Record Label Chief Is Indicted on Money-Laundering Charges

Irv “Gotti” Lorenzo once saw murder as a metaphor.

Back in 1997, when the charismatic music producer got his own record label from Island Def Jam, he named it Murder Inc. because of what he called the moniker’s “ill double meaning.”

“When you have a hot record, people say you put out a hit,” he said in a 2003 interview. “I thought, ‘I’m going to call my artists murderers, because they put out hits.’ This is the whole psyche behind it, man. Nothing more.”

On Wednesday, federal prosecutors alleged that there was, in fact, a lot more behind it.

“They don’t call it gangster rap for nothing,” said Frederick Snellings, special agent-in-charge of the FBI’s New York criminal division. “It’s pretty clear that the image isn’t accidental.”

In a 37-page indictment, the Justice Department accused Lorenzo and his brother Christopher of laundering drug money for their neighborhood friend Kenneth “‘Preme” McGriff, who was charged separately with the murders of three men.

In all, prosecutors allege that the Lorenzo brothers and McGriff funneled about $1 million through various ventures, including Murder Inc., which has since tried to soften its image by renaming itself The Inc. The indictment further alleges that Gotti cut checks totaling more than $280,000 to pay McGriff for business and personal expenses, including travel and hotel costs.

The indictment portrays the Lorenzos, McGriff and five other individuals as members of a dangerous criminal enterprise that furthered its illegal activities by “intimidating and threatening to use physical violence against others to dissuade them from cooperating with law enforcement.”

The Inc., co-owned by Universal Music Group’s Island Def Jam Records, has sold about 20 million records with a roster headed by artists Ja Rule and Ashanti; no performers were charged in the indictment. Ja Rule’s current album, “R.U.L.E.,” peaked at No. 7 on the Billboard chart. Ashanti is appearing in the movie “Coach Carter,” which debuted atop the box-office list nearly two weeks ago.

Gotti and his brother were released on $1-million bonds Wednesday afternoon after pleading not guilty in federal court in Brooklyn. Gotti’s lawyer, Gerald Lefcourt, said the brothers had been unfairly targeted for trying to help a respected figure from the rough Queens neighborhood where they grew up.

“I grew up poor from the streets so I have friends, whatever, like that. So I don’t look bad at them for thinking ill things about me,” Irving Lorenzo, 34, said as he left court. “No way, in any way, shape or form have I done anything wrong, except make great music that the people seem to love, and that’s all that I’m guilty of.”

Lorenzo is known in the industry as a relentless self-promoter. A savvy shaper of image, he has cultivated his own bad-boy reputation for years, adopting the gangster handle “Gotti” as his last name and donning ivory suits and fedoras.

During the last decade, he rose from a minor office job at Def Jam to become a brand-name mogul after discovering such stars as Jay-Z, DMX, Ja Rule and Ashanti, generating nearly $1 billion for Universal Music Group.

McGriff, currently in prison on a gun violation, became famous among young rappers on the East Coast because of his notorious past. He is a convicted drug dealer whose Supreme Team gang allegedly dominated the crack cocaine trade in a violent Queens, N.Y., housing project during the 1980s. McGriff, now 44, spent 10 years behind bars on narcotics charges and was released in 1995. Soon after, he met Lorenzo.

Although McGriff has not been arrested for narcotics since his release, the indictment portrays him as an active drug lord operating a violent cocaine and heroin ring in New York, Maryland and North Carolina.

Prosecutors, focusing on a six-year period from 1997 to 2003, allege that McGriff ordered three murders and trafficked in heroin and cocaine sales across three states. They say he operated a “stash house” in Baltimore, where police recovered guns and narcotics, $30,000 in cash and a videotape that allegedly tied him to the July 16, 2001, slaying of E-Money Bags, a novice rapper whose real name was Eric Smith.

According to the indictment, McGriff also ordered the killing of two of Smith’s associates -- one of whom was attempting to cooperate with authorities.

The laundering of drug money, prosecutors allege, occurred at several companies affiliated with the Lorenzos, including Picture Perfect Films, MI Records, IG Records and Murder Inc. In the indictment, Murder Inc.’s financial partner, Def Jam, is referred to as “the other company.” Def Jam has not been charged with any wrongdoing.

The government contends that Irving Lorenzo used his position as head of Murder Inc. to persuade “the other company” to pay $1 million to co-produce a soundtrack for a McGriff-produced film called “Crime Partners.” Of that money, $500,000 was paid and deposited in an account later frozen by federal authorities.

Although neither Island Def Jam nor Universal Music Group, which is owned by Vivendi Universal, were mentioned in the indictment, documents seized at their Manhattan offices two years ago formed much of the backbone of the charges filed Wednesday.

During the last two years, federal authorities have alleged in court documents that the Lorenzos had launched Murder Inc. with seed money provided by McGriff’s drug-trafficking proceeds. Since then, Island Def Jam has provided documentation to the government showing that it invested the entire $3 million used to start the label.

Prosecutors turned out in force to announce the indictments at a crowded news conference. The group included U.S. Atty. Roslynn R. Mauskopf, New York City Police Commissioner Raymond W. Kelly and officials from the FBI, the Internal Revenue Service and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

Associated Press was used in compiling this report.