Top MCA Figure a Focus of Probe Into Mafia Dealings

A top executive of MCA Inc., the giant entertainment conglomerate, is under investigation for his role in directing millions of dollars in contracts to a small New Jersey printing company that authorities believe is linked to organized crime, The Times has learned.

Eugene F. Giaquinto, a 29-year MCA employee who heads the company’s $100-million-a-year home video division, has emerged as a key figure in a federal organized crime strike force investigation into the Mafia’s suspected penetration of the movie industry, law enforcement sources said.

Although Giaquinto denies any connections to organized crime, investigators are examining his alleged association with several Mafia figures, including Edward Sciandra, the reputed acting boss of Pennsylvania’s Bufalino crime family, the sources said.

The investigation is also attempting to determine why Giaquinto continued to direct MCA business to North Star Graphics Inc.--at what one former company official said were higher-than-normal prices--long after the Clifton, N.J.-based company was implicated with Sciandra in 1981 in a $68,000 false-invoicing scheme that apparently victimized MCA, the parent of Universal Studios and MCA Records.

Sciandra and two others were convicted on tax-evasion charges in connection with that case. In a background report prior to Sciandra’s sentencing, federal prosecutors said he was able to deliver business from MCA because of his mob ties.

“Although he was neither an employee nor authorized agent for Universal, Sciandra was able--because of his organized crime connections--to dictate to which companies Universal sent its film processing and film editing work,” the report said.

MCA officials said the company was investigated and cleared of any wrongdoing in the 1981 investigation that led to Sciandra’s conviction. Indeed, company officials said MCA cooperated in that investigation and supplied evidence that was used against Sciandra.

In a brief telephone interview Tuesday, Giaquinto angrily denied any involvement with the mob.

“This is ridiculous. I don’t work 29 years for a company and all of a sudden become somebody that I’m not,” he said. “All I know is this: We’ve been doing business with that company (North Star) for a long time and I’m not aware of what any allegations about it are.”

Giaquinto, 47, acknowledged that he was contacted by the FBI about the investigation, but said the agent “was all over the place” in terms of allegations and he said he could not determine precisely what the agent was after.

“There’s not going to be any indictment,” he added, before declining further comment.

No Questions Raised

MCA spokesman Ron Olson said there have been no questions raised about the propriety of the North Star contracts, nor has the company received any information that Giaquinto is the subject of any investigation.

Richard A. Stavin, the strike force prosecutor who is reportedly directing the inquiry, has refused to confirm whether Giaquinto is involved in the investigation, either as a subject or as a potential witness against others.

MCA is one of the world’s largest purveyors of home videocassettes, but North Star is not one of the handful of firms most often used by the other major Hollywood studios to package their videocassettes.

Sources said the FBI is attempting to determine why Giaquinto’s home video division apparently contracted with North Star for all of MCA video’s printing and packaging business--business that one source put at “several million dollars”--including a recent contract for release of the movie “E.T.,” expected to be the largest-selling video in movie history.

Did an Internal Audit

MCA conducted its own internal audit of the home video division’s dealings with North Star “a few years back,” according to a former executive familiar with the audit. “It turned up some irregularities, somewhere between $400,000 and $500,000 that had been paid out for work that wasn’t actually done.”

The former executive, who asked not to be identified, said there had long been questions about the North Star contract inside MCA.

North Star was charging considerably more per box than the going rate, the executive was told. “And it was a flat rate--no matter what volume was ordered, the price (per box) was the same,” he said.

“The deal was very exclusive; there was no outside bidding and no competition,” the executive added, estimating that “North Star is billing MCA, conservatively, between $3 million to $5 million a year.”

Checking on Money

The FBI is now trying to determine whether money from North Star was subsequently funneled to the Bufalino family, and if it was, whether Giaquinto knew about it, sources said.

North Star’s president, Michael Del Gaizo, identified in the Pennsylvania Crime Commission’s 1985 annual report as a Bufalino associate, is believed to be a longtime friend of Giaquinto, according to law enforcement sources. Del Gaizo pleaded guilty in 1984 to a tax evasion charge in connection with North Star Graphics. That case was unrelated to the 1981 invoicing scheme.

Maria Del Gaizo Noto, Del Gaizo’s sister and lawyer, said that “any allegation that Michael Del Gaizo has an organized crime involvement is absolutely, categorically false. He has never been charged with being a member of organized crime.”

Noto attributed the allegations to “a series of rumors gone wild.”

Giaquinto has met on at least two recent occasions with Sciandra, once at a video convention in Florida and on another occasion at a Beverly Hills restaurant, a meeting which Del Gaizo also attended, sources said.

Came Up With Scheme

According to the government’s sentencing memorandum in the 1981 case, Sciandra came up with a scheme in early 1979 to sell fictitious invoices to businessmen “who wanted to get cash out of their businesses, but wished at the same time to show a legitimate business expense on their corporate records.”

Sciandra’s first customer, according to court documents, was Del Gaizo, who ordered $68,000 worth of fictitious invoices over a three-year period. Del Gaizo kept 90% of the proceeds, funneling an additional 5% to Sciandra, the prosecution alleged.

As part of the same scheme, Sciandra received money “under the table” from several film-processing and editing companies for steering Universal business their way, according to court documents.

Olson said MCA’s contracts with North Star Graphics have been closely examined and were found to be competitive.

“North Star’s service, North Star’s prices have been competitive, and given that, there was no reason to terminate them,” the spokesman said. “Remember that North Star was not convicted (in the 1981 case)” he added. “North Star’s principal was not convicted, somebody that Mr. Del Gaizo knew (Sciandra) was convicted. Now, I don’t think that suggests any reason to quit doing business with North Star, unless their prices and services were not what they were looking for.”

Second Investigation

In any case, MCA officials emphasized, there is no reason to believe that MCA as a whole is the subject of any investigation simply because one of its executives has been approached by the FBI.

The current investigation marks the second time in recent years that federal authorities have looked into business dealings between MCA subsidiaries and reputed organized crime figures.

In April, Salvatore J. Pisello--identified by the FBI as a “high-ranking soldier in the Gambino crime family”--was sentenced to four years in prison for evading taxes on more than $400,000 in unreported income he earned through a series of business deals with MCA Records between 1983 and 1985. After a two-year investigation into Pisello’s record business activities, the investigation was halted and no MCA executives were charged with wrongdoing. Last October, John L. Newcomer, chief of the Los Angeles Organized Crime Strike Force, sent a letter to the company stating that “neither MCA nor any of its employees or executives are the target of (the Pisello) case or its attendant investigation.”

According to sources, Pisello was sent to Giaquinto in early 1985 by MCA Record executives to discuss channeling some of MCA’s home videocassette duplicating business to a company that Pisello supposedly represented. Giaquinto refused to do business with Pisello, however, sources said.

Giaquinto has recently been embroiled in a bitter power struggle with MCA Music Entertainment Chairman Irving Azoff over control of the home video division, sources said.

‘Loyal MCA Soldier’

Sources close to Giaquinto describe him as a “loyal MCA soldier” and “stand-up company guy” who started working for the company while he was still attending college. “He’s one of the world’s nicest people,” a longtime colleague said.

FBI officials are also investigating Giaquinto’s connections with Martin Bacow, an unofficial Teamsters representative in Hollywood who is the focus of a separate labor racketeering investigation.

Bacow, whom the FBI is investigating as a possible conduit for labor peace payoffs from Hollywood producers, had negotiated a $3-million contract with Giaquinto for the video rights to a movie on the life of gangster Meyer Lansky. The deal is currently in limbo.

Bacow, who said he is a personal friend of Giaquinto, contended there was nothing wrong with the film contract. Bacow, who has no criminal record, has also repeatedly denied allegations that he received any money in exchange for his labor negotiations.