Updated at 4:00pm ET, 4/28/2014
(CNN) - He already faced a tough re-election this year, but things are now even tougher for Republican Rep. Michael Grimm. And national Democrats are pouncing.
The two-term Republican, who represents New York's 11th Congressional District, entered a not guilty plea Monday in federal court in Brooklyn to various charges that include mail fraud and hiring undocumented workers, according to an unsealed indictment.
After he was released on bond, Grimm talked to reporters, saying he would fight the charges, which he described as a "political witch hunt."
"As far as all these allegations today I am going to let my legal team take care of these charges and we are going to fight tooth and nail. We are going to fight tooth and nail until I am fully exonerated. So let me be perfectly clear I will not abandon my post or the wonderful people who entrusted me to represent them. I have their backs and I know that they have mine. I will get right back to work as I always have. With honor and distinction I will serve and then, on top of all that, I have an election to win," Grimm said.
Grimm, a tough-talking former Marine and undercover FBI agent, narrowly won the district, which includes the entire New York City borough of Staten Island and the Bay Ridge, Bensonhurst, and Dyker Heights neighborhoods of Brooklyn, in his 2010 election and 2012 re-election. But President Barack Obama narrowly carried the district in his re-election victory.
Even before the latest developments, Grimm was facing a tough re-election against Democrat Domenic Recchia, a former city councilman. And national Democrats see the race as one of their top pick up chances this November.
"This race was already one of our best pickup opportunities in the country, with a strong Democratic candidate running against a scandal-plagued Republican congressman for a seat where voters supported President Obama. It's never been more clear that the people of Staten Island and Brooklyn deserve new responsible representation," Rep. Steve Israel of New York, the chairman of the Democratic Congressional Campaign Committee, said in a statement on Monday.
The rival National Republican Congressional Committee declined to comment. But the New York State Republican Committee called the charges politically motivated
"The Holder Justice Department has been among the most political in history. Congressman Grimm will have his day in court and we would all be wise to reserve judgment until more facts emerge," said David Laska, communications director for the New York Republican State Committee.
Grimm was in the national spotlight following the State of the Union in January, when a clip of him threatening to throw a reporter over a Capitol Hill balcony went viral. The reporter was trying to ask Grimm about allegations of wrongdoing.
Grimm is accused of not reporting more than $1 million in cash revenue at the Manhattan restaurant he operated from 2007 to 2010, and using the cash to "pay workers off the books," U.S. Attorney Loretta Lynch told reporters in New York.
Asked about Grimm on Monday, House Majority Leader Eric Cantor said "I haven't had a chance to talk to him and I hope to be able to do so today. I will probably be making a statement after that."
Cantor, the number two House Republican, wouldn't answer a question on whether Grimm should keep his seat on the Financial Services Committee.
A top political handicapper says political damage has already been done.
"Getting arrested usually isn't part of the campaign playbook for vulnerable incumbents facing competitive re-election races. I think Grimm had the advantage in his re-election race but getting arrested usually qualifies as a game-changer," Nathan Gonzales, deputy editor of the non-partisan Rothenberg Political Report, told CNN.
The Rothenberg Political Report, along with the Cook Political Report, another top non-partisan handicapper, changed their ratings of the race from "Lean Republican" to "Lean Democrat."
CNN changed its ranking of the race from "Tilt Republican" to "Tilt Democrat."
Even if Grimm did drop out, his name would still appear on the November ballot, as the deadline for a candidate to decline his party's nomination passed two weeks ago. A New York State GOP source said that the only way for Grimm's name not to appear on the ballot in the midterms would be for Grimm to be convicted, to be nominated for a judgeship, or for the congressman to declare residency outside his current district.
Even if the Democrats win back the seat, they still a challenge to win back control of the House. Democrats need a net gain of 17 seats from the GOP to regain control of the chamber. Political handicappers consider that a tall order, considering the shrinking number of competitive congressional districts nationwide.
CNN's Evan Perez, Shimon Prokupecz and Deirdre Walsh contributed to this report