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DEFENDANTS PLEAD GUILTY IN GASOLINE EXCISE TAX CASE Washington, D.C. -- The Department of Justice announced today that four more defendants in the largest gasoline excise tax prosecution to date have pleaded guilty. Joseph A. Macchia, of Lattingtown, N.Y., and two of his sons, Lawrence Macchia and George Macchia, admitted conspiring to evade approximately $85 million in federal gasoline excise taxes. They each also pleaded guilty to two counts of excise tax evasion. A third son, Joseph L. Macchia, pleaded guilty to conspiracy, the only charge against him. The four entered their guilty pleas in United States District Court at Hauppauge, New York in front of the Honorable Leonard D. Wexler. Each faces a maximum of five years in prison and a $250,000 fine for each count to which he pleaded guilty. The Macchias owned and operated a series of wholesale gasoline companies, including a trucking company and many holding and management companies, which owned and managed a large number of gasoline stations, most of which carried the "Citgo" brand. Their central company was New York Fuel terminal Corporation, which operated a gasoline storage facility in Brooklyn known as the "M & Q" Terminal. "M & Q" was short for Manhattan & Queens the Macchias also operated Manhattan & Queens Fuel and M & Q Trucking Corp. New York Fuel was registered with the IRS and was required to pay a tax on each gallon of gasoline it sold to an unregistered company. The Macchias, through New York Fuel, sold almost one billion gallons of gasoline to unregistered companies without paying the tax they owed. Many of the unregistered companies were controlled by the co-defendant Marat Balagula, who pleaded guilty to all of the charges against him on October 13, 1994. Most of these illicit sales were purportedly made by "book transfers" within the M & Q terminal. Book transfers occur when the title to gasoline within the storage tank passes from one company to another, but the product itself does not move. The conspirators created fictitious book transfer records indicate that the gasoline sold by New York Fuel passed through the accounts of sever other licensed and unlicensed companies before being received by the actual purchaser, when in fact, the only transfer was from New York Fuel to the actual unlicensed purchaser. Assistant Attorney General Loretta C. Argrett hailed the pleas, saying that "the successful prosecution of this complex case proves our determination to combat excise tax evasion." The case was prosecuted by attorneys of the Tax Division of the Department of Justice and was investigated by the Criminal Investigation and Examination Divisions of the Internal Revenue Service and the New York State Tax Department. ### 94-619