ORGANIZED CRIME MEMBER CARMINE AGNELLO, 5 ASSOCIATES, AND SCRAP METAL COMPANY PLEAD GUILTY TO RACKETEERING, EXTORTION, ARSON, "VIN" OBLITERATION AND INCOME TAX FRAUD

ALAN VINEGRAD, United States Attorney for the Eastern District of New York, RICHARD A. BROWN, Queens' District Attorney, BARRY W. MAWN, Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation, PAUL L. MACHALEK, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigations, New York, and BERNARD B. KERIK, Commissioner, New York City Police Department, today announced that Gambino Organized Crime Family soldier CARMINE AGNELLO and six co-defendants entered guilty pleas to criminal charges including racketeering, extortion, arson, vehicle identification number ("VIN") obliteration, and income tax fraud, pursuant to plea agreements resolving the pending federal case against them. Pursuant to the terms of his plea agreement, if accepted by the court, AGNELLO will be sentenced to nine years in prison, will forfeit $10 million to the United States, will be ordered to pay $950,000 in restitution to his crime victims and approximately $150,000 in back taxes to the Internal Revenue Service, and will be barred for life from participating in the scrap metal industry. AGNELLO's individual co-defendants - STEVEN SCALA, MARK LOMONACO, JOSEPH BURGER, also known as "Jumbo," MICHAEL AGNELLO, and JOHN SOWULSKI - face sentencing ranges from 15 to 87 months incarceration, and fines of $250,000 or the greater of twice the gross gain or twice the gross loss resulting from their offenses.

AGNELLO and co-defendants SCALA, LOMONACO, BURGER, and NEW YORK SHREDDING CORPORATION ("NYSC"), a metal shredding business located at 1340 East Bay Avenue, Bronx, New York, and principally owned by AGNELLO, SCALA and LOMONACO, pled guilty to violating the federal racketeering statute. The RICO charge included extortion and arson conspiracies that victimized an NYPD "undercover" scrap metal processor - Stadium Scrap, Inc., located in Willets Point, New York, not far from Shea Stadium - and numerous other scrap metal businesses.

According to the indictment and other pleadings and court filings, in May 1999, AGNELLO and BURGER attempted to persuade Stadium Scrap to sell its crushed metal to NYSC, but Stadium Scrap refused. In an attempt to force compliance, in June 1999, AGNELLO, through LOMONACO, hired an associate to start a fire at Stadium Scrap. On June 10, 1999, after cutting the locks on Stadium Scrap's gate, the arsonist was arrested by members of the New York City Police Department, agreed to cooperate with law enforcement, and subsequently recorded conversations with AGNELLO and others. During conversations recorded by the cooperating witness, AGNELLO explicitly directed the torching of Stadium Scrap. As a part of the undercover operation, after two controlled fires, Stadium Scrap agreed to do business with NYSC.

The government also alleged that between the fall of 1997 and March 2000, AGNELLO, SCALA, LOMONACO, BURGER, and NYSC conspired to extort PSN, a metal shredder with facilities located in Queens and the Bronx, New York, and its successor, Hugo Neu Schnitzer East ("HNSE"). Both companies bought scrap metal for shredding and distribution. Prior to July 1998, AGNELLO and various co-defendants sold processed scrap metal to PSN and, in an attempt to increase the price paid, assaulted one PSN employee and threatened a number of others. In 1998, HNSE succeeded PSN, and with the opening of NYSC in July 1998, AGNELLO became a direct competitor of HNSE. Thereafter, AGNELLO and various co-defendants threatened and attempted to intimidate HNSE in order to eliminate competition. For example, in 1999, BURGER approached an HNSE employee who was soliciting AGNELLO's customers and threatened to kill him if the soliciting continued.

The government's investigation revealed that in mid-May 1999, at a meeting at NYSC attended by AGNELLO, SCALA, LOMONACO, and BURGER, AGNELLO directed the arsonist - who was not then cooperating with law enforcement - to burn down Bronx Metals Recycling ("Bronx Metals"), a division of HNSE located at 850 Edgewater Road, Bronx, New York. As BURGER and LOMONACO looked on, the arsonist threw containers of gasoline and road flares onto the roof of Bronx Metals. Fortunately, the arson attempt failed.

As part of the racketeering count, AGNELLO and SCALA were also charged with conspiring to extort a now-defunct stock brokerage firm, Duke & Co., Inc., with offices previously located in Manhattan and Nassau County, Long Island, and a debt collection agency, John Glenn Associates, Inc., located in Garden City Park, Long Island; AGNELLO, SCALA, and NYSC were charged with conspiring to extort a distributor of sanitation trucks, Sanita & Co., Inc., previously located in the Bronx, New York; and SCALA and NYSC were charged with attempted extortion of a solid waste pick-up and disposal business, Waste Mangement, also located in the Bronx.

Pursuant to the terms of their plea agreements, SCALA, who pleaded guilty to racketeering and filing a false income tax return for 1997, faces a sentencing guideline range of 70 to 87 months imprisonment and maximum fines of $250,000 or the greater of twice the gross gain or twice the gross loss resulting from the racketeering offense and $100,000 for the tax fraud offense; BURGER, who also pleaded guilty to racketeering and filing a false income tax return for 1997, faces a sentencing guideline range of 51 to 63 months imprisonment and maximum fines of $250,000 or the greater of twice the gross gain or twice the gross loss resulting from the racketeering offense and $100,000 for the tax fraud offense; LOMONACO, who pleaded guilty to racketeering, conspiring to obliterate VINs, and illegally structuring financial transactions, faces a sentencing guideline range of 51 to 63 months and maximum fines of $250,000 or the greater of twice the gross gain or twice the gross loss resulting from the racketeering and VIN obliteration offenses and $500,000 for the structuring offense; and corporate defendant NYSC which also pleaded guilty to racketeering, faces a maximum fine of $500,000 or the greater of twice the gross gain or twice the gross loss resulting from the offense.

Defendant MICHAEL AGNELLO pleaded guilty to conspiring to obliterate VINS and conspiring to commit arson and faces a sentencing guidelines range of 37 to 46 months imprisonment and a maximum fine of $250,000 or the greater of twice the gross gain or twice the gross loss resulting from the offense. Defendant JOHN SOWULSKI pleaded guilty to conspiring with CARMINE AGNELLO to defraud the Internal Revenue Service in connection with the business of Avenue Concrete, a company in which AGNELLO maintained a hidden interest and which was formerly located in Jamaica, New York. SOWULSKI also pleaded guilty to bank fraud in connection with a fraudulent home mortgage loan application. He faces a sentencing guideline range of 15 to 21 months imprisonment and maximum fines of $250,000 or the greater of twice the gross gain or twice the gross loss resulting from the conspiracy offense and $1,000,000 for the bank fraud offense.

In announcing today's guilty pleas, United States Attorney ALAN VINEGRAD stated, "These guilty pleas represent a resounding victory for law enforcement in this case. Federal and state law enforcement agencies, working cooperatively, have dealt a powerful blow to the Mafia's infiltration of the local scrap metal industry. In addition to facing a substantial prison term and forfeiting enormous sums to the United States, Carmine Agnello will be barred from the scrap metal industry for life, ending his ability to terrorize the industry and those people who make legitimate livings in it. The use of violence and intimidation by gangsters to gain competitive advantage in business will not be tolerated. With this prosecution, Carmine Agnello has been relegated to the scrap heap of organized crime."

Queens' District Attorney RICHARD A. BROWN stated: "Today's guilty pleas represent a significant victory for both the law enforcement community and the consuming public. Thanks to the diligent and cooperative efforts of agencies involved, Carmine Agnello and his associates will no longer be able to victimize those who refuse to do business with them. Agnello will be barred for life from ever re-entering the scrap metal business which he and his associates controlled through violence and intimidation and through which they were able to facilitate illicit auto theft and insurance fraud."

FBI Assistant Director-in-Charge BARRY W. MAWN stated: "Carmine Agnello and his co-conspirators exemplify the truism that the business of organized crime is to make money. Everything else mobsters do in a criminal enterprise is directed toward that bottom-line objective. Agnello and his partners-in-crime demonstrated that the ability to generate fear by violence or the threat of violence is the way the mob makes money. The indictment essentially outlines their business plan, including how to beat the competition. When they encountered competition, they literally beat the competition, or threatened to beat them. They didn't build a better mouse-trap or streamline their operation, they just set fire to their competitor's business."

IRS Special Agent-in-Charge PAUL L. MACHALEK stated: "Today's guilty pleas are yet another example of how combined investigative efforts of several law enforcement agencies can result in successful prosecutions. With regard to the tax charges, the public should be reminded that since the days of Al Capone criminal tax enforcement is often a key component in fighting organized crime."

New York City Police Commissioner BERNARD B. KERIK stated: "The guilty pleas of Carmine Agnello and his criminal associates takes them off our streets, hits them in the wallet, gives restitution to their crime victims, and eliminates their stranglehold on the Queens and Bronx scrap metal industry. The undercover work by the NYPD is commendable and once again interagency cooperation has led to the successful prosecution of yet another Gambino organized crime case."

Today's guilty plea proceedings were held before United States Magistrate Judge Robert M. Levy. The defendants will be sentenced on a future date by United States District Judge Nina Gershon, at United States Courthouse in Brooklyn.

The government's case is being prosecuted by Assistant United States Attorneys Bridget Rohde, Andrew M. Genser and Susan Riley, and Special Assistant United States Attorney Gregory Pavlides, an Assistant District Attorney in the Queens County District Attorney's Office.

Carmine Agnello (in custody)

Age: 40

6 Birch Hill Court, Old Westbury, NY

Michael Agnello

Age: 42

161-12 85^th St., Howard Beach, NY

Joseph Burger

Age: 43

94-10 134^th Ave., Ozone Park, NY

Mark Lomonaco

Age: 37

78-15 95^th St., Ozone Park, NY

Steven Scala

Age: 38

77-02 79^th Pl., Glendale, NY

John Sowulski

Age: 41

86-23 76^th St., Woodhaven, NY