In April 1985, Salvatore Pisello, long of interest to various law enforcement agencies, was found guilty of tax evasion in federal court here. Three months later, record distributor John LaMonte was beaten by thugs in New Jersey while FBI agents looked on.
These seemingly unrelated events, according to a federal investigator, touched off inquiries by federal grand juries in New Jersey, New York and California into "mob infiltration of the record business."
Although the three investigations were begun independently, the federal source said, "there are connections." The New Jersey grand jury is "getting close" to issuing indictments, while the Los Angeles and New York probes, a source said, have "a long way to go."
When Pisello, 62, was convicted, he was described in the prosecutor's sentencing memorandum as an "alleged high-ranking soldier in the Carlo Gambino crime family of New York."
During Pisello's trial, prosecutors moved to subpoena documents from MCA Records. The judge rejected the motion, but the request appeared in the trial record and began to gather notice.
MCA Records is one of the nation's most prestigious labels; its parent company is the huge entertainment conglomerate MCA Corp., which owns Universal Studios.
Federal documents filed at the time of sentencing showed that Pisello, a record-industry novice, had made several deals with MCA Records in 1984, earning more than $250,000. Documents filed in April said that, after sentencing, new evidence had come to light that put Pisello's record-industry earnings over the last few years at about $700,000.
Pisello's deals with MCA Records included sale and distribution of millions of "cutouts," records in the retail market so long that they no longer sell well. Record companies remove the aging titles from their catalogues and sell them to wholesalers in bulk at reduced prices. The wholesalers then sell them to retailers.
In one deal arranged by Pisello, 5 million MCA cutout records and tapes were sold to Roulette Records, a New York firm. Law enforcement officials said Roulette President Morris Levy, 57, has ties to East Coast crime figures. Sources close to the case said Levy and Pisello are key targets of all three current investigations.
The cutouts bought by Roulette were resold to wholesale distribution companies, including Out of the Past Inc., a Pennsylvania-based company, and a Los Angeles firm, Betaco Enterprises, which then sold them to Scorpio Music, also headquartered in Pennsylvania.
In March, MCA Records filed suit in Los Angeles, charging Scorpio with counterfeiting. Shortly after that, Scorpio filed suit in Philadelphia, alleging that, in place of cutouts for which it had contracted, "trailerloads of junk records" with no retail value had been delivered.
Dennis Eisman, a Philadelphia attorney representing Scorpio Music, said in a telephone interview that MCA accused Scorpio of counterfeiting only because MCA representatives knew of the suit that Scorpio was preparing.
Defendants named in Scorpio's $55 million suit include Pisello, MCA Records and its president, Irving Azoff. They are accused of racketeering and fraud, and Scorpio alleges that MCA representatives tried to coax the plaintiff into signing an agreement promising not to talk to law enforcement officials.
Eisman also represents John LaMonte, owner of Out of the Past Inc. The suit filed by Eisman for Scorpio alleges that Out of the Past Inc. also received junk records instead of the cutouts it ordered.
It also alleges that, when LaMonte complained about the shipment and refused to pay, he was "beaten for failure to pay . . . The defendants used this as an example to keep victims such as Scorpio Music Inc. from going to the authorities."
The suit further alleges that the beating, which occurred in New Jersey in July 1985 and left LaMonte with a broken jaw, was photographed by the Federal Bureau of Investigation.
Sources said FBI agents witnessed the beating by chance during a routine mob investigation. The agents were undercover and could not intervene without compromising their position, but the beating touched off the current New Jersey investigation into organized-crime activity in the record business, sources said.
Soon after the incident, FBI agents told LaMonte that his life was in danger, and he agreed to wear a hidden microphone, sources said.
They said the tapes he recorded, now in possession of New Jersey authorities, include conversations with Pisello and Levy. Last September, LaMonte entered the Federal Witness Protection Program and went into hiding with his family.
"They key question" in the Los Angeles investigation, a source close to the case said, "is: What did MCA know, and when did they know it?"
Investigators are asking how Pisello, with little or no experience in the record business, made hundreds of thousands of dollars in one year from deals with MCA that, in addition to cutout sales, included test-marketing break-dancing mats and exploring the feasibility of a Latin recording label for MCA.
Harland Braun, an attorney who has represented Pisello, said Pisello declined to be interviewed for this article.
Allen E. Susman, counsel for MCA Inc., said, "MCA was not aware of any background this man Pisello had involving anything he'd done that was illegal . . . until he was convicted" on the tax fraud charge.
Susman described Pisello's relationship with MCA Records as that of an "independent purchaser of cutout records" and added that, once Pisello's conviction was known, MCA severed the connection.
Susman said Pisello "was there at MCA , but he didn't have an office."
One source close to the case, however, said Pisello did have his own office at MCA and operated under the aegis of top MCA executives.
"If you're a farmer, and the fox comes to you and says, 'Let me in your chicken coop,' and you let him, did you know the fox would kill your chickens? Whose burden is it to check out the fox?" the source asked.