sio r _

...o.rt..to......the..lR ....anclthe NYS

Iax_D_ep...artmen..t

less

than

half of the wages Healthalicious actually paid its employees.


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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

submitted to

the

IRS;

d.

GRIMM s

Form

1040 U.S. Individual Income Tax Returns filed

with the IRS;

_ _ New

-Y 0rk.State.Eorm

ST-1 O Q _ _ Q u a r t e r c y _ s a l e s a n d l l s e I a x -

Retums filed

with

the NYS Tax Department; and



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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

ofNew

York. During the deposition, GRIMNI testified that

Healthalicious employees had not been paid in cash. GRIMM also testified that he did not

general ly 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 he deposition, GRIM:M knew that he had sent and received many

a i l s

F ~ l a t d

t G l : I e a l t h a 1 i c i G u s

a r i d a c c e s s e d . . . a l . l d C o n t i n u e d . . t o _ Q _ L e m a i l

account which he did not identify in the deposition and which contained many emails related

to Healthalicious.

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I


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\

5

11. The government is in a position to prove all of the above beyond a

--- -

reasonabledoubt: - Fhefacts

detai-led-above-serve-only- -a-summary-

of

the -evidence-were-

- -

this case to proceed to trial and are not intended to be an exhaustive account of all the

Case 1:14-cr-00248-PKC-RML Document 94-1 Filed 06/19/15 Page 7 of 7 PageID #: 534I . I .

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- -

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the above-captioned case.

Dated:

Brooklyn,New York

Dece111

ber l.2., 2014

~ r v

HAEL

GRIMM

Defendant

j W j f J ~~ f 1

- . Neiman,

Esq

L

Rashbaum, Esq

Stuart

N

Kaplan, Esq.

Joseph G Sconzo, Esq

Counsel to Defendant

By:

LORETTA E LYNCH

United States Attorney

Eastern District o New

York

Anff my M. Capozzolo

rm es D Gatta

Nathan Reilly

6

Assistant United States Attorneys



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EXHI IT

Case 1:14-cr-00248-PKC-RML Document 94-2 Filed 06/19/15 Page 2 of 2 PageID #: 536Re: Mailer

http://mail.aol.com/38366- I l l/aol-6/en-us/mail/PrintMessage.aspx


23/93

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

dr ft

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%

.

. will

d i s ~ e r s o n .

I am very proud and fortunate to have you as a partner and as a fr iend, 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 sk you when do you want the coupons to expire? also how

soon do you w nt the 10 000 menus in the mail?

-----

GaR

-

we

give

-

some

- +-toward s-

the

-ma i-inJ.

--

- -

-

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



24/93

EXHI IT C

Case 1:14-cr-00248-PKC-RML Document 94-3 Filed 06/19/15 Page 2 of 17 PageID #: 538/

- ~ - - - -

1 ~ : : ~

~ _ j


25/93

From :

To:

Cc:

Bee:

Subject:

Date:

Attachments:

Thanks

Healthalcious payroll

Tue Mar 23 2010 17:36:50 E T

Payroll 3-14 - 3-20-201 O xls

Case 1:14-cr-00248-PKC-RML Document 94-3 Filed 06/19/15 Page 3 of 17 PageID #: 539-=. _,

J : : i . - _ ~ ~

..-:_.

-

_,...

I


26/93

WORK SCHEDULE

3/14/10- 3/20/10

TOTAL

HRS

R TE

TO P Y

NET PAY CHECK

Serqio

salarv 800 .00 800.00

400 .00

400.00

fA.leiandro

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

75.90 151.80 75.90

75.90

16.5 4.60 75.90

Luis

50 .0

4.60 230.00 1 . _30 .00

Uose Luis

0.0 4.60

0.00

0.00

0.00

Ricardo

56 .5 4.60 259.90 259.90

259.90

Elisio

24,5

4.60

11 .

25 .5

4.60 117.30

Karla

42 .0 11.00 462.00 462.00 0.00

462 .00

Roneld

18.0

9.50 171 351.50 171.00

180.50

19.0

9.50 180.50

Ivan

0.0 8.00

. 0.00

276.00

0.00 276.00

34.5 8.00 276.00

Lina

0.0 15.00 0.00 0.00 0.00

Riao

16.0

8.00 128.00 256.00 128.00

128 .00

16.0

8.00 128.00

Huao

4.60 0.00 0.00

0.00

Mike

0.00

0.00 0.00

0.0

0.00

0.00 3 022.70

3,022.70

Case 1:14-cr-00248-PKC-RML Document 94-3 Filed 06/19/15 Page 4 of 17 PageID #: 540 -

.::..:

. ;f __ _. ._

.

._

-

-

. ~ - - - - - . . , . . - ==

-

I

j

z - C ~ ~ . = - -

I

_


27/93

From:

To:

Cc:

Bee:

Subject:

Date:

Attachments:

healthalicious

Tue Apr 06 2010 12:58:

09

E T

Payroll 3-28 - 4-03-2010.xls

Sr. muchas gracias

I

Case 1:14-cr-00248-PKC-RML Document 94-3 Filed 06/19/15 Page 5 of 17 PageID #: 541 '

-

J.__


28/93

WORK S HEDULE

TOT L

HRS

...

c;

Seraio

salarv

~ l e j a n d r o

salarv

Miauel

43.0 9.00

Regino

60.0 4.60

Uesus

17.0 4.60

17.0 4.60

Luis

51 .5

4.60

Uose

Luis

0.0 4.60

Ricardo

40.5 4.60

Elisio

24.5 4.60

24.5 4.60

Karla

41

.5 11.00

Roneld

18.0 9.50

18.0 9.50

Ivan

0.0 8.00

32.5

8.00

Lina

0.0 15.00

Riao

15.0 8.00

15-1)


29/93

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.

TH NKS and sorry I wasn t there to do it for you.

Michael

Case 1:14-cr-00248-PKC-RML Document 94-3 Filed 06/19/15 Page 7 of 17 PageID #: 543I .: : : __

_

I

1 ,

~ = : . . . _ . ;

.1


30/93

WORK S HEDULE

TOTAL

HRS

U.T

Sergio

salarv

Alejandro

salary

\/liquel

45.0 $9 .00

Reqino

57.5

$4 .60

Jesus 16.0 $4.60

16.5 $4.60

~ U i

49 .0 $4 .60

Jose Luis

0.0

$4 .60

Ricardo

55.5

$4 .60

Elisio

24.0

$4 .60 .

24.0 $4 .60

Karla

42 .0

$11 .00

Roneld

17.0 $9 .50

17.5

$9 .50

Ivan

0.0

$8.00

34.5 $8 .00

Lina

0.0 $15 .00

Riao 15.0 $8 .00

. 14.5

$8 .00

Huao

$4.60

3

Mike

I

0.0

$0.00

4/04/10- 4/10/10

fOP Y

N T PAY :HECK

$800.00

$800.00 $400.00

$650.00

$650.00

$350.00

$405.00

$405.00

$0.00

$264.50

$264.50 $0.00

$73 .60

$149.50 $73.60

$75.90

$225.40

$225.40 $0.00

$0.00

$0.00

$255.30

$255.30

$110.40

$220.80 $110.40

$110.40

$462.00

$462.00 $0.00

161

.5 $327.75

$161.50

$166.25

$0.00

$276.00 $0.00

$276.00

$0.00 $0.00

$120.00

$236.00

$120.00

$116.00

$0.00

$0.00

$0.00 $0.00

$0.00

$4 272.25

1

215.50

$4,272.25

$400.00

$300.00

$405.00

$264.50

$75.90

$225.40

$0 .00

$255.30

$110.40

$462.00

$166.25

$276.00

$0.00

$116.00

$0.00

$0.00

$3 056.75

$3,056 .75

$4,272 .25


I ;:_

~ . . , . - . :

-..:o:- ' _.;: . ::: ::

.

_ _

_

. .


31/93

From:

To:

Cc:

Bee:

Subject:

Date:

Attachments:

healthalicious

Wed Apr 21 2010 11:05:11 E T

Payroll

4 11

417 2010.xls

Case 1:14-cr-00248-PKC-RML Document 94-3 Filed 06/19/15 Page 9 of 17 PageID #: 545I:

I


32/93

WORK SCHEDULE

TOT L

HRS

R TE

Sergio

-

salary

~ l e i a n d r o

salarv

Miouel 49 .0 9.00

Reoino

61 .0 4.60

Uesus 18.0 4.60

18.0 4.60

Luis

51.0 4.60

Uose

Luis

0.0

4.60

Ricardo 53.0 4.60

Elisio

24.0

4.60

24.0

4.60

Karla

42.0

11

.00

Rone d

18.5 9.50

17.5 9.50

van

0.0 8.00

34.0 8.00

Lina

0.0 15.00

Rigo

15.5 8 .00

14.5

8.00

Hugo

4.60

Mike

ILL

0.0

0.00

4/11/10- 4/17 10

T P Y

NET P Y

800.00

800.00

650.00

650 .

441.00 441.00

280.60

280.60

82.80

165.60

82.80

234 .60

234 .6

0.00

0.00

243.80 243.80

110.40 220.80

110.40

462 .00

462.00

175.75

342.00

166.25

0.00

272 .00

272 .00

0.00 0.00

124.00

240.00

116.00

0.00

0.00

0.00

0.00 4 352.40

4,352.40

CHECK

400 .00

350 .00

0.00

0.00

82.80

0.00

110.40

0.00

175.75

0.00

124.00

0.00

1 242 .95

400.00

300.00

441.00

280.60

82.80

234 .60

0.00

243.80

110.40

462.00

166.25

272.00

0.00

116.00

0.00

0.00

3 109.45

3,109.45

4,352.40


-

:

1 ~ > 5 . : ~ . = : -

- -

- I

..;,,._ ~ - - =

----

- - - - I


33/93

From :

To:

Cc:

Bee:

Subject:

Date:

Attachments:

Sr.

healthalicious

Tue Apr 27 2010 12: 16:23 EDT

Payroll 4-18 - 4-24-201 O.xls

Karla will send the checks and envelopes to Pita Grill.

Thanks

Did

we

order the waffle maker?

MgG

Case 1:14-cr-00248-PKC-RML Document 94-3 Filed 06/19/15 Page 11 of 17 PageID #: 547_-J~ = - ' ~ - . . , . - = - - - '

~ = - '

-I - - -

I

I -

~ - I '


34/93

WORK SCHEDULE

TOTAL

HRS

_

--

ISeraio

I salarv

I

Alejandro

salarv

f--- '-

Miguel

55.0

$9.00

Regino

60 .0

$4.60

Jesus

16.5 $4.60

16.5

$4.60

~ u i s

47.5 $4.60

Jose Luis 0.0 $4.60

Ricardo

52.5

$4.60

Elisio

23.0

$4.60

23.5 $4.60

Karla 40.5

11

.00

Rone

d

17.0 $9.50

18.5 $9.50

van

0.0

$8.00

31 .0

$8.00

Lina

0.0 $15 .00

~ i a o

14.0 $8.00

15.0


35/93

From:

To:

Cc:

Bee :

Subject:

Date:

Attachments:

Tue May 2 7 :11 :25 E T

Payroll

5-01

5072010.xls

forgot the attachment

Case 1:14-cr-00248-PKC-RML Document 94-3 Filed 06/19/15 Page 13 of 17 PageID #: 549I

- :__ _

__

_,_ ;__ --

-

I

I


36/93

WORK SCHEDULE

5/01/10- 5/07 10

TOTAL

RS

T P Y

\JET

PAY

Seraio

I

salarv 800 .00

800 .00

I

Alejandro

r

salary 650 .00 650.00

-

Miguel

30.0 9.00 270.00

270.00

Regino

61.5 4.60 282.90

282 .90

Jesus

17.0

4.60

78.20

156.40

17.0 4.60 78.20

uis

43 .5 4.60

200.10 200.10

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

23 .5 4.60 108.10

Karla

40 .5 11.00 445.50

445.50

Roneld

18.5 9.50 175.75

351 .50

18.5 9 .50 175.75

Ivan

0.0 8.00 0 .00 260.00

32.5 8 .00 260 .00

ina

0.0 15.00 0.00 0.00

Riao

16.0 8.00 128.00 252.00

t

_

5

R

no

124 .

00

Huao

4.60 0 .00 0.00

1

Mike 0.00

0.0

0.00

0.00 4 174.40

4,174.40

CHECK

400 .00

350.00

0.00

0.00

78.20

0.00

108 .10

0.00

175.75

0.00

128.00

0.00

1 240 .05

400.

00

300.00

270.

00

282.90

78.20

200.10

0.

00

289 .80

108 .10

445 .50

175 .75

260.00

0.00

124 .00

0.00

0.00

2 934.35

2 ,934.35

4,174.40

Case 1:14-cr-00248-PKC-RML Document 94-3 Filed 06/19/15 Page 14 of 17 PageID #: 550__ _;

I

1

I ,


37/93

From:

To:

Cc:

Bee

:

Subject:

Date:

Attach men ts:

Sr

Payroll

Tue Jun 08 2010 19:20:09

E T

Payroll 5-30 - 6-05-2010.xls

I

am

sorry but I can't make it into the city tonight.I will text you the details

Thanks as always

Michael


. >o

.

:

1 ~ . . ~ . . - - - -

_ _

~ ~ I

-

.

. _..._

.

~ t ; . _ ~ ~


38/93

WORK SCHEDULE

TOTAL

HRS

- .,

K M P E

Sergio

-

salary

Alejandro

salary

Freddy

23.5

9.00

23.0 9 .00

~ e a i n o

58.0

4.60

Uesus

.

4.60

0.0 4.60

Carlos

48 .0 4.60

Lauro V e l a z q u e ~

21

.0 4.60

21

.0

4.60

Ricardo

52.5 4.60

Elisio

24.0 4.60

24.5 4.60

Karla

65 .5 11.00

Roneld

0.0 9.50

0.0 9.50

Ivan

0.0 8.00

32.5 8.00

ca

lease

19.0 8.50

19.5 8 .50

Riao

15.5 8 .00

1.S. )

ct . ) )

Hugo

4.60

Mike

-

0.0

0.00

5/30/10- 6/05/10

T P Y

NET PAY

800.00 800.00

650.00 .0

211.50 418.50

207.00 207.00

266.80 266.80

0.00 0.00

0.00

220.80

20.80

96.60 193.20

96.60

241 .50

_4

v

110.40

223.10

112.70

720.50 720.50

0

0.00

0.00

0.00

260 .00

260 .00

161 .50 327.25

165.75

124.00

244 .00

~ 1 2 0

0.00

0.00

0.00

0.00

4 772 .65

4,772.65

~ H E C K

400 .00

I

0.00

0.00

0.00

'.

96.60

110 .40

0.00

0.00

0

.00

161 .50

124.00

0.00

1 242 .50

400.00

211.50

266.80

0.00

2

.8

96.60

_ ~ 1 .

112.70

720.50

0.00

260.00

165.75

120.00

0.00

0.00

3116.15

3,116.15

4,358.65

'

Case 1:14-cr-00248-PKC-RML Document 94-3 Filed 06/19/15 Page 16 of 17 PageID #: 552 I jI

- I


39/93

From:

To:

Cc:

Bee

Subject:

Date:

Attach men s:

sorry it took so long - thank you Sr

Tue Jun 15 2010 17:10:16 E T

Payroll 6-06 - 6-12-2010.xls

Karla has everything ready in a bag and the checks Thank s as always my friend - say a prayer that

the land lord is willing to bargain.

Case 1:14-cr-00248-PKC-RML Document 94-3 Filed 06/19/15 Page 17 of 17 PageID #: 553I - -- - J - JJ :;


40/93

WORK SCHEDULE

TOTAL

HRS

~ T E

ISeroio

salarv

Aleiandro

salarv

Freddv

25.5 9.00

25.0 9.00

Reaino

62 .5 4.60

Uesus

4.60

0.0 4.60

Carlos

48 .0

4.60

Lauro Velazque.

21.0 4.60

22.5 4.60

Ricardo

52.5 4 .60

Elisio

26.5 4.60

26 .5 4.60

Karla

65 .0 11 .00

Rone

d

0.0 9 .50

0.0

9.50

Ivan

0.0 8.00

31.5 8.00

ca

lease

16.5 8.50

16.5

8.50

Riao

16.0 8.00

5 _n


41/93

EXHIBITD


-

:>:

-

-

__

Re : Upda

te

http mail.aol.com/38366 l l l/aol6/

en

u

s

mail/PrintMessage.as

px

-_:


42/93

Subject:

Re: Update

Date: Sat , Apr 3, 2010 4:24

pm

Sr

.

Thank you I think we may just want to swi tch 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 tax es 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

ofl

-

1 l s Q _ _ c : 1

t t l n n g t h l l _ f 1 a y ~ e ~ ~ _ f ~ r l

the

~ l t _ : G r

p i o y e a n d b o o e a l f h a l i c f o u s we -

wT

lfjUst

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 .


43/93


I

I .


44/93

Bee:

Subject:

e nee o

avo1

e same mistakes

and I

need you to understand

why I

am frustrated

Date:

Sat Feb

6

2010 2 :34:17 EST

Attachments:

Page 2 of 5


I I -

- I

0

I

I -

. >

i - - -


45/93

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


46/93

Page 4 o 5


I

L


47/93

MgG

Page 5

o

5


48/93


Case 1: 11 -cv-08736-CM Document 1 Filed 12 01 11

.:

11 w


49/93

MICHAEL

f

AILLACE ASSOCI ATES, 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

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT

OF

NEW YORK

- - ~ - - - - - - - - ~ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - )

REGINO

PEREZ, and CARLOS

PEREZ,

individually and on behalf

o

others similarly

situated

Plaintiffs

-against-

GRANNY

SAYZ

LLC,

HEALTHALITIOUS

NYC INC. (di b/a HEALTHALICIOUS),

BENNETT ORF

ALY and MICHAEL

GRIMM

Defendants.

-------------------------------------------------------)(

COMPLAINT

COLLECTIVE ACTION UNDER

29

u.s.c.

216(b)

ECF Case

Plaintiffs Regino Perez and Carlos Perez, individually and on behalfof 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

~ ~ o l l e c t i e h 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


50/93

N TURE OF

THE

CTION

I. Plaintiffs

are

former employees

o

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

o

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

he

Defendants. They were primarily

employed as deliverymen. However, each position

often

entailed additional, extensive

responsibilities that

were

not related

to the principal duties o

each job.

5.

At all times relevant to this complaint, Plaintiffs worked for Defendants in excess

o

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

o

their

hours worked, failed

to

pay Plaintiffs appropriately

for

any hours worked over forty (40), either

at

the straight rate

o

pay, or

for any

additional overtime premium. Further, Defendants

failed

to

pay Plaintiffs the required spread

o

hours pay for

any

day in which they had to work over

ten

l ~ O } J u u r s ~ ~ ~ ~

6.

At all

times relevant

to this complaint,

Defendants maintained a policy

and

practice

o

requiring Plaintiffs

and

other

employees to work in

excess

o forty

(40) hours per

2


Case

1:

11 cv 08736

CM

Document 1 Filed

12 01

1 1 Page 3 of

19

week without paying them the minimum wage and overtime compensation required by federal


51/93

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, non

tipped 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 Pla intiffs' 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 behal f

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 ofhours 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.

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13. Plaintiffs seek certification of this action as a collective action on beh alf

of

_


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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.

TH

PARTIES

laintiffs

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.

Plaint iff 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.

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Case 1:11 cv 08736 CM Document 1 Filed

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efendants


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18. At

all

relevant times, Defendants

owned

operated, and/or controlled a health food

takeout restaurant located at

1594

2nd A

venue

New York New

York

10028, under the name o

Healthalicious.

19.

Upon information and belief, Granny

Sayz

LLC ( Granny Sayz ) is a domestic

corporation organized and existing under the laws of

the

State o New York.

Upon

infonnation

and

belief it maintains

as

its principal

place o

business a health

food

takeout restaurant

located

at 1594 2nd

Avenue New

York

New

York

10028 under the

name o

Healthalicious.

20.

Upon

information

and

belief, Healthalitious

NYC Inc.

( Healthalitious )

is

a

domestic

corporation organized

and

existing

under the laws

o the State

o

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 o

Healthalicious.

21.

Defendant Michael Grimm

is an

individual engaging (or who

was

engaged)

in

business

in this judicial distric.during

the

relevant time period. Defendant Michael Grimm is

sued individually in his capacity

as an

owner officer and/or agent o the Defendant

Corporations. Defendant Michael

Grimm

possesses

or

possessed operational control over

Defendant

Corporations,

an

ownership interest in Defendant Corporations, or controlled

significant functions

o

Defendant Corporations.

He

determined the wages

and

compensation

o

the employees of Defendants, including Plaintiffs, and established the schedules o 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

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Case 1:11 cv 08736 CM Document 1 Filed 12 01 11 Page 6 of 19

sued individually in his capacity as an owner, officer and/or agent

o

the Defendant


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Corporations. Defendant Bennett Orfaly possesses or possessed operational control over

Defendant Corporations, an ownership interest in Defendant Corporations, or controlled

significant functions o Defendant Corporations. He detennined the wages and compensation

o

the employees

o

Defendants, including Plaintiffs, and established the schedules o the

employees, maintained employee records, and had the authority to hire and fire employees.

FACTUAL ALLEGATIONS

Defendants onstitute Joint Employers

23. Defendants operate a health food takeout restaurant located in the Upper East Side

o 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 o Defendant

Corporations.

25. Defendants are associated and joint employers, act in the interest

o

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 Plaint iffs (and other

similarly situated employees ) working conditions, and over the policies and practices with

re speet te-the-employment.and-compensation_oflh_e ai tiffs and all similarl situated

individuals, referred to herein.

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27. Defendants jointly employed the Plaintiffs, and all similarly situated individuals,

.,


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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

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Corporations as an entity legally separate and apart from himself, by, among other things:


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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

o

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 Plaint iffs' employers within the

meaning

o

he FLSA and New York Labor Law. Defendants had the power to hire and fire

Plaintiffs, control the terms and conditions o employment, and determine the rate and method o

any compensation in exchange for Plaintiffs' services.

32. In each year from 2005

to

the present, the Defendants had gross annual sales

o

not less than 500,000 (exclusive

o

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

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the restaurant

on

a daily basis such as fruits, vegetables, bread, meat, dishwashing soaps, and


57/93

beverages were goods produced outside of the state of New York.

ndividual 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 egino Perez

36. Plaintiff Perez was employed by Defendants from approximately April 2007 until

on or about March 25 2011.

37. Defendants ostensibly employed Plainti ff 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 Plaint iff 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.

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58/93


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51.

Defendants ostensibly employed Plaintiff Carlos

as

a deliveryman.


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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

o

New

York.

55 Plaintiff Carlos's work duties

required

neither discretion nor independent

judgment.

56.

Plaintiff

Carlos

regularly

worked in

excess

o 40

hours per

week.

57.

From approximately

March

2010 until on

or about March

10,

2011, Plaintiff

Carlos worked

a

schedule o 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 o 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

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61. Defendants did not account for these tips in any daily, weekly, or other


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accounting o 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 o pay for all o his hours

worked.

63. No notification, either in the form

o

posted notices, or other means, was given to

Plaintiff Carlos regarding overtime and wages under the FLSA and NYLL.

Defendants General mployment Practices

64. Defendants regularly required the Plaintiffs to work in excess o forty (40) hours

per week without paying them the proper minimum and overtime wages or spread o hours

compensation.

65. At all times relevant to this complaint, Defendants maintained a pol.icy and

practice

o

requiring the Plaintiffs and all similarly situated employees to work in excess o forty

(40) hours pe r week without paying them appropriate minimum wage and/or overtime

compensation, or spread o 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

o

their

pay received, in part so as to hide Defendants violations o the wage and hour laws, and to take

advantage

o

Plaint iffs relative lack

o

sophistication in wage and hour laws.

67. All Plaintiffs were paid their wages wholly in cash until approximately October

2010 and in a combination o 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 o hours Plaintiffs (and similarly situated individuals) worked, and to

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avoid paying Plaintiffs properly for (1) their full hours worked, (2) for overtime due, and (3) for


61/93

spread

o

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 o the tips earned by Plaintiffs for the

deliveries they made to customers.

71. Defendants required Plaintiffs to perform the jobs o multiple employees in

addition to their primary responsibilities as deliverymen. These responsibili ties 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 o

these Plaintif fs hours worked.

72. Defendants required Plaintiffs to perform the jobs

o

multiple employees in

addition to their primary responsibilities as deliverymen. These responsibili ties 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 o

these Plaint iffs hours worked.

73. Several Plaintiffs were ostensibly employed as deliverymen (tipped employees)

y 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 .

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62/93

74.

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

he

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

one-

half 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

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hire and fire Plaintiffs, control the tenns and conditions of employment, and detennine the rate


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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 of 9 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. Plaintiffs repeat and reallege all paragraphs above as though fully set forth herein.

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 Pla

usa v michael grimm - us government recommendation on sentencing

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