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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. ### 94-723