Four Convicted in Largest Motor Fuel Tax Fraud in U.S. History (6/26/98)

FOR IMMEDIATE RELEASE
Friday, June 26, 1998
Contact: Jeff Nelligan
Telephone: (202) 366-6312
OIG 21-98

Four Convicted in Largest
Motor Fuel Tax Fraud in U.S. History

The U.S. Department of Transportation's Office of Inspector General (OIG) today announced the conviction of four defendants in the largest motor-fuel tax fraud case in U.S. history.

According to the Inspector General, they evaded more than $140 million in state and federal taxes.

A U.S. District Court jury in Camden, N.J. on Friday, June 19, 1998, convicted Daniel Enright of Mullica Hill, N.J.; Demetrios Karamanos of Norwood, N.J.; Richard Pedroni of Clermont, N.J.; and Mary Ingram of Woodbridge, N.J., of conspiracy and other charges.

The overall case -- which spurred 25 indictments and 17 guilty pleas -- was brought by a multi-agency task force including OIG, the Internal Revenue Service, the FBI and prosecutors from the Department of Justice. Two defendants are fugitives.

"‘Bootleg’ motor fuel crimes -- which cost taxpayers billions each year -- are the continuing focus of the task force," said Todd Zinser, the department's Assistant Inspector General for Investigations.

The cases at hand involved tax-evasion schemes operating in New Jersey, New York, Pennsylvania, Delaware, Georgia and Florida. The defendants engaged in a pattern of deception known as "daisy-chaining" in which firms that actually do business in fuel and oil create a phony paper trail by setting up false-front firms designated as the taxation point for all firms in the chain. The front firms later are placed in bankruptcy.

In addition to "daisy-chaining," some of the defendants simply falsified records to show that taxes had been paid on fuel to state or federal governments, when in fact the owed tax was pocketed by the perpetrators.

After nine days of deliberations, the jury convicted:

Enright, president of PetroPlus, a wholesale motor fuel distributorship, on charges of conspiracy, wire fraud, money laundering, tax evasion and a currency reporting violation;
Karamanos, a managing officer of Kings Motor Oils, on charges of conspiracy, wire fraud, money laundering and tax evasion;
Pedroni, president of Pedroni Fuel Co., on a conspiracy charge; and
Ingram, president of American Minority Petroleum, a wholesale motor fuel distributor, on charges of conspiracy, wire fraud, money laundering and tax evasion.

The jury acquitted John Ruocco of New Jersey and Michael Lipkin of New York City.

Prosecutors alleged that Pedroni and Ingram cooperated in a scheme devised by Enright and Karamanos and the two fugitives in the case, Igor Erlikh of Brooklyn, N.Y., and Aaron Misulovin of East Hills, N.Y. According to prosecutors, Enright and his firm got more than $60 million in the scheme, $4 million of which was allegedly placed by Enright in a secret Swiss bank account.

Sentencing is set for Oct. 9, 1998.

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