In 1981, Franzese was contacted by Lawrence Salvatore Iorizzo who had developed a scheme to defraud the federal government out of gasoline taxes in 1965. Iorizzo was being hassled by criminals in California and offered Franzese a percentage if he would defend and solve the issue. The pair set up 18 stock-bearer companies based in Panama. Under law at the time in Panama, gasoline could be sold tax-free from one wholesale company to the next. Franzese partnered with the Russian Mafia in Brooklyn in the gas scheme. The wholesale gas was sold to one company, but shipped to another company while a third company, a dummy company, was sold the gasoline on paper and would forge tax documents for the company that received the gasoline. Franzese's crew was then able to collect and pocket the nine cents per gallon of gasoline in federal tax. Once enforcement agents attempt to collect the tax from the dummy company, it declares bankruptcy and the daisy chain would continue. This gasoline supplied between one third and one half of all gasoline sold in the New York metropolitan area. According to officials, Franzese kept 75 percent of the profits, making $1.26 million per month, while Iorizzo made $45,000 per month. An associate later testified that Franzese personally made $1 million per week from the gas scheme.