3 Federal Investigations Into Allegations Under Way : Mob Ties to Record Deals Probed

Three federal investigations have begun looking into suspected involvement of organized crime figures in certain record deals, The Times has learned.

The investigations are said to focus on alleged counterfeiting of legitimate recordings and the sale and distribution of so-called cutouts, or out-of-date recordings.

Centered in Los Angeles, New York and Newark, N.J., the investigations are being conducted by agents of the FBI and Internal Revenue Service, along with local authorities. The Justice Department recently authorized prosecutors to take evidence to grand juries.

Sources said the probes are still in the relatively early stages, and no arrests or indictments have been disclosed so far. “We’re investigating individuals, not the (record) industry per se; we’re looking at possible violations of the law through certain record deals,” said a Justice Department official in Washington, who asked not to be identified. He described the investigations as “very significant.”

The Newark investigation has been going on for more than a year and has utilized at least one undercover FBI “sting” operation involving drugs, sources say. A key figure in the “sting” has since gone into hiding under the government’s witness protection program.

The New York-based investigation grew in part out of information developed in the New Jersey case. It is described by federal law enforcement officials as the most far-reaching of the three.

Additional Investigation

In addition, the New York Organized Crime Task Force, an investigative agency whose sole jurisdiction is organized crime activities in that state, is also looking into possible mob involvement in some record transactions. A task force spokesman said the agency “can’t comment on ongoing investigations.”

Sources say the investigation in Los Angeles is narrower, focusing on the involvement of one alleged organized crime figure in a series of record deals.

Among the things being examined by the IRS here is the alleged crime figure’s role as a middleman in the 1984 sale by Los Angeles-based MCA Records of nearly 5 million cutout recordings. Cutouts are usually older recordings that have been deleted from the record companies’ sales catalogues because they are no longer in demand. Some industry experts estimate that the major record companies sell more than 100 million cutouts a year to a network of budget record and tape distributors around the country who then sell them to retailers.

East Coast law enforcement officials stressed that MCA Records itself is not a target of their investigations. “It’s possible that the company was merely a victim,” one investigator said.

The East Coast investigations began as a probe of certain individuals allegedly involved in traditional organized crime activities such as gambling, drug trafficking and loan sharking. But sources close to the investigations say they were expanded last spring when FBI agents began picking up information suggesting that members of the Gambino, Genovese and DeCavalcante organized crime families of New York had become involved in the cutout market.