Defense Starts Arguments in Pisello Tax Trial

The defense began presenting its case Thursday in the tax evasion trial of reputed mobster Salvatore Pisello with two record industry veterans testifying about the sometimes-murky world of “cutout,” or discontinued, record sales.

Pisello is charged with evading taxes on about $450,000 in unreported income for the years 1983 to 1985. Some of that alleged unreported income came from two cutout record sales that Pisello negotiated in 1984, apparently on behalf of MCA Records.

John Gervasoni, the owner of a New Jersey cutout distributorship called Scorpio Music, was called by defense attorney David Hinden in an apparent attempt to impeach the testimony of prosecution witness Ranji Bedi, the owner of a now-defunct cutout company called Betaco Enterprises. Bedi testified last week that he made a series of unusual cash payments to Pisello as down payment on the purchase of 1.5 million MCA cutouts.

In his testimony Thursday, Gervasoni said that, when he sought to buy 1 million of those cutouts from Bedi in November, 1984, Bedi told him he needed a $50,000 down payment. “He wanted me to meet him in Las Vegas with $50,000 in cash. He wanted me to put it in a brown paper bag. He told me it was for (MCA Music Entertainment Group President) Irving Azoff.”

Later Thursday, a spokesman for MCA Records released the following statement: “We are appalled that a tax evasion case has turned into a vehicle to voice hearsay statements, distorted comments and lies against MCA and its executives, none of whom is on trial. To comment further would be to dignify these outrageous and scurrilous statements.”

Gervasoni said he had “absolutely no knowledge” about whether Bedi was telling the truth concerning Azoff. He also said he refused Bedi’s request for cash: “I told him I didn’t want to get involved with anything like that.” He said he eventually wired a total of $350,000 to the California bank account of Betaco as a 50% down payment on the cutouts.

Testifying for the prosecution last week, Bedi said he had never made cash payments to MCA executives, nor had he ever claimed to anyone that he had made such payments.

Gervasoni testified Thursday that, when he received only a small portion of the cutout records that he ordered, he called MCA and complained to Allan Clement, an MCA corporate auditor. Shortly after that, he said, he received a call from Zack Horowitz, the vice president of legal affairs for MCA Records. “Zack confirmed my deal but said I had to keep my mouth shut, that they were having problems over at the record company, that MCA corporation was doing an audit and the government was asking questions and looking around, and he was concerned.”

When U.S. District Judge William J. Rea asked Gervasoni if he ever received the rest of his records, Gervasoni replied: “No. They sued me for counterfeiting and tried to put me out of business.” MCA sued Scorpio for counterfeiting in March, 1986, and Gervasoni countersued for breach of contract on the cutout sale. Both suits were dismissed last June by U.S. District Judge Stephen Wilson.

On Thursday, Judge Rea listened intently as Gervasoni delivered a sometimes-amusing 10-minute monologue on the way the cutout business is conducted.

“I felt Ranji was just a go-between so they could shield themselves,” he told the judge, noting that record companies often “use a middleman because they don’t want to get their hands dirty.

“If you look at it logically, there is no reason to have a Ranji Bedi; they could have sold to me directly,” Gervasoni said.

The second record professional called by the defense Thursday was Sam Passamano, formerly executive vice president of MCA Distribution, the distribution arm of MCA Records. Passamano testified that Pisello’s involvement in MCA cutout sales was initiated by MCA Records President Myron Roth in early 1984. “Myron Roth indicated to me that Mr. Pisello would be taking over the sale of our cutouts and I was to supply him with our inventory sheets.”

Passamano said he had previously been in charge of selling MCA cutouts “for 20 years.” Passamano was fired by MCA in November, 1984, after 34 years with the company. He is currently suing the company for wrongful termination.