Actually the Russians didn't invent the scam. I think the scam had been around since the 60s and was being done by a few smart people here and there, but not on an 'organized crime' basis. They just made a few hundred k and then left the country before anyone wised up. The Russians were the first to do it on a huge scale though.

As for Balagula, he wasn't 'with' Franzese. Franzese tried shaking him down and Balagula reached out to Gaspipe Casso and Christy Tic, who scared Franzese away.