Investigations, Rumors Mount In Columbia ‘Drugola’ Scandal A look at high level crime in the music business

Several federal agencies have leapt into the CBS vs. Clive Davis affair, with talk of payola by drugs (or “drugola,” as the New York Times has called it) still persistent and more rumors and grand jury testimony leaks gushing out daily, easily swamping insistent industry denials of highlevel crime in the record business.

Latest reports had investigations being conducted by the US Attorney’s office in Newark, New Jersey, and its Strike Force Against Organized Crime; the Justice Department; the Federal Communications Commission, and the Internal Revenue Service. Newark postal authorities also figured in the early stage of the scandal, when a February 6th bust of a heroin ring, including a reputed Mafia figure, led federal investigators to David Wynshaw, then a vice president at Columbia Records. A CBS investigation of Wynshaw led to the firing and suing of president Clive Davis, on charges of receiving and obtaining company funds for personal use.

The federal forces are studying talk of payola at Columbia Records, possible connections between organized crime and the music business, and criminal aspects in the CBS complaint against Davis. CBS had detailed some $94,000 of alleged misappropriations of funds, but the suit also referred to “other substantial sums” of money, including a specific instance of $6500 in $100 bills allegedly “handed over” to Davis by Wynshaw.

Davis remains secluded in his Manhattan apartment. He has reportedly met at least twice with federal investigators, but neither he nor his attorney, Vincent Broderick, could be reached for comment.

Many business friends of Davis’, along with industry observers, have charged CBS with making Davis a scapegoat in what the company knew would be a major federal investigation of a possible industry scandal. Those friends, along with numerous Columbia artists, are known to have literally flooded Davis with calls, telegrams and letters of sympathy. But so far, the former president, once (and still potentially) one of the most powerful figures in the record business, has seen only a few close friends.

The CBS complaint, handed to Davis as he was fired May 29th, had called for a response within 20 days. At deadline, however, a deputy counsel at CBS told Rolling Stone that an extension had been worked out between Davis’ lawyer and CBS’ counsel, the firm of Cravath, Swaine and Moore.

The law firm is conducting an in-house investigation at Columbia Records, working alongside a team of accountants and private detectives, poring over legal documents, financial papers, and expense vouchers, and interviewing employees. The company is reportedly prepared to file additional suits against Wynshaw and Anthony Rubino, the accountant at Columbia in charge of budget control who was fired after a CBS check of what they called “false invoices” connected him to Wynshaw and Davis.

At Columbia, workers said that since the in-house investigation began three weeks ago, no expense vouchers have been paid. The accounting department is apparently going through a complete overhaul. One man, now in San Francisco working on preparations for a Columbia sales convention in mid-July, showed the check he’d received from the company for his free-lance work. It was so fresh that it bore no printing; “CBS Records” was typewritten into the upper left-hand corner.

Also, the convention worker said, CBS at the moment had editors at work on the film of Columbia’s recent “A Week to Remember” in Los Angeles, a showcase of the label’s talent, MCed by Clive Davis. The deposed president, our source said, was being carefully edited out.

Meanwhile, Goddard Lieberson, who has stepped in as president of the CBS Records Group, sent out a memo dated June 11th, assuring employees that the investigation was “not a witch hunt. It is for the protection and reputation of all of us.” Later, he told us, “morale at the company is very high.”

Both inside and outside of Columbia, record executives and employees involved in sales, promotion and merchandising were expected to be subpoenaed to appear before the Newark grand jury investigating payola, made officially illegal ten years ago after the House Subcommittee on Legislative Oversight completed its hearings.

Wynshaw was the first to bring up the subject of payola. Shortly after his dismissal from Columbia, and before Davis was fired seven weeks later, Wynshaw began weekly meetings with the Strike Force, reportedly detailing how Columbia had spent $250,000 on payola to black-oriented stations alone. While he has said only “no comment” to reports of his testimony, he has also been said to have told of a $7000 weekly payoff to Kal Rudman, publisher of Friday Morning Quarterback, which Rudman calls “a factual programming guide,” a compilation of radio station reports on new singles.

Rudman was reportedly pictured as a conduit for the money, which he received and sent along to black radio station program and music directors in what he says is his separate occupation, that of an independent promotion man. Rudman has heatedly denied any payola or other wrongdoing. (“I am as clean as the driven snow,” he said. “I swear on the body of my only son I am clean.”) But he has admitted that he accepts money—generally around $150 a week, according to one knowledgeable record company president—from nearly all the labels for promotion work. The fact that he does his work by hyping radio stations that are reporting to his Quarterback, and the fact that he raves over selected records, on the front pages, often records on labels that are paying him—does not add dirt to the snow, in his mind. “I am bigger and better than ever,” he said. Also, Rudman said, he never deals with black radio stations and has no section on R&B in his publication.

From the New Yorker, November 27th, 1971, reporting on a Columbia Records singles meeting, with special guest Kal Rudman: “[Clive] Davis announced that Free Movement, a black group with a current hit, had just been signed by Columbia. Then Free Movement’s current hit, ‘I Found Someone of My Own,’ was played …

“Kal Rudman talked about Free Movement. ‘I was eminently involved in the history of the record,’ he said. ‘It’s a freak situation. This record was an R&B hit, with no pop [white] exposure except in a couple of places in the Southwest. I talked the record up strenuously. I got the program directors at KQV and WIXZ, in Pittsburgh, to listen. I got it on both stations. I put it in my sheet. I called the promotion men sissies for not promoting the record. In two weeks, there was a complete breakout. You’ve got a million-seller. This is a memorable day. We are seeing the birth of a super group.'”

Free Movement did not sell a million: They are still waiting for Rudman’s declaration to come true.

Kal Rudman was backed up in his denials by Jerry Boulding, a consultant to black stations in Washington, Chicago and Milwaukee. Talking to the Wall Street Journal, he laughed off the $250,000 Columbia figure. “It’s a maximum of $50,000 a year for the Columbia group that gets into the hands of blacks,” he said. “And all the rest of the companies together, maybe another $50,000.”

Numerous black station owners have issued strong denials of any payola. Black stations in recent years have followed the standard AM approach to making up playlists, putting the job in the hands of only one or two men at each station.

Which is not to exclude the higher-ups from suspicion. One story making the rounds in San Francisco involved the recently departed music director of KDIA, the area’s “soul” station, and a promotion man, also recently departed, who were caught by the station manager taking and giving, respectively, $300 in cash. In denying the story, the promo man told us his truth: He’d been visiting at the station, playing his company’s latest releases, and they included a new record by a white artist, with black backbeat. He was jokingly saying how he’d love to hear that record on KDIA, he said, mentioning, in the process, “a nurse and a pharmacist.” The man at KDIA (not the music director, said the promo man, “but someone who was sitting in for him”) called the promo man the next day. The record was on the playlist, and the man wanted to know about the nurse and the pharmacist. “I told him I couldn’t do it; I was only kidding,” the promotion man said. “The song stayed on the playlist.”

The story, whatever innocence implied, also indicates that play-for-pay is something that crops up easily for the would-be giver—and is taken seriously by the would-be receiver.

But generally speaking, payola beyond friendly gifts (promotion men generally work under a legal, company-sanctioned expense budget of “$25 per occasion,” according to one such employee) is less serious than most of the government agencies, and the general press, seem to suspect. “It’s almost a ceremonial thing they go through,” said Tom Donahue, general manager of KSAN-FM in San Francisco, talking about what promo men and DJs may give and take from each other. “But it doesn’t relate to anything.”

Aside from payola, the federal investigators are looking most carefully at suspected organized crime involvement in the business, those suspicions stemming from the indictment, and alleged illegal activities of one Pasquale Falcone, including the setting up of dummy companies that allegedly billed record companies for services never rendered, resulting in funds to keep and kick back to conspirators at the record companies. Reportedly close to the New York “family” of the late Vito Genovese, Falcone was indicted in the February heroin bust, and Wynshaw’s name was found among his papers. Also, Falcone had been seen frequently around the CBS building in New York, and he had been identified in the daily press as manager of several acts, including Sly Stone, and country artists Tommy Cash and Lynn Anderson. All three have issued complete denials of any knowledge of Falcone.

The man was subsequently called a “silent partner” in a management firm, sharing an office with Frank Campana, who left Columbia as an artists relations man over a year ago to go into management. He shared his office with Falcone as an economy measure, he said, but knew nothing of Falcone’s outside activities. He alone worked with Cash and Anderson, he said, without any “silent partners.” The two country artists said Campana was retained only to do public relations work for them. “Lynn Anderson,” said her husband Glenn Sutton, “wouldn’t know a Mafioso from a pizza salesman or heroin from baking powder.”

David Kapralik, now Sly Stone’s co-manager (with Ken Roberts), issued a similar denial of any knowledge of Pat Falcone, his alleged involvement with a drug ring, or any drug connection between Falcone and Wynshaw or Columbia. “Any additive, whether it be aspirin or codeine that Sly has used, has come from doctors or drug stores,” he announced.

Frank Campana did admit that he had shared two clients with Falcone. Their names were later found on a contract as co-managers of a man described in the New York Times only as a “rising Broadway star.” (A CBS press release dated June 4th, a week after Davis’ dismissal, announced the signing of Ben Vereen, Tony award-winning singer in the musical Pippin. “He is managed by Frank Campana,” the release stated. Vereen has reportedly switched managers.)

Another former associate of Falcone’s, Anthony DelVecchio, also arrested in the February heroin-ring bust, has talked to the Newark grand jury about payola and is reportedly under protective custody. Kal Rudman said he had appeared once and would do so again, “gladly.” Wynshaw is also said to be continuing testimony, and subpoenas from New Jersey are expected to reach record executives in Los Angeles shortly.

The industry, meantime, continued to stay silent. Those who talked, talked with confidence. “They’re barking up the wrong tree; they won’t find anything,” said an attorney close to Clive Davis. “It’ll just go away.” A prominent manager and record executive agreed, adding, “In this business, lavish entertainment is not unusual. And certainly not criminal.”

At any rate, CBS has finally gone a step further than their non-witch hunt. CBS-TV, it was announced last week, has begun an investigative report on payola. It could be another Selling of the Pentagon, with a twist or two.

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