The Forgotten Gambino Gasoline Bootlegger – Anthony Morelli

Anthony “Fat Tony” Morelli

People who say Phillip “Benny Squint” Lombardo, former Boss of the Genovese Crime Family was a ghost clearly have never tried to research the subject of this piece: Anthony “Fat Tony” Morelli. While the nickname is anything but imaginative, Morelli has managed to creatively stay hidden (minus one large indictment) all these years to the point where almost nothing exists on the wiseguy. Despite being involved in one the largest tax frauds in American history with the “Russian Mafia”, only bits and pieces of his exploits can be found on the net. I did the arduous task of trying to piece everything together for your enjoyment.

An Obscure Beginning 

Anthony Morelli was born on May 10th, 1941. Like most criminal youths he started his journey as a thief, associating with hoodlum Carlo LoCicero. Carlo was the son of Charles “the Sidge” LoCicero, a legendary caporegime and possibly one-time Consigliere of the Profaci Crime Family (later renamed Colombo). Moonlighting as a furniture salesman, the Sidge made his way up in the underworld by controlling extensive loansharking and gambling rackets. Al Capone notwithstanding, mobsters still didn’t think there was a need to pay taxes and so just like his Boss, Joe Profaci, the Sidge had major problems with the IRS regarding his company Florentine Furniture. The company’s records were mysteriously burned in an accidental fire, helping Charles in his case. How lucky! Charles was also involved in the failed negotiation with Joey Gallo when the rebellious hood kidnapped four men from the Profaci Borgata. The Sidge met his end on April 20th, 1968, as he sat at Calisi’s soda fountain and stationery shop in the Borough Park section of Brooklyn.

Charles “the Sidge” LoCicero

Anyways, Charles LoCicero’s two sons, Carlo and Charles, both followed their father into the Family business. According to his occupational record at the time, Anthony Morelli would have you believe he was just a simple warehouse worker, but that’s not really what he did for a living. On June 11th, 1965, $40,000 worth of rare coins and valuable stamps were stolen from Karlesson’s Stamp and Coin Company. A little more than a month later, four detectives and two FBI agents burst through the doors of a Bay Ridge, Brooklyn apartment. In it, they found those rare coins and valuable stamps. What they also found was Carlo LoCicero, 27, and Anthony Morelli, 24, in possession of six loaded pistols, a tear gas gun, safe cracking and burglary tools, a set of master car keys fitting most car makes, and five masks. The two thieves were charged with criminally receiving stolen goods, the illegal possession of weapons, and the possession of burglar’s tools. Clearly, nothing substantial ever came from these charges as the two hoods were shortly at it again. This time, however, the prize would be bigger and deadlier.

Stolen security certificates such as stocks and bonds were all the rage back in the 1950s and 1960s. Before the days of “pump and dump” schemes, stealing stock certificates as they were being transported was the extent of the Mafia’s involvement with Wall Street. In pursuit of quick riches, mobsters like Al D’Arco and Vincent Teresa all dabbled in the racket. It caused such a headache, however, that much like drugs, the Bosses outlawed this practice, informing recruits about this decree during induction ceremonies. Yet, just like narcotics, this was largely ignored as long as easy money could be made.

Richard LoCiCero, the nephew of Charles and Carlo, was a troublesome youth, to say the least. During the summer of 1966, he found himself working for Paine, Webber, Jackson & Curtis when he was asked to deliver $370,762 worth of securities to Grace National Bank. As he did his job, a man forced him into an old building, tied him to a door handle and escaped with the certificates. About a month later, on September 20th, six people were arrested after they tried to sell the stolen shares to a Brooklyn detective posing as a fence. Among the arrested were the two LoCicero brothers and Anthony Morelli. Richard proceeded to testify to the grand jury that indicted the six men, and this caused ire among his relatives. On April 6th, 1967, Richard was found gruesomely murdered after being stabbed multiple times and having his gut ripped open. With their star witness unable to testify, the case seemingly fell apart and nothing else came of it concerning Anthony Morelli.

Are you Gaslighting me with all this Gas Talk? 

Over the next two decades, Morelli would re-invent himself away from a common thief to a respectable racketeer. He continued his career as a fence and became a fabulously wealthy shylock. Moving away from the ever-troubled Colombo Family, he started associating with the Gambino Borgata. He came just in time, as new leadership took over that was hungry to expand the Family’s rackets. In early 1986, John Gotti, the newly crowned Boss of the Gambino Crime Family was still conducting business out of the Bergin Hunt and Fish Club. One day a bug picked up an interesting conversation. An associate only identified as Joey (Jerry Capeci said it was Joseph Galizia) told the Godfather stories of a new racket sweeping New York that produced untold riches. Doing some quick back-of-the-envelope math, the not-yet Teflon Don realized how lucrative stealing gasoline taxes was. He exclaimed, “I gotta do it right now, right now, I gotta do it.” He called up “Bobby the Jew” to try and get things going. It was a racket he couldn’t refuse.

John Gotti talking to Vincent Asaro outside the Bergin Hunt and Fish Club

Anthony Morelli would soon come into the picture. He was inducted as a made man of the Gambino Family sometime in 1988 and his rise in the Family would be meteoric. Originally based out of Staten Island, Morelli was quickly promoted to a caporegime and charged with overseeing the Family’s investments in labour racketeering and illegal dumping. John Gotti was so happy with his performance that soon Morelli was put in charge of the newly formed Florida Crew in the early 1990s. His most important duty, however, was to serve as the Gambino liaison to the Russians of Brighton Beach in the gasoline bootlegging racket.

In short, vast amounts of money could be made by stealing State and Federal motor fuel taxes through the creation of a daisy chain. Distributors would move the gasoline between several paper corporations in an effort to confuse the IRS. By the time the government would come to collect from the final burnout company (that existed only in the form of an address and a phone number) in the chain, it was already placed into bankruptcy and no taxes would be received. By pocketing the extra twenty-eights or so cents per gallon, these illegal distributors could be very aggressive on their pricing and drive legitimate competitors out of business. This is why honest distributors like Getty Oil started cooperating with the gangsters. This enabled Italian and Russian mobsters to control a large portion of the market and deprive Federal coffers of over a billion dollars a year. The Franzese-Iorizzo-Markowitz cartel controlled this illicit market in the early-to-mid 1980s, with as many as 1,000 stations under management. Once both Iorizzo and Markowitz turned informant and Franzese was jailed, it collapsed and allowed other players to fill in the void. Marat Balagula became the largest player and, in effort to protect himself from the Yuppie Don’s extortion, aligned himself with the Lucchese Family. To regulate the new cartel, La Cosa Nostra created a gasoline panel to oversee the extortion. The Gambino’s were the last to the party (the Bonanno’s never got involved) and Anthony Morelli was its representative. However, besides the Balagula extortion, the families also got involved in separate independent gasoline ventures with other Russian and crooked distributors. This is how Morelli became involved with Daniel Pagano, the Zilber brothers and Igor Roizman.

The story of Vladimir and Alex Zilber is that of the fabled ‘American Dream’. Coming to the U.S. as poor immigrants out of the Communist block, their father and mother worked hard jobs earning meagre wages. The children, however, wanted to seize all the prospects the Land of Opportunity had to offer. They became hardened criminals and clawed their way up the Brighton Beach mob to become full-fledged dons of their own. Their crowning achievement was opening Rasputin, a restaurant in Coney Island that allegedly cost $4 million dollars to renovate. Their source of wealth came from the extensive gasoline bootlegging operation they ran. To run this operation, they paid Anthony “Fat Tony” Morelli a mob tax of one cent per gallon sold. The Genovese’s representative, Daniel Pagano, got another cent. It wasn’t a parasitic relationship because, in return, the Gambino captain provided the muscle necessary to run the operation by forcing legitimate distributors to play ball with the mob. While Vladimir Zilber maintained the scheme, the fuel was supplied by Gregory Federico who operated Capital Fuel Service in Cranford, New Jersey. Finally, the motor fuel scheme itself had to evolve from the original one Michael Franzese perfected. The government was finally getting its act together and stealing gasoline taxes was getting harder and harder. As such, bootleggers like Zilber had to innovate and start stealing taxes on diesel fuel by taking advantage of another legal loophole. Home heating oil and diesel are virtually chemically identical, with refineries designating them both as being number two fuel. When the fuel was purchased to be sold as home heating oil, it was not taxable. This was not the case with diesel and so mobsters started setting up phoney home oil distributors and secretly selling it to retail fuel stations, pocketing the tax difference. The hitch with diesel, however, was that naturally it wasn’t as in demand as gasoline and so mobsters had to expand beyond New York and to New Jersey and Pennsylvania to make it truly profitable. This was exactly the case with the motor fuel empire Anthony Morelli was overseeing. For several years, the operation was operating smoothly and all those involved made a lot of money. John Gotti was caught on a bug telling his Acting Consigliere, Frankie LoCascio, about how Peter Gotti picked up ten thousand a month in cash from the gasoline racket.

Now besides just “protecting” his Russian partners, Morelli sought to extort other independent dealers throughout his area. To that end he helped create a fuel-oil industry association that sought to put a “secure roof” over the heads of everyone, you know, to keep any pesky troublemakers out. Independent dealers were coerced to pay as much as 2.25 cents per gallon as a mob tax in New Jersey and parts of Pennsylvania. If you weren’t going to pay Uncle Sam, Uncle Tony made sure to collect. The Italians also weren’t messing around with the numbers, as they would regularly send auditors to verify the bootlegger’s numbers to make sure they were not cheated. At this point, the government was losing a lot of money and despite firing one gasoline fraud-related indictment after another, it just didn’t seem to end. You had to look no further than to one of Morelli’s partners, Igor Roizman. In 1991, while aiding Morelli’s diesel operation, Igor was arrested on a completely separate gasoline tax evasion rap. In that case, one of his co-defendants was Joseph Galizia, who himself was a repeat offender. Just in 1986, Galizia was indicted with Michael Markowitz and Shelly Levine in the aftermath of Michael Franzese’s bust. Igor Roizman was part of the 1986 indictment as well. It was a nightmare trying to fight bootleggers, as these habitual schemers just couldn’t help themselves to easy millions.

Igor Roizman

The FBI Likes to Give Out Receipts. 

To combat these ingenious mobsters, the FBI came up with the brilliant plan of infiltrating these fuel cartels from within. It was codenamed Operation Red Daisy, and needless to say, it was very successful. To do so, they set up a rival phoney fuel wholesaler in Ewing Township, New Jersey and two other locations in Bucks County, Pennsylvania. In May of 1991, they were officially in business and started competing with Morelli’s Association. Soon enough the pair of undercover FBI agents were approached by Gambino Family associate Edward Dougherty who tried to explain the realities of doing business in their territory. If they joined forces with the bootleggers and paid a mob tax, the generous Gambino Family would allow them to operate and even give them a $165,000 payment for their cooperation. If they refused, they would go out of business. Instructed by the Bureau, the agents turned down the deal. Soon enough their clients were harassed and on February 10th, 1992, their Ewing location burned down under suspicious circumstances. The Gambino’s soon approached the agent’s other two locations and once again explained the situation in plain language. They would be allowed to operate if they agreed to make payments and have their profit margin regulated by the Association. This time, the agents complied and coughed up and over the next three months paid over $127,000 in extortion payments. The FBI undercover operatives became so influential in the Association that they soon met top echelon mobsters running this scheme during Association conferences in La Guardia Airport. The wiseguys were none the wiser and soon enough Anthony Morelli, Daniel Pagano, and others started getting word that huge indictments were coming down on them all.

Daniel Pagano

The two Mafia captains decided to do some spring cleaning and Vladimir Zilber was on the chopping block. Not sure if he would be able to stand up under law enforcement pressure, they decided that he should be killed. On November 20th, 1992, as Vladimir was driving to have a sit-down with his Genovese partners, a car pulled up next to his beat-up 1989 Ford Taurus. He was lucky that his window was closed because a Russian in the other car pulled out a huge shotgun and fired at Zilber’s head. The gasoline czar was half-blinded and crippled from this incident, but he did survive. Anthony Morelli materialized out of nowhere beside Vladimir’s hospital bed and told him to keep his mouth shut. As it turns out, it was a blessing for Vladimir. Two days later the FBI executed 200 search warrants to seize evidence from the bootleggers. The mobsters knew the jig was up.

To make the trial a slam dunk for the government, however, they wanted someone from the scheme to flip and become a cooperating witness on the case. David Shuster, one of the participants in the Red Daisy scheme was hiding out in Moscow. Since there was no extradition treaty with Russia, the FBI had to do some underhanded deals with the Kremlin government to get him back on American soil. Russian special forces apprehended Shuster and put him neck-deep in a hole they dug out. The FBI agents arrived to dig him out, put him on a plane back to America and arrested him once they were all back. He got a sweetheart deal to testify against his former comrades. The government didn’t know it at the time, but more help was coming.

On May 6th, 1993, 13 men were indicted in a $100 million motor fuel tax evasion scheme. Among the indicted were Anthony Morelli, the Gambino captain, and his associates including Edward Dougherty and Gregory Federico. On the Russian side, there were Vladimir Zilber, Igor Roizman, Jacob Dobrer, Arkady Seifer and others. What made this case particularly interesting was that unlike previous gasoline bootlegging cases that were treated as simple tax fraud cases (tax fraud is not a RICO predicate) Morelli’s scheme was indicted under a RICO charge. Besides Morelli’s La Cosa Nostra connection spicing up the case, another factor might have been that, unlike previous cases that were purely a financial crime, this case included nineteen counts of extortion and the gaining of extension of credit by extortionate means. Indeed, allegedly two participants in the fuel business were beaten by Gambino enforcers to ensure that they didn’t buy their diesel from the FBI-run front company. At any rate, the group was handed a 101-count indictment that charged the criminal enterprise with multiple counts of racketeering, wire fraud, tax evasion and money laundering. John Gotti, who was already in prison for murder and racketeering, was an unindicted co-conspirator.

With Zilber incapacitated, Anthony Morelli became the star defendant. Despite being able to afford the best lawyer, he went with a second-rate Gambino in-house attorney, Richard Rehbock. That would prove to be a big mistake as he made several crucial blunders during the trial that all but sealed Morelli’s fate. If that decision by Morelli was bad, then this next one is even more questionable. Fat Tony tried to set up Edward Dougherty as the fall guy to eat the brunt of the charges. Understandably upset, Edward defected from the Gambino’s and joined the government’s growing cast of cooperating witnesses. During the five-month trial, jurors were played tapes of Morelli talking to his Boss at the Ravenite Club and explained how $66 million dollars were laundered. As a reward for Morelli’s protection, he received at least $6.7 million as a mob tax. After the trial, the three principal witnesses were found guilty. Anthony Morelli was found guilty of RICO conspiracy, racketeering, extortion conspiracy, extortion, mail fraud, and general conspiracy. In 1995 Morelli was convicted and in 1996 he received a 20-year prison sentence, which was the harshest ever meted out in a tax evasion case of this type. After losing multiple appeals, he finally went off to do his time in 1998 and got released on July 22nd, 2014.

Anthony Trentacosta

The undercover operation the FBI conducted produced numerous more indictments and all these mobsters and fuel bootleggers fell one after the other. In September of 1996, Daniel Pagano, Anthony Palumbo and Genaro Dellamonica (another Morelli subordinate) were indicted on a $77 million motor fuel tax evasion scam. The last vestiges of La Cosa Nostra’s influence in the petroleum industry were purged. As to Anthony Morelli’s other business partners? Nicky Corozzo, one-time Acting Boss of the Gambino Crime Family, showed what friends in that life are worth. Picked up on a bug, Nicky talked about how Anthony Morelli and Anthony “Tony Pep” Trentacosta made a “ton” of money in the oil business. Tony Pep was supposed to contribute $100,000 to help pay for Morelli’s legal fees. He ended up only paying $25,000 and that’s after Corozzo sat down with him over the issue. As for Morelli’ old crew, Mikey “Scars” DiLeonardo said that Ignazio Alogna was promoted in the late 1990s to take over Fat Tony’s Florida crew. Anthony Morelli has been quiet since he got out.

A House of Cards Twist? 

In 2012, all of a sudden Anthony Morelli’s name was in the newspaper again. He was in prison at the time so what was all the ruckus about? Michael Grimm was a retired FBI agent turned politician and between 2011-2015 he was in congress representing New York’s 13th district. The twist came from the fact that Michael Grimm was partners in a restaurant with an induvial by the name of Bennett Orfaly. Why did that matter you may ask? Well, Benny was a regular visitor to incarcerated Gambino captain Anthony Morelli. In fact, Orfaly characterized their relationship as being very close with him calling the convicted gangster “Uncle Tony”. Orfaly caught a tax charge relating to his pita restaurant and Grimm was indicted on tax charges in connection to Healthalicious.

La Cosa Nostra’s fling with the petroleum industry is quite interesting and shows the versatility and adaptability of the mob as the government hammered away at their traditional rackets. I wish Michael Franzese would just talk more about the other bootleggers.

Sources include:   U.S. v. Anthony Morelli, et al, 2:93-cr-00210 case files and related appeals, Village Voice, Gaspipe by Phil Carlo, DoJ Press Releases, Red Mafiya by Robert I. Friedman, Space, Time, and Organized Crime by Alan A. Block, LCNBiosQuitting the Mob by Michael Franzese and Dary Matera, and various articles from the Daily News (New York), The New York Times, and other newspapers.

4 thoughts on “The Forgotten Gambino Gasoline Bootlegger – Anthony Morelli

    1. Hello,

      This is an amalgamation of several different types of sources. In terms of books, the primarily ones used were Mob Star: The Story of John Gotti by Gene Mustain and Jerry Capeci and Red Mafiya: How The Russian Mob Has Invaded America by RI Friedman (must be used with more caution because it appears Friedman may have been overzealous at times in what he wrote).

      The bulk of the information, however, came from a variety of newspapers published by The New York Times, Asbury Park Press, The Record, and others. Additional information came from Russian Organized Crime in the United States: Hearing Before the Permanent Subcommittee on Investigations conducted in 1996 and Organized Crime: 25 Years After Valachi; Hearings Before the Senate Permanent Subcommittee on Investigations conducted in 1988 (which explicitly identified the membership of Anthony Morelli in the Gambino LCN organized crime family).

      Thank you for reading.

    1. This is an amalgamation of several different types of sources. In terms of books, the primarily ones used were Mob Star: The Story of John Gotti by Gene Mustain and Jerry Capeci and Red Mafiya: How The Russian Mob Has Invaded America by RI Friedman (must be used with more caution because it appears Friedman may have been overzealous at times in what he wrote).

      The bulk of the information, however, came from a variety of newspapers published by The New York Times, Asbury Park Press, The Record, and others. Additional information came from Russian Organized Crime in the United States: Hearing Before the Permanent Subcommittee on Investigations conducted in 1996 and Organized Crime: 25 Years After Valachi; Hearings Before the Senate Permanent Subcommittee on Investigations conducted in 1988 (which explicitly identified the membership of Anthony Morelli in the Gambino LCN organized crime family).

      Thank you for reading.

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