The New Jersey police have impounded Fredo Corleone's car, but they haven't discovered the evidence inside - evidence which links Fredo to a murder. Get to the car and destroy it before they begin their investigation.
Reward: +2,500 Respect
Go to the police station where they are holding Fredo's car. You can sneak up behind the first cop and garrote him without anyone noticing. From there, slowly go out the window. Pull out a gun and start shooting all cops in sight. Be careful because once you start shooting, about five cops will appear behind you.
Once you have some breathing room, run over to Fredo's car and plant the dynamite. Get away from the car and just wait for it to blow up, defending yourself from any more cops if need be.
An alternative strategy is to bribe a few cops before you go inside the station. You can walk right in and plant the dynamite and the cops won't start shooting until it blows up. Hopefully by then you'll be in your car and ready to make a getaway.