Around the end of February, 1933, at the age of 25, Pete was arrested by federal agents for operating a moonshine still on the creek that runs through the Morelli Ranch in Occidental. The still was installed by Pete’s cousin, John B. Morelli, and Pete claimed he was just a hired hand. A small article in the Press Democrat stated:

“Federal Prohi officers from Santa Rosa and Sacramento
on Monday morning seized a 250 gallon still, 50 gallons
of alcohol, and 2,000 gallons of mash and arrested
Pete Morelli, 25, on a ranch northeast of Occidental.
Morelli is in the county jail in lieu of $2,000 bail set
by Commissioner McAlpine before whom he was taken
after his arrest on a possession charge.
Federal Prohis from the Santa Rosa office scouting in
the Occidental district on Sunday smelled the odor of
the mash and wired to Sacramento for additional
officers to come to this county to assist them in the raid.”