Industry Rule number 4080 — record company people are shady!
Who knew Q-Tip could have been talking about Lyor Cohen when he wrote that lyric? Here’s a revealing look at Lyor Cohen, who the judge at his recent trial called ‘morally reprehensible’.
I would have liked to have seen more details on what Lyor did that was so reprehensible though. I’d also like to know if Russell Simmons was involved in the alleged acts. But the article’s a good read nonetheless. It also gives a good look at the drama surrounding Murder Inc. and Irv Gotti.
I’ve reprinted the article in its entirety in case the Yahoo story expires. (hat tip to Anil)
Lawsuit Is Glimpse Into World of Rap Mogul
Wed Dec 3, 2:31 PM ET
By TOM HAYS
NEW YORK –
After two decades of survival and success in the cutthroat music business, the world’s pre-eminent white rap mogul found himself trapped in a place most horrific: A witness stand. In a federal courthouse. Under oath.
“It’s the nastiest, most negative place I’ve been in a very long time,” said Lyor Cohen, head of the Island Def Jam Music Group, testifying in an ugly legal tussle over the platinum-selling rapper Ja Rule.
It only turned nastier and more negative for the 43-year-old music executive. He lost the lawsuit. The judge implied he was “morally reprehensible.” And the jury found him personally liable for millions in punitive damages.
Trial evidence also revealed that Island Def Jam owned 50 percent of Ja Rule’s record label, Murder Inc. Federal prosecutors are investigating Murder Inc. for alleged money laundering, raising questions about whether IDJ and its publicly owned parent companies, the Universal Music Group and Vivendi, are indirectly in business with one of New York’s most infamous drug dealers.
The trial offered a rare public glimpse into music business ugliness ordinarily obscured by platinum albums and glitzy videos. And the verdict was the first misstep for Cohen after a mercurial 20-year rise through the music business.
“Lyor’s somebody who’s really paid his dues,” says music business veteran Bill Adler, who’s known Cohen since those early days. “He’s really gone from success to success.”
Until now.
Still, Cohen remains head of IDJ — his contract expires in early 2004 — as lawyers appeal the judgment. Cohen’s boss, Universal Music Group head Doug Morris, has said that the verdict “should in no way detract from the incredible accomplishments of Lyor at Island Def Jam.”
It probably won’t, predicted Bob Lefsetz, publisher of the music industry bulletin The Lefsetz Letter. And that speaks volumes about the music industry.
“This case will have no effect on the industry whatsoever,” Lefsetz says. “This case will be an anomaly put under the rug. It (epitomizes) the history of the music business.”
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It was 1994 when Steve Gottlieb, founder of independent label TVT Records, signed an ambitious Queens DJ, Irving Lorenzo, as a producer/talent scout. “DJ Irv” quickly produced, signing Cash Money Click, a three-man crew featuring a Queens rapper named Ja Rule.
Lorenzo’s circle of Queens friends included another, more menacing acquaintance: drug kingpin Kenneth “Supreme” McGriff, who would later serve 10 years in prison for leading a murderous crack-dealing operation that did $200,000 a day in business.
The Cash Money Click album was scrapped when a member was jailed. In 1996, Lorenzo — now calling himself “Irv Gotti,” after the late Gambino family boss — jumped to join Cohen at Def Jam. Ja Rule went with him.
A year later, Cohen and Gotti launched Murder Inc. According to court papers, investigators believe McGriff provided Gotti with the seed money for his end of the deal.
“Gotti is the public face of Murder Inc.,” an informant was quoted as saying in an affidavit filed earlier this year. “McGriff is the true owner of the company.”
With Gotti producing the tracks, Ja Rule proceeded to sell more than 10 million copies of his first three albums, making himself and Gotti magazine coverboys and MTV staples.
That’s when Gottlieb began thinking about releasing the old Cash Money Click recordings, along with new material from the group. Since Ja Rule was under contract to Island Def Jam, Gottlieb initiated talks with Cohen to secure permission.
“Everything had been very cordial,” Gottlieb recalled. “I would see Lyor from time to time over the course of a year. I even had meetings with Doug Morris about it.”
Gottlieb says he spent $1 million on production and promotion for the album. But in August 2002, nearly a year after Gottlieb believed a deal was finalized, Cohen killed the project during an angry phone call.
“He said, `You’re going to be hearing from my lawyers,'” Gottlieb recalled. “Then he hung up. At that point, I guess I knew we had a big problem.”
Gottlieb says efforts to settle out of court were repeatedly rebuffed, forcing his lawsuit. “We didn’t choose this dance,” he says.
When the trial ended in May, Cohen and his label were ordered to pay TVT a staggering $132 million in compensatory and punitive damages. Cohen, who testified that he made more than $100 million when Def Jam was sold in 1999, was found personally liable for an unprecedented $56 million.
U.S. District Court Judge Victor Marrero later reduced the award to $53 million (with $3 million due from Cohen). But in his decision, Marrero described the defendants as “morally reprehensible” and made note of “inconsistencies” in Cohen’s testimony.
“The jury found that the CEO of the biggest rap label in the country committed fraud,” says TVT attorney Peter Haviland. “This is a guy, the co-director of Murder Inc., where bodies continue to drop every couple of weeks.”
Actually, it was one body. On Sept. 5, one of the label’s rappers — Gerard “D.O. Cannon” Fields — was shot to death in Queens.
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The 50-50 relationship between Cohen’s IDJ and Gotti’s Murder Inc. was discussed in detail at trial. Supreme McGriff’s involvement is a murkier matter.
The ties between McGriff and Murder Inc. were outlined in an affidavit used by authorities to seize bank accounts related to “Crime Partners,” a 2001 straight-to-video film marketed by Murder Inc. and based on a novel by influential pulp author Donald Goines.
McGriff was listed as executive producer of the film. IDJ paid $500,000 to McGriff’s company for a soundtrack for “Crime Partners 2000,” says McGriff’s attorney, Robert Simels. The deal was brokered by Gotti, a law enforcement source said.
The soundtrack was never delivered, raising further questions about Gotti’s relationship with McGriff, the source said. But Simels says the explanation was much simpler: “The government froze all the funds advanced by Def Jam to do it.”
Rap and crack were both born about 30 years ago, and more than a few rappers brag on their records about starting their labels with drug money. Murder Inc., according to at least one informant, was bankrolled by McGriff.
A federal investigation launched in early 2003 has resulted in three arrests — including a Murder Inc. employee — and seizure of records in raids on the label’s Manhattan offices.
Two McGriff associates have pleaded guilty to fraud in deals that could make them witnesses in a possible money-laundering case against Gotti and others.
McGriff, 42, was sentenced in June to 37 months in prison for illegal possession of a handgun.
Both McGriff and Gotti have denied any wrongdoing. McGriff, in a letter from prison, says he was the victim of a “vindictive investigation” by “overzealous and politically ambitious individuals.”
Lyor Cohen isn’t saying anything. Island Def Jam and Universal Music Group declined to speak to The Associated Press about the case, and Cohen’s attorney did not return phone messages.
When Cohen was asked about the case at the end of an AP interview promoting a new artist, his publicist terminated the talk.
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Cohen, the grandson of an Israeli general, was born in New York to Israeli immigrants. He grew up in Israel and Los Angeles, far from the New York streets where Cohen’s future artists were inventing a new kind of music.
He entered the rap game 20 years ago, after an encounter with the seminal rappers Run-DMC at a club Cohen was running in California. Cohen sensed an opportunity, and was soon back in New York working for Def Jam founder Russell Simmons.
The white guy in the predominantly black office was known as “Little Israel,” an odd tag for a 6-foot-5 man. But he quickly gained acceptance, despite his strange accent. As Def Jam grew into the industry’s most influential rap label, with artists ranging from the Beastie Boys to Public Enemy to Jay-Z, Cohen became indispensable.
“He’s always been slightly eccentric, but he’s totally irreplaceable,” UMG chairman Morris once said. And he was aggressive, a player who made things happen. Newsweek magazine crowned him “rap’s unlikely king.”
“Lyor’s got a reputation as a hard-nosed businessman,” says Adler, who was Def Jam’s publicist during the Run-DMC era. “But he’s in a hard-nosed business. You cannot be a cream puff and run a record label.”
Cohen once staked out rapper Foxy Brown’s home, convincing her to sign with Def Jam when she finally emerged. On another occasion, he signed the group 112 away from Sean “P. Diddy” Combs’ Bad Boy label and then told the Financial Times: “If you haven’t nailed it down, expect for it to be taken.”
When Universal Music Group bought Def Jam in 1999, Cohen collected $100 million and moved up to run the newly created Island Def Jam operation. By the time Cohen signed Mariah Carey (news) last year, he was living as large as any of his acts: a spacious home on the tony Upper East Side, seaplane trips to the Hamptons to watch his son’s baseball team.
He was involved in philanthropic activities, and his professional duties had expanded, too. At Island Def Jam, he handled diverse labels such as American Recordings and Lost Highway, and worked with artists like Bon Jovi.
But it was Gotti, Ja Rule and Murder Inc. that led to the lawsuit.
The Gotti-Cohen relationship was tight. The producer gave Cohen his own mob alias — Lansky, as in Meyer Lansky, a founding father of the original Murder Inc. collection of mob hit men.
“It’s a term of endearment,” Gotti testified during the trial, a gangsta discussing a gangster.
Gotti and Cohen’s offices were just one floor apart at IDJ’s Manhattan headquarters, and Cohen served on the executive board of Murder Inc., according to documents introduced as evidence at the trial.
Under questioning, however, Cohen claimed he couldn’t identify his position with the record label.
“Do you sit with Mr. Gotti on the executive board of Murder Inc.?” Haviland asked.
“I’m not sure,” Cohen replied.
The next step in the legal fight is an appeal by Cohen and IDJ to the 2nd Circuit Court of Appeals, which should be heard in February. TVT attorney Haviland was confident that his client would end up with its money sometime next year. Other industry people agreed, although they expected it to come in the form of a settlement rather than the enormous lump sum.
“More likely than reducing it through appeal, they’ll work out some other settlement,” says entertainment attorney Ian Waldon. “They’ll reduce it there.”
Settlement or not, it’s business as usual for Cohen — and the music industry.
Murder Inc. has just released a new Ja Rule album. IDJ has new releases from Jay-Z, Bon Jovi, Johnny Cash (news) and Ryan Adams (news). Universal — the biggest record company in the world, with a 24.4 percent market share in 2002 — considers Cohen a “great asset” and is trying to negotiate a new contract, said a company insider on condition of anonymity.
“If you’re an artist, you only get one shot,” says Lefsetz. “The irony is everyone would still go with Lyor Cohen. He’s the kind of guy you would want.”
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On the Net:
www.murderincrecords.com
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