Growing Force of Investigators Probes Mob Ties to Record Industry

During the third week of January this year, record industry executives from around the country arrived in New York to attend a $1,000-a-plate, black-tie ceremony at the Waldorf-Astoria hotel.

They were there to honor the first 10 inductees into the newly established Rock ‘n’ Roll Hall of Fame. But law enforcement authorities detected some visiting executives doing a few other things, too.

Some were on the phone with top East Coast Mafia figures, or meeting with them. Among their contacts was reputed Gambino family boss John Gotti. Federal, state and local authorities noticed the activity while conducting separate undercover investigations of New York organized crime families.

Increased Activity

The contacts with Mafia figures had no apparent connection with the Hall of Fame ceremony itself. But the presence in town of so many record executives who had so much to say to mobsters aroused investigators’ suspicions. And they contributed to growing concern that the Mafia, no stranger to the field, had stepped up its activity in the record industry.

Law enforcement is eager to learn more. Never have so many investigators been so active in examining the record industry and its possible links to the Mafia. This year, five federal grand juries--in Los Angeles, New York, Philadelphia, Cleveland and Newark, N.J.--began investigating suspected Mafia infiltration of the $4-billion-a-year U.S. recording industry.

The Newark grand jury last month handed down a 117-count indictment citing the president of a small New York record company and a group of reputed East Coast mob figures for their role in an alleged racketeering and extortion scheme that grew out of a 1984 purchase of nearly 5 million out-of-date, or “cutout,” recordings from Los Angeles-based MCA Records.

The Los Angeles grand jury is investigating the circumstances surrounding the MCA sale--a deal in which MCA says it was victimized by organized crime figures now under investigation or indictment.

“It is indeed regrettable that the things we saw in the mid-1970s appear to continue to exist and there does appear to be an organized crime involvement in the record industry,” said U.S. Atty. Thomas W. Greelish in Newark, whose office is prosecuting the indictments there.

Ten years ago, Greelish headed a nationwide payola investigation into bribes paid to radio programming directors in exchange for giving records air play. “Back then we were investigating the industry and we found organized crime; this time we were looking at organized crime and found the record industry,” he said.

Gaining a Foothold

Mob involvement in the industry could be considered worse now than in the past, said Greelish. “Because the industry is bigger--there’s more money in it--and you have a whole new aspect in terms of video.”

Investigators do not contend that the record industry or any major record company is controlled by organized crime. Of two dozen law enforcement officials interviewed by The Times for this story, none made such an allegation.

“We’re not talking about control, we’re talking about getting a foothold, having influence,” said one member of the FBI’s organized crime investigative unit in Washington.

But law enforcement officials agree that there is increased mob involvement in virtually every area of the business, including hidden ownership of small independent record labels, distribution companies, recording studios, record-pressing and cassette-duplicating plants, concert promotion companies and talent agencies.

“We are seeing a great deal of activity between the record business and organized crime right now,” one New York investigator said. “We can’t sort it all out yet, it’s just tantalizing bits and pieces. We still need the common thread to tie it all together.”

Some of the bits and pieces are disturbing. Among them was the murder last January of a New York City police detective on the sidewalk in front of a Queens restaurant. The detective, responsible for surveillance of several reputed mob figures, was shot twice in the face at point-blank range and twice more as he lay on the pavement, according to the police report.

The man now charged with the murder, Frederick (Fritz) Giovannielo, is identified by New York law enforcement officials as a member of the Genovese crime family. According to federal investigators and those who participated in the deal, he was financially involved in the purchase of the MCA cutouts along with Roulette Records President Morris Levy and reputed DeCavalcante family chieftain Gaetano (Corky) Vastola, both recently indicted on racketeering and extortion charges in Newark.

The night of the murder, the detective was following Giovannielo as part of an FBI-New York Police investigation into activities of the Genovese family. According to authorities, one of the principal targets of that investigation is Vincent (the Chin) Gigante, the reputed acting boss of the Genovese family who has longstanding personal ties to Morris Levy. Investigators say Gigante also has financial ties to Levy and his company, Roulette.

Around the same time last January, New York investigators began picking up information that a dispute had arisen between the Genovese and Gambino families--the two most powerful organized crime groups in the country--”over their respective record business interests,” said one investigator.

That dispute may have been a factor in the killing of the detective, some investigators believe. According to sources in the New York police department, Giovannielo and the two other men arrested in connection with the murder have claimed they thought the detective--who was following them dressed in plain clothes--was a member of another mob faction. “They thought it was a hit on them,” a New York police detective said. Giovannielo has pleaded not guilty to the murder.

Separately, federal investigators are looking into what they suspect was the forced takeover of a small Tennessee record company by organized crime figures, The Times has learned. According to law enforcement sources, the owner of the record label has told investigators that Chicago mob interests took over his company after he was unable to pay off a loan-sharking debt.

‘A Natural Vehicle’

Suspected links between the record industry and the Mafia observed by law enforcement may have as much to do with the nature of the industry as with the nature of the Mafia.

“The record business is a natural vehicle for organized criminal activity because you can make a lot of cash very fast and the producers of the goods--the artists who make the records--can be easily controlled by contracts and through their personal managers,” said one FBI agent involved in the current Newark case.

One of organized crime’s primary attractions to the record business has to do with the fact that recordings are sold on consignment and can usually be returned to the record companies for full credit. Thus, a record is in effect negotiable tender--a $5 bill made out of vinyl.

Not surprisingly then, organized crime has long been involved in record counterfeiting. More recently, however, investigators say they are discovering a growing number of organized crime figures who have obtained interests in pressing and duplicating plants that frequently are used by the major record companies to handle their excess production when other plants are operating at capacity.

Investigators say that this has led to incidents of what’s known as “back-dooring.” Using the master recording and original artwork provided by the record company, the plant makes more recordings than has been contracted for and then sells the unreported excess product “out the back door” for cash. The result, investigators say, is a marketplace flooded with hundreds of thousands or millions of unauthorized recordings that are exact copies of the legitimate recordings.

Organized crime’s recent increased involvement in the record industry “can be equated somewhat with its traditional infiltration of other industries,” said one FBI official. Once the mob penetrates an industry, “even if it’s through legitimate investments, they often develop a competitive advantage through their willingness to resort to extortionate practices,” he said.

That’s what federal investigators say happened in the aftermath of the 1984 MCA cutout deal. The ultimate customer in that sale was John LaMonte, owner of a budget record distributor called Out of the Past Inc. in the Philadelphia suburb of Darby, Pa. According to the indictment, the records were sold to LaMonte on credit, with Roulette Records President Levy and alleged DeCavalcante family chieftain Vastola guaranteeing his payment of $1.2 million to MCA.

Prison Sentence

However, when LaMonte subsequently refused to pay for the records--claiming that the most valuable titles had been diverted during shipment--Levy and Vastola used “physical violence and threats to take over LaMonte’s company to enforce their guarantees of payment” to MCA, according to the indictments handed down last month by the grand jury in Newark. LaMonte entered the government’s witness-protection program after he allegedly was beaten up by Vastola.

The middleman in the MCA cutout sale was Salvatore Pisello, who is named in court documents as a Gambino family soldier and who is serving a two-year prison sentence in California for income tax evasion. Investigators say that Pisello worked together on the deal with Giovannielo, Levy and Vastola.

That means, authorities said in interviews, that profits from the MCA cutout sale were to be divided among three different organized crime groups--Gambino (Pisello), Genovese (Giovannielo) and DeCavalcante (Vastola). That’s not unusual, said one New York investigator. “There are few cases where one crime group or one person controls the whole thing. Most are joint ventures--they pool their resources,” he said.

According to papers filed last week in U.S. District Court here, some of Pisello’s profits from the MCA deal “were laundered through a Queens, N.Y., bank account which he shared with another East Coast mobster.” Other profits from the MCA cutouts were collected “through a cash payment in a Santa Monica parking lot and a wire transfer to a secret bank account in Las Vegas,” according to the papers filed by an attorney for the Los Angeles office of the Justice Department’s Organized Crime Strike Force in response to Pisello’s request for a reduction of his two-year prison sentence.

“How Pisello was able to get into the record business remains under investigation,” the papers state.