By Katie Honan 

A New York City councilman pleaded guilty in Manhattan federal court to a misdemeanor tax-fraud charge for filing fraudulent information on income and expenses tied to his real estate management business, prosecutors said Thursday.

Chaim Deutsch, a Democrat who represents parts of Brooklyn, failed to pay $82,000 in taxes owed to the federal government between 2013 and 2015, according to a criminal complaint. Prosecutors in the U.S. Attorney's office for the Southern District of New York said he also falsely claimed personal expenses as business expenses.

Mr. Deutsch, 52 years old, was first elected in 2014 and for part of his time in office he was the sole owner of Chasa Management, Inc., a real estate management business, prosecutors said.

The councilman faces up to a year in prison and will have to pay restitution for unpaid taxes, according to the U.S. Attorney's office.

His lawyer, Henry Mazurek, said in a statement that Mr. Deutsch would repay the taxes he owes. "Mr. Deutsch's dedication to public service will not be diminished, and he looks forward to completing his elected term," Mr. Mazurek said.

Mr. Deutsch is term-limited and is set to leave office at the end of the year.

Council Speaker Corey Johnson, a Democrat, said Thursday at an unrelated press conference that he wasn't aware of the investigation and wasn't sure how Mr. Deutsch could continue in his role. Mr. Johnson said a misdemeanor guilty plea doesn't automatically lead to a councilmember's expulsion.

"He's not automatically expelled under the charter but I don't know how he himself would want to continue, given he's pleading guilty to a very serious federal crime," he said.

A spokeswoman for the council said it was looking to remove Mr. Deutsch from his committees, including his role as chair of the veterans committee, and from his role in allocating some city funds to organizations in his district.

In February, New York Mayor Bill de Blasio signed into law a bill that prevents former lawmakers from running for city office if they have ever been convicted of public corruption.

"There must be real consequences for committing tax fraud and we will support the actions taken by City Council on this matter," mayoral spokesman Bill Neidhardt said about Mr. Deutsch's guilty plea.

The city's Department of Investigation, the U.S. Attorney's Office and the Internal Revenue Service conducted a joint investigation into Mr. Deutsch's tax filings.

"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.

Margaret Garnett, the commissioner of the city's Department of Investigation, said the conviction was "dispiriting."

"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," she said in a statement.

Starting in 2018 city council members were prohibited from earning most outside income in exchange for a significant pay raise.

Queens Councilman Ruben Wills was removed from office in 2017 after he was convicted of fraud and grand larceny, which were felony charges. He served two years in prison but is running for office again after the state appeals court reversed the conviction.

Last year, the council voted to remove former Bronx City Councilman Andy King from office following investigations into alleged misconduct and abuse of staff. He was the first council member to be removed from the seat without a criminal conviction.

(END) Dow Jones Newswires

April 22, 2021 14:57 ET (18:57 GMT)

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