Thirteen members of the Mafia and of Russian organized crime were indicted today on charges of collaborating in a scheme to evade $60 million in Federal and state taxes on the sale of gasoline and fuel oil, Federal officials said.
The United States Attorney for New Jersey, Michael Chertoff, called it the largest tax-evasion conspiracy of its kind, part of a larger problem nationwide that defrauds the Government of more than $2 billion a year. The figure is an estimate based on retail gasoline sales and intelligence from informants.
The conspiracy, a scheme that has become increasingly common in the last decade, involves the formation of a chain of dummy wholesale distributors, whose existence helps disguise the intent to avoid taxes. Passing Along the Cost
In a legitimate transaction, fuel leaves the refinery and is sold to a distributor, one of several in the wholesale chain. These refiners, wholesalers of gasoline, are known as "producers." Under Federal tax law producers who register with the Internal Revenue Service may sell to one another without having to pay excise tax. But eventually, as the gasoline makes its way to market, a wholesaler will sell to a small company without the exemption, or directly to the retailer. At this point, the excise tax must be paid, and the producer-seller who has the tax exemption must pay the tax, passing the cost along with the sale price of the fuel.
In illicit transactions involving groups of dummy wholesalers who falsely claim tax-exempt status as "producers," the fuel is moved from one company to another in a series of paper transactions. But the fuel itself never leaves the initial storage center.
Often, the indictment said, invoices among the chain of companies reflected sale prices higher than those actually paid. The difference, the Government said, was often refunded to certain retailers as a cash kickback.
One company in the illegal chain was called the "burn" company, which supposedly would be responsible for paying the applicable taxes. But all its documents were false. In fact, the indictment said, it was a sham intended to insulate the other companies from detection.
When the tax man came calling, the "burn" company disappeared and the other companies in the chain dissolved. Undercutting Wholesalers
The Government said potential tax revenue ends up as a mob tax -- in this case to the Gambino crime family -- and to enrich the conspirators.
To maintain their illicit business association, the conspirators also reinvest some of the unpaid tax money in their companies, enabling them to undercut legitimate wholesalers by a few cents a gallon. This further tightens the mob's hold on the industry, officials said.
The defendants are charged with multiple counts of racketeering, wire fraud, tax evasion and money laundering and face millions of dollars in fines and prison terms of 30 years to life.
Mr. Chertoff and James C. Esposito, the agent in charge of the Federal Bureau of Investigation in New Jersey, said the indictments came after a four-year inquiry.
In February 1992, a fire destroyed a building in Ewing Township, N.J., near Trenton, where the undercover agents had established a series of distributorships. Joint Illegal Operation
After the fire, the agents were contacted by some of those indicted today and were told they would not be allowed to conduct business unless they agreed to make payments and to have their profit margin regulated by the assocation formed by the Gambinos and the Russians.
Mr. Chertoff described the case as a "snapshot of how the traditional and emerging organized crime families operate together."
Mr. Chertoff described the Gambinos' involvement as typical of Mafia groups in providing an "enforcement mechanism." The Gambino family entered the bootleg fuel business recently, officials said, after initial success by the Lucchese, Colombo and Genovese families in infiltrating organizations already set up by Russian emigres.
The prime Gambino figure indicted today was Anthony (Fat Tony) Morelli, who was identified as a captain in the crime family. He was accused of supervising Gambino associates who used threats and violence to help maintain the illegal fuel operation and collect up to 2.25 cents for each gallon sold through the association of dummy companies. Mr. Chertoff said $6.7 million in cash was paid as a mob tax to the Gambino crime group.
Mr. Morelli's associates were identified as Joseph Maritato of Manalapan, N.J., Edward Dougherty of Staten Island, John A. Brogna of Brooklyn, Anthony Zummo of Commack, L.I., and Gregory Federico of Mountainside, N.J.
Victor Zilber of North Brunswick, N.J., who came to the United States from the Soviet Union in 1979 and was naturalized two years ago, was described as operating many of the dummy companies. The indictment said he worked closely with Mela Rubinov, also of North Brunswick, and Arkady Seifer of Brooklyn, who were partners in the associaton of companies run by Zilber.
Igor Roizman of Brooklyn and Jacob Dobrer and his son, Vyacheslav, both of Staten Island were also identified as members of the bootleg fuel consortium.
A 13th defendant, George Doddy of Cherry Hill, N.J., was described as an associate of the Dobrers who set up a meeting for the attempted extortion of the undercover business by the Dobrers. All were arrested today, except the Dobrers, whose whereabouts overseas were not known. Mr. Roizman is serving a sentence in the Federal prison in Allenwood, Pa.
Thanks to Charles Strum
Thursday, May 06, 1993
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