FOR IMMEDIATE RELEASE TAX FRIDAY, JUNE 7, 1996 (202) 514-2008 TDD (202) 514-1888 FORMER ORGANIZED CRIME FIGURE SENTENCED IN MILLION DOLLAR FUEL TAX FRAUD SCHEME WASHINGTON, D.C. -- Lawrence M. Harrison, whose scheme to avoid paying excise taxes on gasoline generated an estimated $1 billion for himself and mob figures in the 1970's and 1980's, was sentenced to 188 months in prison and ordered to pay $442,000 in restitution today for a tax fraud in Dallas, the Justice Department announced. The sentence was imposed by U.S. District Judge Sidney A. Fitzwater in Dallas after Harrison was convicted in March 1996 on motor fuel excise tax evasion, conspiracy, wire fraud and money laundering charges that cost the federal government more than $1 million in lost fuel taxes in that one case alone. In sentencing Harrison, Judge Sidney A. Fitzwater of the U.S. District Court in Dallas upwardly departed from the sentencing guidelines based on Harrison's obstructive conduct. "Today's sentence sends a message to the motor fuels industry that the Internal Revenue Service (IRS) and Tax Division remain fully committed to investigating and prosecuting those in the industry who commit frauds against the government and the public," Loretta Argrett, Assistant Attorney General for the Tax Division said. Harrison and four co-defendants--his two sons, Lawrence J. and Joseph M. Harrison, his daughter, Susan Mulry, and a family friend, Peter F. Raneri--were indicted in December 1994 after an investigation by the IRS's Dallas District Criminal Investigative Division. Evidence at trial showed that Harrison, who entered the Witness Security Program in the mid-1980's, and his co- conspirators purchased a small Louisiana corporation, Hebco Petroleum, Inc., in 1988 to enter the Dallas/Ft. Worth wholesale diesel fuel and gasoline markets. They won customers by pricing Hebco's fuel well below acquisition costs. Although Hebco's invoices stated that state and federal taxes were included in the price, the company in fact did not pay state and federal taxes, but kept the revenue itself. From June 1989 through January 1990, Hebco grossed approximately $26 million in fuel sales. Between October 1989 and January 1990, Hebco transferred approximately $3 million from Texas bank accounts to a Cayman Islands account from which it was forwarded to European bank accounts to fund a scheme to defraud the Belgian government of petroleum tax revenues. The Hebco group also defrauded its Louisiana financial backers and Fina Petroleum and Chemical Company, a Dallas petroleum distributor, of $438,000. Following his 1993 indictment by Texas for the Hebco scheme, Harrison, then a Florida resident, fled the U.S., and remained in hiding until his arrest in January 1995 in Washington State, where he was involved in yet another motor fuel tax fraud scheme. In the late 1970's and early 1980's, Harrison, then known as Lawrence S. Iorizzo, conceived and developed so-called motor fuel excise tax evasion "daisy chain" schemes for organized crime groups in New York and Florida. To confuse state and federal tax auditors, Harrison employed a maze of shell corporations, false paper trails and offshore bank accounts. Harrison estimated the schemes yielded approximately $1 billion in stolen taxes for himself and organized crime figures in New York. In 1984, Harrison, who was convicted of mail fraud and wire fraud relating to a fuel tax evasion scheme in New York, fled to Panama prior to sentencing, allegedly after receiving death threats from his organized crime associates. He returned to the U.S. later that year and entered the Witness Security Program under an agreement with the Organized Crime Strike Force for the Eastern District of New York. When his convictions were over- turned in 1986, Iorizzo subsequently pleaded guilty to federal mail fraud and to a violation of Florida's organized crime statute. Harrison's sons and Raneri testified at Harrison's trial as government witnesses following their guilty pleas in the Hebco scheme. His daughter, Susan Mulry, also pleaded guilty but did not testify. # # # 96-261