Grimm entered a guilty plea to one count of aiding in the filing of a false tax return. He had been set to go to trial in February on charges of evading taxes by hiding more than $1 million in sales and wages while running a Manhattan health-food restaurant.
Grimm, joined in court by two attorneys, acknowledged sending his accountant underreported receipts and using the leftover money to pay employees off the books and cover other expenses.
News of the planned plea quickly brought pressure from Democrats for Grimm to resign his seat.
The Democratic Congressional Campaign Committee said in a statement before his court appearance today that it was "past time for Michael Grimm to go," calling his continued presence in Congress "a disservice to the people of Staten Island and Brooklyn and a stain on the institution."
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The DCCC and House Minority Leader Nancy Pelosi called on House Speaker John Boehner to ensure Grimm's departure.
Asked in October whether he would resign if found guilty, Grimm responded, "Certainly, if I was not able to serve, then of course I would step aside."
But if Grimm refuses to resign, it would take a rare vote by his fellow lawmakers to expel him from the House. The last member to be expelled was James Traficant, who was kicked out of Congress in 2002.
According to an indictment, the tax fraud began in 2007 after Grimm retired from the FBI and began investing in a small Manhattan restaurant called Healthalicious.