On January 20, 2000, Agnello was charged with racketeering and arson. Undercover New York Police Department (NYPD) officers had set up a phony scrap metal business in Willets Point, Queens. Agnello then used firebombings and other illegal tactics to coerce them to sell their scrap to him at a below-market price. According to testimony, Agnello promised a cooperating witness $2000 to "buy glass bottles (and) fill them up (with gasoline) and throw them all around the truck" of a competitor. Defense documents claimed that Agnello was on medication for bipolar disorder, which led him to bad judgment. On August 16, 2001, Agnello accepted a plea bargain in return for a reduced sentence. On October 26, 2001, Agnello was sentenced to nine years in federal prison and ordered to forfeit $10 million in assets to the court. He was released from federal custody on January 16, 2008.