Four Indicted in Payola Probe of Record Industry

Announcing indictments against four people, authorities in Los Angeles acknowledged for the first time Friday that a 2-year-old federal grand jury investigation into cocaine-and-cash payola by record promoters to radio programmers has become national in scope.

U.S. Atty. Robert C. Bonner said the investigation, being conducted by the Internal Revenue Service under the direction of the Justice Department’s Organized Crime Strike Force in Los Angeles, “is continuing here and throughout the country in several other cities--roughly half a dozen.”

“Certainly on the basis of the indictments returned today, it’s fair to say there continues to be a significant payola problem in the (recording) industry,” he said, calling it the most significant payola case in 15 years.

The last payola indictments were in 1973, when several East Coast program directors and disc jockeys were indicted by a federal grand jury in Newark, N.J., for accepting cash payments in return for playing records.

In addition to San Mateo-based independent record promoter Ralph Tashjian and his wife, whose arrests were confirmed Thursday by defense attorneys, the Los Angeles federal grand jury indicted William Craig, a Scottsdale, Ariz., record promoter, and George Wilson Crowell, former vice president and general manager of radio station KIQQ in Los Angeles.

The indictments accused Craig and Tashjian of making undisclosed payments totaling nearly $300,000 to nine program directors at radio stations across the country between 1980 and 1986. The payments allegedly were to arrange for the airing of records they were promoting for major U.S. record companies.

The nine people named as recipients were not charged in the indictments. Bonner said some of the program directors were cooperating, but declined to say whether they had been granted any kind of immunity from charges.

As reported in The Times on Friday, Tashjian was also charged with conspiracy related to alleged distribution of cocaine to program directors at three stations--KYNO and KMGX in Fresno and KAMZ in El Paso. The Craig indictment added stations WCIN in Cincinnati; KPRS in Kansas City, Mo.; WAOK in Atlanta; WJAX in Jacksonville, Fla.; WLOK in Memphis, Tenn., and WGIV in Charlotte, N.C. The Crowell indictment added KIQQ to the list.

Income tax evasion charges, which carry heavier penalties than payola charges, were also made against Crowell, Craig and Tashjian and his wife, Valerie. Ralph Tashjian is also accused of providing altered and false business records to the grand jury under subpoena.

Tax Allegations

The indictment against Crowell alleges that he failed to file income tax returns on more than $435,000 of income for 1984, 1985 and 1986. Prosecutors said these included more than $100,000 in illegal undisclosed cash payments in 1984 and 1985.

It is the failure to disclose payola, rather than the paying of it, that is illegal under federal law. Prosecutors say the wording of the payola statute has “a lot of gray area” and, consequently, makes prosecution difficult. The charge is a misdemeanor, punishable by a maximum of one year in jail and a $10,000 fine, while various income tax charges are felonies and carry a maximum of several years’ imprisonment.

Crowell could not be reached for comment. The Tashjians, through their attorneys, denied the charges Thursday. Craig’s attorney, David G. Derickson of Phoenix, conceded that Craig has made payments totaling hundreds of thousands of dollars but denied that he had done “anything legally or morally wrong.”

Hired by Major Labels

“What’s undisclosed about these payments?” Derickson said. “He filed a Form 1099 on each one.”

Bonner told a packed news conference that “virtually” every major record company had hired Tashjian and Craig to promote their records. But, in response to questions, he said that prosecutors have “no evidence” the companies knew their money was used for illegal payments to program directors.

Strike force attorney Richard Stavin told the reporters that payments were made for promoting hundreds of different records. “Just about any artist you can mention” was represented on the records, which were distributed by all the major companies.

The list, given out later, includes such popular recording artists as Duran Duran on Capitol Records; Janet Jackson on A & M Records; Culture Club on CBS Records; the Eurythmics on RCA Records; New Edition on MCA Records and Kool and the Gang on Polygram Records.

sh Focus of Investigation

As previously reported by The Times, both Tashjian and Craig have worked out of the Los Angeles office of another independent record promoter, Joseph Isgro, whose activities have been the primary focus of the grand jury investigation.

Both Tashjian and Craig have previously told The Times that they were offered leniency if they would give investigators incriminating evidence against Isgro. Both men so far have refused to do so, sources say. “Obviously this (the indictments) is a ploy by the government to force the little guys to roll over on Mr. Isgro,” Derickson said Friday.

The payola probe began in February, 1986, growing out of an investigation into activities of reputed organized crime figure Salvatore Pisello. He is to go on trial March 21 on charges that he evaded taxes on several hundred thousand dollars of income derived from various deals with MCA Records between 1983 and 1985.

3 Investigations

The Pisello investigation began in March, 1985, the first of three grand jury inquiries into suspected organized crime involvement in the record business. Besides Los Angeles, the grand juries are in New York and in Newark, N.J.

John L. Newcomer, the strike force chief, told reporters Friday that the Pisello investigation “did uncover some of the basic facts that led to further investigation” and that in turn led to the current indictments.

The defendants are to enter pleas to the charges next week in Los Angeles. Bonner said Craig and Crowell are to surrender later on their charges. Anthony P. Brooklier, attorney for Tashjian, said Friday afternoon that a U.S. magistrate in San Francisco rejected the government’s effort to have Tashjian detained without bond and ordered him and his wife released on property bond.

The lawyer quoted the magistrate as saying the government acted reprehensibly in arresting the Tashjians at home in the presence of their children, instead of letting them surrender, as they had sought in advance of the indictment.