Iorizzo was heavily affiliated with the Daisy Chain scam. He had been operating the scheme since the early 1980's using burner companies and wire fraud.
The daisy chain is a type of tax fraud centred around gasoline it was devised originally by Russian and Armenian organized crime families. Where they would set up various businesses called 'burn companies'. These companies only existed on paper they are not real legitimate businesses. These businesses would then be used to create a long confusing paper trail which would be interconnected to one another.
Using these companies they would filter through money laundering it, while also avoiding taxes as well as falsifying tax records. If a company went under investigation it would be swiftly closed by the crime group. By the time those investigating went through all the paperwork and found the source they needed the company has gone.
Iorizzo got wind of this scheme via some of his Russian associates, he decided he would profit from this himself. So he approached his mafia affiliates and made them a proposal. One it seems they couldn't refuse.
According to government documentation "The self-admitted originator of the daisy chain fraud was, Lawrence Iorizzo, a Long Island businessman" Investigation of Russian-emigre crime. 1996. U.S. GOVERNMENT
However, authorities already knew of daisy chain scams predating Iorizzo.
"Michael Markowitz, a Rumanian, was running his own daisy chain operation in Brooklyn. In addition, several Russian emigres were also running fuel scams." Investigation of Russian-emigre crime. 1996. U.S. GOVERNMENT
It was Iorizzo who introduced Michael Franzese to the gasoline racket in 1981. Ultimatley Connecting Franzese to the Russians. This case became big news as once Franzese got involved they started making a lot of money.
Michael "Mikey" Franzese & the Russian Connection. Michael is a former member of the Colombo Family. His Initiation into the family happened on Halloween in the mid 70's, Friday 31st october 1975 to be exact. Michael assumed one of the highest positions in the family - Caporegime for roughly 15 years from 1980 - 1995 (retired). Michael is one of the only mafia members to retire from the family and live to tell the tale.
Michael and his associates teamed up with the Russian Mafia after the introduction from Iorizzo, they set up a gasoline racket & tax evasion scheme of their own. Subsequently making millions in the process. Becoming one of the highest earning organised crime schemes in history.
As the authorities got intel on the schemes they closed in on the crime organisations. The racket began to be uncovered piece by piece. In 1985 Michael was indicted arrested on multiple counts of racketeering, fraud & conspiracy.
In 1986 Michael was convicted of Racketeering conspiracy, tax conspiracy & Racketeering. He was sentenced to 10 years imprisonment and ordered to pay $14.7 million in restitution plus Nine years' imprisonment (concurrently) and ordered to pay $3 million in restitution.
Michael gave testimony and a written statement in a hearing investigating the Russian Mafia. In this statement he details the involvement between the American mafia and the Russian mafia.
His 8 page statement is posted below, this is a copy of the actual document.
Retrieved from - Russian Organised Crime Hearing. U.S. Senate, Permanent Subcommittee on Investigations, of the Committee on Governmental Affairs,
Washington, DC.
U.S. GOVERNMENT PRINTING OFFICE WASHINGTON. Wednesday, May 15, 1996. PP. 162 - 169.
Iorizzo was indicted and arrested. After agreeing to give authorities information in return for safety he went under witness protection. This didn't last, he was soon removed from the program & pleaded guilty for his involvement.
