In 1989, Franzese was released from prison on parole after serving 43 months. On December 27, 1991, Franzese was sentenced in New York to four years in federal prison for violating the probation requirements from his 1989 release. Franzese had been arrested in Los Angeles on a tax fraud accusation and was sent back to New York for the probation hearing. In court, prosecutors complained that Franzese had only started paying the balance of his court-ordered restitution payments earlier that year. Franzese was also later subpoenaed to testify at Walters' trial in March 1989, as Walters had invoked his name to frighten college athletes into signing management contracts, including Maurice Douglass. In exchange for his testimony, he was given immunity from prosecution in the Walters case. Prosecutors have said that Franzese was not considered by the government to be a federal cooperating witness.