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Lawsuit is glimpse into world of rap mogul

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 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 suit and federal probe are a rare dose of adversity in a mercurial 20-year rise for Cohen.

"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."

Cohen remains head of IDJ -- his contract expires in early 2004 -- as lawyers appeal the judgment. Universal Music Group head Doug Morris has said that the verdict should not detract from Cohen's "incredible accomplishments."

It probably won't, predicted Bob Lefsetz, publisher of the music industry bulletin The Lefsetz Letter.

"This case will have no effect on the industry whatsoever," Lefsetz says.


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 Ja Rule.

Lorenzo's circle of friends included a more menacing acquaintance: drug kingpin Kenneth "Supreme" McGriff, who would later serve 10 years in prison for leading a murderous, multi-million dollar crack-dealing operation.

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 joined him.

A year later, Cohen and Gotti launched Murder Inc. Court papers indicated that investigators believe McGriff provided Gotti with the seed money for his end.

Gotti, speaking at a Wednesday news conference where he renamed his label The Inc., defended himself against the charges.

"In contrast to what people think about me and my label and stuff like that, we're good people," he said. "Although a lot of things over the past year has been said about us, about the label, we're good people."

Three Gotti-produced Ja Rule albums sold more than 10 million copies. Gottlieb then considered releasing the old Cash Money Click recordings.

With Ja Rule under contract to IDJ, Gottlieb began cordial negotiations with Cohen. TVT spent $1 million on production and promotion for the album, Gottlieb says.

But in August 2002, nearly a year after Gottlieb believed a deal was finalized, Cohen killed the project during an angry phone call. Gottlieb says efforts to settle out of court were repeatedly rebuffed, forcing his lawsuit.

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 was found personally liable for an unprecedented $56 million.

A federal judge later reduced the award to $53 million (with $3 million due from Cohen) -- but not before labeling the defendants "morally reprehensible" and noting "inconsistencies" in Cohen's testimony.


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, and IDJ paid $500,000 to McGriff's company for a soundtrack.

Authorities say the lucrative soundtrack deal was brokered by Gotti, raising further questions about his history with a convicted drug lord. An informant has told investigators that Murder Inc. was bankrolled by McGriff, 42, currently jailed for illegal possession of a handgun.

McGriff and Gotti have denied any wrongdoing. McGriff, in a letter from prison, says he was the victim of a "vindictive investigation."

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.


The New York-born Cohen, grandson of an Israeli general, grew up in Israel and Los Angeles, far from the New York streets where his future artists invented a new form of music.

After a meeting with seminal rappers Run-DMC, Cohen sensed an opportunity and was soon working for Def Jam founder Russell Simmons. The 6-foot-5 white guy in the predominantly black office was known as "Little Israel."

But as Def Jam became the industry's most influential rap label, with artists ranging from the Public Enemy to Jay-Z, Cohen became indispensable. Newsweek magazine crowned him "rap's unlikely king."

"Lyor is one of the blackest white guys in the world," said Gotti.

When Universal Music Group bought Def Jam in 1999, Cohen became head of the newly created Island Def Jam operation. He was living as large as any of his acts: a spacious home on the tony Upper East Side, seaplane trips to the Hamptons.

Along the way, Gohen and Gotti grew close. The rap 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.

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.

The next step in the legal fight with TVT is an appeal by Cohen and IDJ to the 2nd Circuit Court of Appeals, which should be heard in February. The new year also could bring a criminal indictment against Murder Inc.

But for Cohen -- and the music industry -- it's business as usual.

"If you're an artist, you only get one shot," says Lefsetz. "The irony is everyone would still go with Lyor Cohen."


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