 In March 1937, Dioguardi was arrested on charges of extortion, conspiracy, and racketeering, He pleaded guilty and received a three-year prison term in Sing Sing.After his release from prison, Dioguardi moved to Allentown, Pennsylvania, where he established a dress manufacturing plant.He later sold the plant (taking a $11,200 bribe to ensure that it remained non-union before he sold it), and set up a dress wholesaler operation in New York City.