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FOR IMMEDIATE RELEASE TAX

FRIDAY, DECEMBER 23, 1994 (202) 616-2771


TDD (202) 514-1888

FOUR MEN WITH TIES TO WELL KNOWN NEW YORK ORGANIZED CRIME
FAMILIES WERE SENTENCED IN EXCISE TAX FRAUD CASE

WASHINGTON, D.C. -- Four men with ties to well known New


York organized crime families were sentenced today for their
involvement in a $34 million gasoline excise tax evasion scheme.
Judge Leonard D. Wexler of Hauppauge, New York, sentenced Michael
Varzar, Paul Sharp, Frederick "Buddy" Adrion, and Joseph "Chubby"
Audino to the following:
Michael Varzar--52 months imprisonment, $15,000 fine, three
years supervised release and $250 special assessment.

Paul Sharp--35 months imprisonment, three years supervised


release and $150 special assessment.

Frederick Adrion, a Luchese crime family associate--34


months imprisonment, 3 years supervised release and $100
special assessment.

Joseph Audino, soldier in the Colombo crime family--32


months imprisonment, 3 years supervised release and $100
special assessment.

Previously, Vyacheslav Dobrer, a/k/a "Sol Dobrer," was


sentenced to 37 months imprisonment, Frank Sciortino, a/k/a
"Frankie the Bug," was sentenced to 60 months imprisonment and
Victor M. Orena, a/k/a "Vic Jr.," a/k/a "The Little Guy," was
sentenced to 51 months imprisonment for their involvement in the
same conspiracy.
Three additional defendants are fugitives and known to be
hiding in Israel. One of those defendants, Joseph Reisch, a/k/a
"Yosi Reisch," is awaiting trial in Israel for the May 1989
murder of Michael Markowitz, a former colleague of Reisch's in
the gasoline bootleg industry.
The defendants pleaded guilty to conspiracy and tax evasion
charges before Judge Wexler several weeks before the trial was
scheduled to proceed in June 1994.
Sharp, also pleaded guilty to a RICO conspiracy count
concerning a motor fuel excise tax scheme in the Northern
District of Georgia. Varzar, pleaded guilty for his involvement
in an $85 million excise tax conspiracy relative to gasoline
distributed by New York Fuel Terminal Corporation, which operated
a gasoline storage facility in Brooklyn, New York, known as the
"M & Q" Terminal.
The charges stem from an elaborate scheme, referred to as a
"daisy chain," in which gasoline is purportedly sold between a
number of wholesale distributors before reaching the retail
level. These sales, in fact, never occur and are mere paper
transactions designed to disguise the identity of the company
responsible for remitting the taxes. These schemes allowed the
defendants to pocket a substantial portion of the excise tax
included in the price paid by motorists at the retail pump.
In an effort to infiltrate the bootleg gasoline industry, a
government undercover business called Rossi Associates was
established to compete directly with the defendants' bootleg
operation. Rossi Associates, which was run in a joint effort by
the Internal Revenue Service and the Federal Bureau of
Investigation, successfully attracted the attention of the
defendants and resulted in their bringing Rossi Associates into
the daisy chain schemes.
On November 24, 1992, at the conclusion of the undercover
operation, federal agents seized assets of the defendants,
including approximately $1.7 million in cash from various safe
deposit boxes, nearly $1.2 million in bank accounts and $1
million in gasoline stored at various terminals and barges.
Also, Varzar's yacht valued at about $500,000 was seized.
As part of the scheme, the Colombo, Gambino, Luchese and
Genovese crime families collected what was termed a "tribute"
payment of at least a one and one-half cents per gallon from the
proceeds of these transactions. Payments were made to a number
of organized crime representatives, including defendants Frank
Sciortino, a/k/a "Frankie the Bug," and Audino, both of whom were
soldiers in the Colombo crime family, as well as Frank Campione,
a/k/a "Frankie Camp," a Colombo associate and Adrion, a Luchese
associate. These payments were delivered to, among others,
defendant Victor M. Orena, a/k/a "Vic Jr.," a/k/a "The Little
Guy," a Colombo captain.
Assistant Attorney General Loretta C. Argrett of the Tax
Division, hailed the sentences saying that "The successful
prosecution of this complex case proves our determination to
combat excise tax evasion."
This case, which is part of a nationwide motor fuel excise
tax enforcement effort, was investigated jointly by the Long
Island Motor Fuel Task Force and the Office of Zachary W. Carter,
U.S. Attorney for the Eastern District of New York. The task
force includes attorneys from the Department of Justice Tax
Division and agents from the Criminal Investigation and
Examination Divisions of the Internal Revenue Service, the
Federal Bureau of Investigation, the U.S. Department of
Transportation and the New York State Department of Taxation and
Finance.
The case was prosecuted by Deputy Chief of the Fraud Section
of the U.S. Attorney's Office Edward A. Rial and Paulette Wunsch,
Special Attorney, Tax Division, Department of Justice.
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