Chaim Deutsch Pleads Guilty to Tax Fraud

City Council Member Chaim Deutsch, who represents southern Brooklyn, has pleaded guilty to tax fraud related to outside income from his real estate management company.

According to the U.S. Attorney for the Southern District of New York, Deutsch filed a personal tax return for the 2015 calendar year "that included false and fraudulent information concerning his income and business expenses in connection with operating Chasa Management." Prosecutors say that the tax returns for 2013 through 2015 included evasions of $82,076 in taxes.

Deutsch, a Democrat and the chair of the Council's Jewish Caucus, was elected to serve the 48th District—which includes Brighton Beach, Sheepshead Bay, and Midwood—in 2014. Beginning in 2017, Council members were banned from earning outside income, effective in 2018; Deutsch had said he would be forgoing the Chasa income (which was somewhere in the $100,000-249,000 range) and remain a part of the Council. (His guilty plea concerns a tax filing that pre-dates the rules change on outside income.)

"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. "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.  My Office will continue to work tirelessly with our law enforcement partners to hold our elected officials accountable when they break the law for their own financial benefit."

NYC Department of Investigations Commissioner Margaret Garnett, who was involved in the probe, said, "It is dispiriting when a sitting City Council Member is convicted of a crime.  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.  DOI was pleased to work side-by-side with our partners at the IRS and the U.S. Attorney’s Office for the Southern District of New York on this investigation."

Deutsch pleaded guilty in Manhattan federal court on Thursday to one count of filing a false tax return in 2015. He also agreed to pay back the $82,076, plus interest. He will be sentenced on July 29th, and faces up to one year in prison with a maximum of a year of supervised release, plus a maximum fine of $100,000.

The 52-year-old Council Member is term-limited, and Amber L. Adler, Binyomin Zev Bendet, Steven Saperstein, Heshy Tischler, and Mariya Markh are vying for the Council seat. Deutsch lost a Congressional primary against Rep. Yvette Clarke last year; during that challenge, Deutsch essentially blamed Clarke and Democrats in power for the pandemic, looting, attacks on the police, and more in a campaign video.

"No one is above the law, not even Council Members and this tax fraud misdemeanor is incredibly troubling news," Jennifer Fermino, spokesperson for the City Council, said. "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."

When former Council Member Dennis Gallagher pleaded guilty to sexual assaulting a woman in his district office in 2008, he vacated his seat a month after entering his plea.

However, Deutsch intends to complete his term. His attorney, Henry E. Mazurek, said in a statement, "Today, my client pled guilty to a one-count misdemeanor tax offense of making false statements on a tax return. He accepts the responsibility of his actions and intends to full repay the $82,000 in taxes he owes. Mr. Deutsch's dedication to public service will not be diminished, and he looked forward to completing his elected term."