Does DC Corrupt Congressman Tim Holden Really Have Any Information About Music Industry Mafia Ties?

"Organized crime will put a man in the White House someday-- and he won't know it until they hand him the bill."
- Ralph Salerno, NYPD, 1967

That man was Ronald Reagan.

You probably wouldn't have guessed Blue Dog Tim Holden and I have any friends in common. After all, I lived in Monroe County and he's from DC, although he keeps a home in distant Schuylkill as well. The rest of the new 17th CD-- Lackawanna, Monroe, Luzerne, Carbon, Northampton-- never had anything to do with Holden. Anyway, I wouldn't have guessed we do either. But over the weekend a mutual... acquaintance approached me and asked me to not be so hard on Holden. "He doesn't believe in any of that crap," he told me. "He was just voting that way because of the district. The new district will allow him to vote for like a Democrat. He's telling everyone."

He is telling everyone, but only the suckers and hacks believe him. I first heard it from a union bureaucrat who announced at a meeting that they had had lunch and that Holden promised-- I didn't ask if he crossed his heart and hoped to die-- that he would vote more like a Democrat if he wins. The union bureaucrat was taken in and, disgracefully, persuaded the union-- which favors the Keystone XL pipeline-- to endorse and work for Holden... turning a lot of stomachs in the process.

Anyway, I asked mutual acquaintance why Holden went after me in such a personal way in a press release and why he used the term "Hollywood record executive" as though it was supposed to convey I was operating on a level of someone running a brothel, a hedge fund or a lobbying firm (or all three-- like Goldman Sachs).

"Tim's old school," his friend said. "He remembers when MCA was run by the Mafia and involved in deal drugs for the Reagan administration's covert operations that they were hiding from Congress. He probably doesn't realize the music business isn't a criminal activity. But it was a little thick of him."

Holden's friend is also very old school and very smart. And he's been around a long, long time. He may remember when MCA was a criminal Mob-connected operation that nearly brought down the Reagan Justice Department. But I sincerely doubt that has anything to do with Holden attacking me and castigating the music industry. And I'd bet anyone that Holden-- well known around DC as a dunce-- has no idea about the House INSLAW investigation, the 1986 book, Dark Victory: Ronald Reagan, MCA and the Mob, or the connections between international drug dealing, MCA and the Reagan Administration. Here are a few paragraphs from Moldea's book. You can watch him being interviewed on TV up at the top of this post.

In March 1984 the executives of the nation's record companies gathered at the Diplomat Hotel in Hollywood, Florida for the annual convention of the National Association of Recording Merchandisers. Buyers and sellers in the $4.5 billion recording business had come together to unveil their new catalogs, to socialize, and to make deals.

One of those who had come to do a little business was a mobster named Salvatore James Pisello, who had connections to major organized crime operations in the New York City area. Pisello wasn't the only mobster at the convention. A series of record and tape counterfeiting operations had led federal investigators to suspect that organized crime figures were worming their way into the lucrative music business, and the presence of several hoods at the convention confirmed their suspicions.

None of the mobsters in attendance had Pisello's cachet, however. He was there not as a greasy hood trying to strong-arm a small-time distributor but as a representative of MCA Records, a subsidiary of MCA Incorporated, the most powerful force in the entertainment industry. Pisello had come to make a relatively small deal on MCA's behalf-- to sell a little more than $1 million worth of out-of-date records-- but his appearance was significant. One of the industry's giants was being represented by a mobster. How deeply had the industry been infiltrated? Four years after the convention there's still no answer to that question. But there's a new question: Why has the Justice Department dropped its investigation of the ties between Pisello and MCA?

Last December, according to sources in the Justice Department, the Los Angeles prosecutor who had started the investigation was called to Washington and told by top officials of the Strike Force Against Organized Crime to eliminate MCA from the probe. David Margolis, the strike force's chief, and Michael DeFeo, his deputy, told Marvin Rudnick, the prosecutor, that he could pursue a tax case against Pisello, who had earned about $600,000 in income from his dealings with MCA, but that he couldn't call several of MCA's executives as witnesses nor could he try to determine the exact nature of Pisello's relationship with MCA.

The action raises a host of troubling questions and has prompted a preliminary investigation by a House subcommittee. While spokesmen for the Justice Department and MCA refuse to comment on the case, the House Energy and Commerce Oversight Subcommittee has interviewed witnesses in an attempt to determine if hearings are warranted and whether Justice Department officials acted properly in killing the investigation.

The case is certainly worth examining. Why, for instance, when the entire record industry is under the scrutiny of grand juries in at least five cities, would one major record company be exempted from investigation? Why would a supposedly reputable business get involved in a series of apparently unprofitable deals with a man of dubious background?

One element of the case makes the whole matter even more curious: the names of some of MCA's high-placed friends. These include Robert Strauss, a former chairman of the Democratic National Committee and an MCA board member; Howard Baker, a former U.S. senator and a former MCA board member; and Ronald Reagan, the president of the United States and once one of MCA's most important clients.

Interviews with industry sources and law enforcement officials, court documents, and MCA's own records indicate that there's an unusual relationship between the Mafia figure and the Fortune 500 company-- a relationship that seems to be just the sort of thing that the Justice Department is supposed to investigate.

At the end of 1987, when Justice Department officials ended the probe of MCA, they knew the following:

* Pisello is an active participant in the world of organized crime. His name appears on numerous federal reports, where he is identified as a high-ranking soldier of the Carlo Gambino crime family in New York (which is currently headed by mobster John Gotti) and as an alleged narcotics trafficker with links to drug dealers in Mexico, Italy, and Panama.

* Pisello had close business ties with several hoods more powerful than he; some of them had recently been indicted for trying to infiltrate the record industry.

* MCA started to work with Pisello in 1983, although he had no previous experience in the record business.

* MCA lost money on every deal it made through Pisello. The company appears to have lost as much as $3 million on these deals, while Pisello made at least $600,000.

* MCA executives may have made false and misleading statements to federal officials who were investigating the Pisello case.

* At least six executives of MCA Records were subpoenaed to testify before a federal grand jury in Los Angeles. Five of them refused to cooperate unless they were granted immunity from prosecution.

* An argument erupted over the relationship between MCA Records and Pisello at an MCA board meeting in 1985. Howard Baker, who was then a board member, demanded that the executives who were involved with Pisello either cooperate with federal officials or be fired. Several of these officials subsequently received raises and promotions.

* MCA continued to deal with Pisello after his underworld ties were made public and he was convicted of tax evasion in 1985.

On April 8, 1988 Pisello was again convicted of tax evasion for failing to report most of the money he had made in his dealings with MCA.

For 22 of the years that Ronald Reagan pursued a career in show business, MCA was his talent agency. Lew Wasserman, the company's chairman, represented Reagan during the actor's early days in Hollywood. The late Jules Stein, MCA's founder and a longtime political supporter of Reagan's, negotiated the sale of Reagan's California properties at hugely inflated prices. In fact, MCA's help in the real estate transactions made Reagan a millionaire. Wasserman is a major contributor to and currently sits on the board of the Reagan presidential library, along with Attorney General Edwin Meese and seven others. He's helping to raise $80 million to build it.

So the biggest question of all, and another one that's still unanswered, is: Did somebody do a favor for Reagan's pals?

Pisello's biggest deal for MCA, which he struck at the Florida convention, involved cutouts-- discontinued records that have been removed from record companies' catalogs. When companies unveil their new lines, they try to unload old inventory. Sold in huge quantities, cutouts are usually picked up by discount operators to sell as budget-priced items in retail stores. To make these deals more attractive, the companies usually add a handful of "sweeteners"-- popular records by major recording stars.

Federal investigators have discovered that cutout deals attract organized crime figures, who are lured by the opportunity to counterfeit the sweeteners and sell them at a huge markup. After a record is sold in a cutout deal, it's difficult to prove counterfeiting, according to a law enforcement official. "The buyers have written authorization from the record companies to be selling the cutouts and the sweeteners," he says. "You'd have to count every record sold to prove they had manufactured more than the original quantity."

At the 1984 convention in Florida, MCA sold more than four million cutouts to John LaMonte, a convicted record counterfeiter and the owner of Out of the Past Incorporated, a discount record and tape company in Darby, Pennsylvania [not that far from Holden's Schuylkill home]. Representing MCA in the sale was Pisello, who had recently begun to work in the record business as a partner of Morris Levy, the president of Roulette Records. Levy, a powerful force in the industry, had previously owned Promo Records, which was once the dominant cutout record company in the country; his partner had been Tommy Eboli, who was then the boss of the Vito Genovese crime family. Government investigators reported that Levy was "under the control" of Vincent Gigante, the underboss of the Genovese family. Also present at the negotiations was Palmer Brocco, LaMonte's partner and a cousin of Gaetano Vastola, a top member of New Jersey's DeCavalcante crime family.

...According to the source, the board split into two principal factions at the meeting. The one led by Wasserman, the chairman of the board, and Sidney Sheinberg, the president of MCA Incorporated, wanted to ride out the storm and take no action. The other was led by Howard Baker, the former Senate majority leader, and Felix Rohatyn, a prominent New York investment banker. Baker had been appointed to the board in late 1984 along with Strauss, the Democratic power broker. Baker had recently made it known that he was interested in running for a Republican presidential nomination in 1988. He argued that MCA should rid itself of Pisello and his shady business associates. According to the source, he demanded that MCA's executives tell federal investigators what they knew about the Pisello deals and that anyone who didn't cooperate be fired. It's not clear where Strauss stood on the issue. He declined to be interviewed for this story, as did Wasserman, Sheinberg, and Baker.

In the end, it seems, Wasserman and Sheinberg prevailed. At least two of the executives who were involved in the Pisello deals were rewarded. Roth was promoted to president of MCA Records; Azoff who was named president of MCA's Music Entertainment Division, later became the third-largest stockholder in the company when it bought several of his personal businesses in return for stock valued at $25 million.

In the meantime, the corporate auditors were putting pressure on MCA Records to collect the money that Pisello and Levy owed. The pressure ultimately fell on LaMonte, who had coughed up only $30,000 in nearly two years, as well as $600,000 in notes payable to Levy-- only half of what was owed.

Soon after the board meeting, LaMonte told federal investigators, Pisello had called him and threatened his life if he didn't pay up. When LaMonte refused to pay unless the sweeteners were replaced, Pisello said that he wanted the entire shipment back. Shortly thereafter Dan Westbrook, a vice president of MCA Records, checked the merchandise in Pennsylvania to see if it was intact. Despite Pisello's conviction for tax evasion and the revelation of his connections to organized crime figures, MCA continued to deal with him.

On May 18, according to federal documents, the stakes in LaMonte's dealings were raised when Vastola met with him at a motel in Hightstown, New Jersey. When LaMonte refused to pay his debt to Pisello and Levy, Vastola hit LaMonte with a single punch that crushed the side of his face. After the assault LaMonte became convinced that Pisello and Levy were trying to extort the money from him and agreed to cooperate with federal agents who had Vastola and Levy under electronic surveillance.

The evidence from the wiretaps makes it clear that MCA was on the minds of people besides Pisello. During a conversation taped on September 12, 1985, Levy said that he was "getting nervous, and I'm not the nervous type. MCA is getting hot. And they have a right to. I don't want them to sue because they can hurt me... If I have to send them the money, I will. I have to pacify them now."

In conversation on September 23 Levy made a cryptic reference to dealings between another high-ranking mobster and MCA. A videotape reveals Levy lamenting that he and Vastola "had paid Dom (Dominic Canterino, a lieutenant in the Vito Genovese crime family) more money to make peace with MCA than we collected from LaMonte." Canterino, who was present at the taped meeting, had been paid at least $30,000 for his services. What he did to earn the money was never explained.

Three days later federal investigators taped a conversation between Vastola and Levy. "I want everything resolved more than you because I know what it means," Vastola said. "I know what the problem you're having right now (with) MCA (is). And I want it resolved, and we're gonna resolve it. One way or another, John LaMonte will pay this money. I don't care how. He's gonna pay."

As an undercover witness, LaMonte began to wear a wire and allow FBI cameras to film events that took place in his office. He has become a key witness in two federal grand jury investigations-- in Newark and New York City-- into the mob's infiltration of the record industry. LaMonte and his family were placed under federal protection.

As the FBI gathered evidence against Vastola and Levy, the Los Angeles Strike Force Against Organized Crime opened an investigation into Pisello's business relationship with MCA. In the wake of the Los Angeles Time's story on MCA's audit, the government's suspicions that something wasn't right with the relationship were revived. Investigators discovered that they hadn't even been informed of at least one major deal in which Pisello was involved: MCA's $3 million purchase of Sugar Hill's Chess/Checker/Cadet catalog.

The strike force's investigation sought to discover why a member of the Gambino crime family was doing business with MCA without signed contracts. Why was Pisello making money in repeated deals while MCA was losing millions? In addition to what MCA had paid Pisello, the audit made it clear that Sugar Hill had received more than $3.5 million in loans and advances from MCA. Several years earlier Sugar Hill had placed the value of the Chess/Checker/Cadet catalog at $350,000, yet MCA had paid more than $3 million for it. Perhaps the inflated value was accurate, perhaps MCA had been taken, or perhaps the link to Pisello were more pervasive than they seemed.

In February 1986, a federal grand jury in Los Angeles began to investigate the relationship between Pisello and MCA, as well as allegations of payola in the record industry through the use of independent promoters. The new head of the strike force, Ted Gale, authorized subpoenas of MCA and Pisello's company, Consultants for World Records.

On May 19, 1986, within three months after the grand jury investigation began, Wasserman became the largest individual contributor to the Ronald Reagan Presidential Foundation, donating $517,969 for the construction of the Reagan library, according to documents obtained from the California secretary of state's office.

The government's probe into the record industry and the mob intensified in September 1986, when a federal grand jury in Newark indicted 21 people for a variety of racketeering charges, including the extortion scheme against LaMonte. Among those named in the 117-count indictment were Levy, Brocco, and Vastola. Other grand jury investigations continued in Los Angeles and New York City, while grand juries in Philadelphia and Cleveland began to look into payola and the ties between the record industry and the mob.

According to federal investigators, Pisello wasn't indicted in Newark because a second tax case was being made against him in Los Angeles. However, his name did come up on some of the wiretaps, according to a federal law enforcement source who has heard them. One wiretap picked up Brocco explaining to LaMonte, who was then his partner, that Pisello was "owed favors" by an unnamed MCA executive who had greased the way for Pisello to enter the company. Brocco said that Pisello had "done a job" for the unnamed executive. Brocco didn't elaborate.

Meanwhile, back in Hollywood, Wasserman celebrated his 50th year at MCA with a huge party on December 14. Held at the Universal Studios lot, the black-tie event attracted more than 1,300 of the top names in politics and show business. Johnny Carson was the emcee. Frank Sinatra, appearing on videotape, sang, Lew's the Champ to the tune of The Lady Is a Tramp. Ronald and Nancy Reagan sent their greetings from the White House via videotape; they told Wasserman that the president would soon be out of work and asked playfully for his help in getting him a new job. Offering additional evidence of the cozy relationship, Nancy Reagan sat to Wasserman's right at a May 1987 luncheon in Los Angeles that was given by the Volunteers of America in her honor.

On February 27, 1987 Baker resigned from MCA's board and became Reagan's chief of staff. Strauss remained on the board and became a key adviser to the 74-year-old Wasserman, who had been ailing.

On July 9 Pisello was indicted again; this time it was on three counts of tax evasion based on the nearly $600,000 he'd made while he worked for MCA from 1983 to 1985. The government charged that Pisello had attempted to conceal the money by laundering it through a series of bank accounts, one of which was linked to Levy's Roulette Records. At the arraignment Rudnick argued that Pisello was "a threat to the safety of others" and should have to post a high bail. Rudnick said that he had evidence that Pisello had once offered to shake down an independent promoter who owed money to Sugar Hill Records and that Pisello had once told an unnamed executive of MCA Records that he could "take care" of the Reverend Al Sharpton, a New York civil rights leader who had threatened to boycott certain record companies and rock concerts.

Pisello, whom Rudnick referred to as "a Mafia enforcer," may even have threatened to kill Sharpton. In a January 20, 1988 interview with Newsday, Sharpton, who was working as an FBI informant, said that after he threatened to boycott Michael Jackson concerts, "one of these nice mobsters threatened to kill me. Sal Posillo (sic)... They got a guy to sit on a meeting with me and let him threaten me on behalf of one of the biggest record company presidents in the business." The March 24, 1988 issue of Rolling Stone magazine reported that Azoff, who had a financial interest in the Michael Jackson tour, admitted to having been the executive whom Pisello approached with an offer to "take care" of Sharpton. Pisello's alleged threat against Sharpton is still under investigation, but to date has not been supported by other witnesses.

In late September 1987, at a pretrial hearing, Rudnick revealed that two MCA executives had invoked their Fifth Amendment rights against self-incrimination when they were subpoenaed to testify before the grand jury. Upon hearing this, Pisello's attorney, David Hinden, jumped up from his chair to object. He claimed that the prosecutor was being unfair to MCA, that the statement was irrelevant, and that Rudnick "was trying to change a tax case into a Mafia case."

It was obvious what the government was trying to do: it wanted to convict Pisello again, sentence him to a long prison stretch, and then convince him to turn state's evidence against MCA executives in return for a lesser sentence.

...MCA responded to this testimony with another indignant 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 are on trial," MCA's officials wrote. "To comment further would be to dignify these outrageous and scurrilous statements."

Gervasoni also testified that in 1985 MCA's executives began to worry about the various cutout deals. After he protested to them that he hadn't received records he'd paid for, he got a call from Horowitz, the legal counsel of MCA Records. "Zack confirmed my deal," said Gervasoni, "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." Horowitz was never called to testify at the trial.

Judge Rea asked Gervasoni if he'd ever obtained the rest of his records. "No. They sued me for counterfeiting and tried to put me out of business," he replied. MCA had filed suit against Scorpio Music for counterfeiting in March 1986, and Gervasoni had countersued for breach of contract shortly thereafter. Both suits were dismissed last June by a federal judge.

On April 8, 1988, Pisello was found guilty of two counts of income tax evasion.

In announcing his verdict, Judge Rea said that Pisello had had no intention of repaying MCA, and that therefore the money wasn't loaned to him. Then, pointing his finger at MCA, he wondered aloud why the company was so reluctant to make Pisello pay up. He noted that Pisello had given MCA three undated checks that had been drawn on an empty account only after MCA "was being audited by Price Waterhouse and (MCA's executives) needed something to reflect that they were making some effort to collect." He also couldn't understand why MCA had "made no effort to institute legal proceedings against (Pisello) to recover on these transactions."

In his closing argument Rudnick managed to raise the questions that had made him suspicious of MCA in the first place and which remain unanswered.

"The lesson learned from this trial is that when you have business deals made in a corrupt atmosphere, it breeds unreported income and tax evasion," Rudnick said. Pisello and MCA had had a business relationship, he added, "not because of his background in the record business but for some other unexplained series of events that cast a cloud over the testimony at this trial.

"Why is this man getting all this money?" Rudnick asked.

"Where did all these people get the idea that this was the man to pay for all these deals?"

The secrecy surrounding MCA's decision to do business with Pisello and the Justice Department's decision to kill the investigation of this association raises serious questions, particularly in view of President Reagan's long relationship with the Hollywood corporation.

Only one member of MCA's board of directors would speak on the record. Mary Gardiner Jones, the president of the Washington-based Consumer Interest Research Institute and a member of MCA's audit committee, says that she remembers the May 2, 1985 board meeting in which the Pisello matter and his association with MCA executives were discussed. But she added that "those are inside, internal issues." When she was told that the strike force's investigation of MCA's relationship with Pisello had been killed, she replied, "Well, maybe for good reason. There is no relationship."

I'm finishing up an ostensibly unrelated book right now, The Last Circle by Cheri Seymour about the death of journalist Danny Casolaro. But the book seems to indicate that there was a lot more going on between MCA and the Reagan Administration than just some Mafia funny business in the music industry. There are assertions that the Reagan Administration, particularly the NSA, were operating covert activities without congressional funding and that the funding was coming from widespread drug networks that involved the Mafia and included MCA.

The NSA makes a “profit.” He alluded that some of the money came from drug profits. He said he was told that the “only people that get busted [for drugs] are those that don’t have a distribution territory.”

Discussion ensued about drug economies worldwide. He said drugs are called “gold” and used as currency worldwide. “Real gold takes up space and is difficult to transport. Payments are made for arms with drugs. Drugs are a business at the highest levels of corporations because there is a huge market and demand for drugs.”

...The memorandum stated that at this time, during the FBI investigation of MCA, Senator Howard Baker was a member of the Board of Directors of MCA Corp. That Robert Strauss was current Ambassador to Russia, and Lew Wasserman was on the Board as well. Wasserman was connected to organized crime.

The memorandum stated that Marvin Rudnick learned MCA was directly connected to the Reagan White House. That Marvin Rudnick detailed this information in the July 1989 issue of American Lawyer. [It was actually the July/August 1988 issue of American Lawyer entitled, “Death of A Mob Probe: MCA Charges A Prosecutor with Misconduct, and Justice Kills a Two-Year Investigation. Why?” by Michael Orey].

The memorandum stated that Marvin Rudnick was fired from his position because he refused to drop the MCA investigation. Rudnick detailed how this occurred and who fired him in a deposition to the Judiciary Committee. The Judiciary files contain a transcript of this deposition.

Marvin Rudnick told the Judiciary Committee that Ted Gale, Rudnick’s immediate supervisor who became a U.S. Attorney in Rhode Island, resigned from his position because of the DOJ’s policies on the MCA investigation.

Richard Stavin, a member of the Organized Crime Strike Force in Los Angeles, also gave a deposition to the Judiciary Committee about the MCA investigation. Stavin said he walked out of his job as a result of the DOJ’s policies on the MCA investigation. Trancript in Judiciary files.

...Eugene Giaquinto, a board member of MCA Corporation, boasted about his lifetime friendship with John Gotti of the Gambino family and assured Martin Bacow that “he would call Edwin Meese and have the FBI’s investigation of MCA stopped.”

This does not necessarily mean that Meese had agreed to Giaquinto’s demand. There is no proof that he agreed-- other than the fact that the investigation was shut down afterward.

...So the official head of the Octopus resided in the U.S. Department of Justice, supported by an out-of-control presidential administration, its tentacles comprised of a cabal of “Old Boy” cronies, true believers, who held that the end justified the means in their obsession to quell the expansion of communism in neighboring countries and throughout the world. They gave corruption a new meaning as they stampeded through the Constitution, cowboyed the intelligence community, blazed new trails into drug cartels and organized crime, while simultaneously growing new tentacles that reached into every facet of criminal enterprise. The theft of high-tech software (PROMIS) for use in money-laundering and espionage, illegal drug and arms trafficking in Latin America, exploitation of sovereign Indian nations, were just a few of these enterprises.

What could be more demoralizing to those men and women who serve and protect, than to capture on tape (actual voice re- cordings), members of the Gambino and Bufalino crime families, in collusion with the Department of Justice and U.S. Attorney General, the highest law enforcement authority in the nation, arranging the shutdown and sealing of an FBI investigation of MCA in order to facilitate the largest sale in U.S. history to the Japanese?

The amount of criminal activities discussed in great depth in the book is pretty mind-boggling and doesn't even stop at murder. Weaponized viruses and nuclear treason are all part of the web-- or "The Octopus," which was headed by Attorney General Ed Meese. This stuff is way beyond Holden's pay grade-- or mine. I was running an indie punk rock label in San Francisco's Mission District and Holden was the Schuylkill Co. Sheriff when all this was happening. But now I want to investigate further... I think.