A True Story of MCA, The Music Business, And the Mafia

By William Knoedelseder

HarperCollins. 480 pp. $23

MUCH AS Watergate began as the investigation of a simple break-in, a simple income tax investigation in California in 1983 fueled a series of exposes that rocked the record business and MCA Records in particular. Over the next four years, an embrassingly bright light shone into several dark corners of the industry, specifically the "Network" of independent promoters who influenced Top 40 airplay through bribes of cash and cocaine, and a 200-million album a year "cutout" industry infiltrated by the Mafia.

Before the dust settled, new questions arose, this time aimed at the Justice Department, which had apparently gone to great lengths to protect MCA Records' parent company, MCA, Inc. As investigative reporter William Knoedelseder points out in Stiffed: A True Story of MCA, the Music Business, and the Mafia (and as Dan Moldea did in 1985's Dark Victory: Ronald Reagan, MCA and the Mob), then-President Reagan had deep ties to MCA and its longtime chairman, Lew Wasserman. Wasserman, at one time Reagan's agent, is widely perceived as one of the most powerful men in Hollywood. Was MCA so powerful that it could influence the Justice Department? There are no smoking guns in Stiffed, but there are enough questionable actions on the part of the government to raise the scent of cordite.

Knoedelseder, who covered the music industry for 12 years at the Los Angeles Times, has written a book in the tradition of Indecent Exposure that is both shocking and entertaining. Shocking because of the events that unfold, entertaining because of the characters caught up in those events. With only a few heroes, notably prosecutor Marvin Rudnick of the Justice Department's Organized Crime Strike Force, Stiffed is a rogue's gallery where everyone seems to have a record, musical or criminal. Stiffed is further enriched by interviews, trial testimony and transcripts of government wiretaps that provide colorful dialogue right out of Damon Runyon and George V. Higgins.

Though there had long been suspicions about mob involvement with small, independent labels, there was no apparent mob connection with the Big Six companies -- CBS, WEA, Capitol-EMI, BMG, Polygram and MCA -- that account for 90 percent of the record business in America. Until 1983, when Irving Azoff, an aggressive and abrasive supermanager (the Eagles, Jimmy Buffett, Chicago), became president of the MCA Records Group, MCA was the weakest of the Big Six both fiscally and in terms of its image.

Sal Pisello, a career racketeer with connections to New York's Gambino crime family, arrived at MCA soon after Azoff. Also known as Sal the Baker and Sal the Swindler, Pisello had managed to slip through cracks in the legal system -- he'd never even been arrested -- and he somehow slipped through the cracks at MCA, too. Though he never had a title or a salary and apparently knew nothing about the record business, Pisello soon ended up in control of MCA cutouts. Cutouts (so called because a corner may be cut off a cover) are the record industry's remainders and overstock; deleted from a label's catalog, they are sold to dealers for anywhere from 10 cents to a dollar. When Azoff took over, there were 10 million cutouts in MCA's warehouses alone. Under the previous regime, cutouts had been sold through sealed bids to the highest per-unit bidder. Pisello had different plans.

John LaMonte had plans, too. A small-time wheeler-dealer who sold imports and cutouts, LaMonte was looking for a deal to put him back in the real money after a 1977 prison term for record counterfeiting. Normally he bought his cutouts from one of several companies specializing in them. A minor player dealing directly with a major label was rare, but LaMonte struck a deal with Pisello, purchasing 4.2 million albums and cassettes for $1.3 million.

LaMonte should have sensed trouble when Pisello demanded off-the-book cash payments (and double-billings that would secretly net Pisello three to five cents per album) and particularly when Morris Levy appeared out of the blue as the deal's guarantor. Levy, founder of Roulette Records, owner of various publishing and management companies and a major independent figure in the '50s and '60s, had long been considered "mobbed up," with his business thought to be controlled by the Genovese crime family. LaMonte knew he was in trouble when 60 tractor trailers arrived -- absent 600,000 of the best records he'd ordered (Pisello had sold them to a competitor). When Levy demanded payment anyway, LaMonte refused.

Back in California, Marvin Rudnick, known as a tireless investigator and relentless prosecutor, was assigned a simple two-count income tax-evasion prosecution of Sal Pisello dating to the late '70s. Following a paper trail, Rudnick eventually connected Pisello to MCA. At that point, Knoedelseder writes, Rudnick "assumed a crime was being committed at the company, he just had to find out what the crime was."

Neither Rudnick nor Knoedelseder ever found out just how Pisello came to work at one of world's largest entertainment companies, but there are hints that the mob did someone at the parent company a big favor, one big enough to get Pisello's foot in the door. Though he received $250,000 in "loans" and "advances" for a number of dubious projects, none of Pisello's deals appeared to be in the interest of MCA. For "repayment," Pisello gave MCA unsigned checks; those that were signed bounced. MCA simply wrote them off. Talk about money for nothing!

As Pisello's Machiavellian deals began to unravel on the West Coast, LaMonte's problems escalated back East, with Levy pressing for payment. Finally, Levy associate Gaetano "Corky" Vastola uncorked a punch, splintering LaMonte's jaw, fracturing his eye socket and crushing his sinus cavities. Soon after, LaMonte became an undercover government witness, later entering the witness protection program. Levy and Gaetano went on trial for extortion conspiracy in the MCA cutout deal. As soon as the media began looking into the scandal, MCA fired Pisello, and Azoff did what everyone else would do: He passed the blame, sullied others and portrayed himself and his company as unaware victims of either criminal subterfuge or government harrassment.

Then, suddenly, the media's attention -- and the Justice Department's -- shifted from Pisello and MCA to the much sexier issue of payola. After a downturn from the late '70s industry boom, many labels had cut back on staff, including promotion departments. That opened the door for a loose-knit group of independent promoters -- dubbed the Network -- who would receive anywhere from $500 to $3,000 for getting a new single added to the playlist at a key radio station (fees depended on a station's size and influence).

By the early '80s, the Network had become all-too-powerful and costly: Joe Isgro, the most conspicuously successful member of the Network, was making $5 million a year, more than any two record company presidents combined. Knoedelseder suggests that the major labels were less worried about possible corruption than excessive costs ($50 million in 1983 alone) when they began to turn against the Network, finding an out in 1986 when NBC began airing reports on independent promotion, payola and mob connections. Soon after, all the majors except CBS severed their ties to the Network. Isgro, targeted by a grand-jury investigation, eventually filed a $25 million antitrust suit against the majors, claiming a conspiracy to put him out of business (most eventually settled out of court). ACCORDING TO Knoedelseder, while Azoff and MCA Records were publicly criticizing the Network, they were also engaged in a secret campaign to break its power by providing the names of suspect promoters and programmers to the government. He also suggests that MCA diverted the Pisello investigation by using its political clout to shift the focus to payola and certain actions seem to support that: Rudnick was threatened by an MCA lawyer, who told him "we have friends in the courthouse. We can make life very difficult for you." He was called to Washington and told by Justice Department officials not to cause MCA "any embarrassment." Rudnick's new task-force boss, John Newcomer, ordered him "not to conduct any investigation of MCA." Justice Department investigators working the LaMonte/Levy case on the East Coast were forbidden to cooperate with or even talk to Rudnick.

While he got a conviction in the Pisello case, Rudnick was gradually defanged and was fired in 1989 for "insubordination and failure to follow orders." The same week Rudnick was fired, MCA had the top three albums on the charts and Irving Azoff was honored by MCA chairman Lew Wasserman in a full-page Billboard ad that said "we are thrilled with the achievements and proud of your accomplishments." Two months later, Azoff resigned to form his own label, Giant, leaving with some $30 million in MCA stock.

Pisello served two years of a four-year sentence on tax evasion. Last fall, he was in Hollywood trying to sell two Mafia-themed scripts (one a drama, one a comedy). Perhaps Joe Isgro will produce it -- he was executive producer of the recent film "Hoffa." Isgro's 57-count indictment was dismissed in 1990 for prosecutorial misconduct. No major Network promoter or radio programmer was ever convicted on payola or tax-evasion charges and despite all the media attention and government bluster, there has been only one minor conviction under the federal payola statute.

Morris Levy, found guilty of the extortion of John LaMonte, sold his music business holdings in 1990 for a reported $70 million and died before he could begin his 10-year sentence. Gaetano Vastola is now serving a 17-year sentence. LaMonte remains in hiding. No MCA executives were ever charged with wrongdoing. MCA, Inc. was sold in 1990 to Japan's Matsushita conglomerate for $6.1 billion. Lew Wasserman made $300 million on the sale and remains as chairman of the company. Marvin Rudnick is now in private practice in Los Angeles.

Richard Harrington is the pop music critic of The Washington Post.