Fuel bootlegging, La Cosa Nostra and the Russian Mafia

Immigrant Presence and The “Mob Tax”

Fuel bootlegging, La Cosa Nostra and the Russian Mafia

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Jermyn described a significant presence of immi­grants involved in the motor fuel tax evasion cases:

There was a large number of Turkish immigrants at the retail levels and there were eastern bloc immigrants who became involved all the way up the chain of distribution to the point where they were actually acquiring gasoline terminals as a result of bootlegging activities.

. . . .

There was a language barrier to begin with. Conspiratorial conversations were often in a foreign language. There weren’t many agents that could speak Rumanian, unfortunately, or Russian. There was inability to infiltrate the closely-knit groups by way of informants or police agents and, in addition to that, these individuals were well-educated and oftentimes smarter than law enforcement agencies.

Q. Did you also find the presence or involve­ment of traditional organized crime groups in the motor fuel tax evasion cases?

A. Yes. Just as with any other industry, where there is an opportunity to make money, illegiti­mate traditional organized crime groups infil­trate that industry. In this case, that occurred very early on…

…the immigrants who became involved in businesses were bright enough to realize that they had to pay tribute to traditional organ­ized crime families in order to operate in certain areas, and there was usually a one or two cents per gallon levy by the mob families imposed upon the sale of bootlegged gasoline.

Q. Is that called the “mob tax”?

A. Yes… amounted to millions and millions of dollars.

Jermyn said the investigation revealed the in­volvement of three traditional organized crime fami­lies in the early period of bootlegging between 1981 and 1988 – the Lucchese, Genovese and the Colombo organized crime families. “And later on in the schemes the Gambino family also became involved,” he said.

Jermyn characterized the relationship between traditional organized crime and the eastern bloc immigrants as “very cooperative.”

[O]ne of the abilities of the organizational skills of the principals involved in these schemes was that they were able to forge a very close working relationship. It became almost like a cartel between the traditional organized crime fami­lies and the eastern bloc people, and they were able to monopolize and control the price of unbranded gasoline in the Long Island area for many, many years.

He recalled a surveillance that revealed a “sum­mit meeting” between the bootleggers, the organized crime figures and the eastern bloc people, “sitting at a large conference table in a meeting room in Long Island.”

Q. Who was the most significant organized crime figure you prosecuted?

A. [O]ne of the defendants in the racketeering case, which was prosecuted federally, was a captain in the Colombo organized crime family by the name of Michael Franzese. There were also many organized crime associates who were prosecuted and convicted and were serving lengthy jail terms.

Jermyn described one motor fuels case in which Franzese was involved:

The amount that was actually evaded was in excess of $30 million dollars and it involved a company where a bond was actually obtained for the payment of the taxes and Mr. Franzese bribed the official in the bonding company to issue the bond. The bonding company actually ended up losing additional moneys, so that there were many victims other than just the state and the federal government.

The Violent Side of Fuel Tax Evasion

Testimony was heard from various witnesses about a darker side of fuel tax evasion and an underlying fear among those in the business.

Rackets Chief Jermyn testified:

Where necessary, violent means have been used to expand a particular bootlegger’s sphere of influence. We’ve estimated as many as a dozen murders have taken place in the last seven years as a result of the bad guys infiltrating the mar­ketplace.

Jermyn described the murders of Michael Markowitz and Phillip Moskowitz. Markowitz, he said, was “one of the bigger bootleggers in the New York area.” He was an eastern bloc immigrant who came to this country with virtually no money in 1979 but at the time of his death had “upwards of 30 million dollars just in assets… not even counting various bank accounts over in Austria and Lichtenstein.” Markowitz was shot in the head while sitting in his Rolls Royce in Brooklyn in 1989.

Phillip Moskowitz was murdered after he was indicted and “certain tapes were released in which he compromised the positions of various organized crime families and identified them as being active in the bootlegging business. His body was found in New Jersey,” Jermyn said.

SCI Special Agent Diszler gave testimony based on the Commission’s own investigation.

BY COUNSEL HOEKJE:

Q. Agent Diszler, have you sensed a fear among the witnesses to whom you have spoken?

A. In most instances we have. Most of them are aware, through the media, of course, that there have been violent homicides which have oc­curred in New York and New Jersey concerning this industry.

Witnesses have told me that they can discern certain accents over the telephone quite easily and many times have felt intimidated and threat­ened by the sales pitch which they get. Even bank officers have expressed an underlying fear to me.

Many times these individuals attempt to open bank accounts in New Jersey at local banks and when they fill out the bank applications it is learned that they have no roots to the community whatsoever. If the accounts are opened, within days and sometimes within hours there are wire transfers moving through their accounts which number in the thousands of dollars. These banking people who are not familiar with the businesses involved often become highly suspi­cious and concerned enough to usually contact the local police departments.

BY CHAIRMAN ZAZZALI:

Q. Are you comfortable identifying the type of accents that you referred to before when people got those anonymous calls?

A. Yes, I would be comfortable in saying that itwas definitely a Soviet, Eastern European ac­cent.

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From a NJ SCI report

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