Grimm, 44, had said he would stay in Congress as long as he could, but he reportedly talked with House Speaker John A. Boehner and said Monday night that he would step down.
“After much thought and prayer, I have made the very difficult decision to step down from Congress effective Jan. 5," Grimm said in a statment. "This decision is made with a heavy heart, as I have enjoyed a very special relationship and closeness with my constituents, whom I care about deeply."
Grimm had been reelected to his Staten Island seat in November, even though he was under indictment. He admitted last week to aiding in the filing of a false tax return, according to court filings.
"The events which led to this day did not break my spirit, nor the will of the voters," Grimm said in the statment. "However, I do not believe that I can continue to be 100% effective in the next Congress, and therefore, out of respect for the office and the people I so proudly represent, it is time for me to start the next chapter of my life."
Grimm was indicted in April on federal charges including mail fraud, wire fraud, tax evasion, employing undocumented workers and perjury in relation to a Manhattan fast-food restaurant he once co-owned and operated.
Grimm admitted that he had made "off the books" payments to employees and under-reported nearly $1 million in gross receipts to the Internal Revenue Service and New York state tax collectors. He also admitted that he lied during a deposition about whether employees had been paid in cash, and whether he had used email accounts to operate the restaurant.
"I should not have done it, and I am truly sorry for it," he told reporters outside the courtroom.
Grimm sold his interest in the restaurant before taking office in 2011, prosecutors said.
If convicted, Grimm could have faced a prison sentence of anywhere from six months for hiring undocumented workers to 20 years for each of the mail and wire fraud charges, prosecutors said.
Grimm is scheduled to appear for sentencing June 8, and could still get prison time. He faces up to three years in prison, according to prosecutors, and has agreed to pay restitution to the IRS and New York state.
Grimm, a former FBI special agent and Marine, has called himself the victim of a political witch hunt.
Controversy has dogged the congressman for years.
Federal prosecutors first began investigating Grimm in a probe of an alleged “donor swapping” scheme designed to skirt individual campaign contribution limits to candidates.
In January, Grimm threatened to throw a New York TV reporter off a balcony and break him in half “like a boy” for asking him about the allegations on camera. Video of the incident quickly went viral, and he was pilloried by pundits and on late-night shows.
Earlier this year, the House Ethics Committee announced it had opened an investigation related to the fraud charges, but deferred action as the federal investigation continued.
He gave up his post on the House Financial Services Committee after his indictment, but vowed to seek another term, winning reelection in November.
"I know who I am and I know what I've done for this country," Grimm told reporters after pleading not guilty in April. "I know I'm a moral man, a man of integrity. I also know that I have a lot more service and leadership to provide this country, and that's exactly what I intend to do."
Democratic leaders called for his ouster. In a statement released ahead of Grimm’s plea, House Minority Leader Nancy Pelosi (D-San Francisco) released a statement calling on Boehner to “insist that Congressman Grimm resign immediately.”
The Democratic Congressional Campaign Committee also called for Grimm’s resignation.
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