On February 28, 1985, Ianniello was indicted in federal court in New York on charges of racketeering involving the operation of several restaurants, bars and carting companies. Using telephone tapping on Ianniello's office, agents assembled proof that he was skimming over $2 million from bars and restaurants and a topless bar in which he owned interests. On December 30, 1985, Ianniello was convicted on numerous counts and on February 16, 1986, Judge Weinfeld sentenced Ianniello to six years in federal prison.