LOS ANGELES -- Death Row Records, the most successful rap label in the country since its founding in 1992, is under investigation by the federal government, which is trying to determine whether Death Row is being run as a criminal enterprise.
Sources said that authorities suspect the rap label is tied somehow to organized crime in New York and Chicago.
It is increasingly apparent that the company faces even more serious problems than the recent jailing of company founder and owner Marion "Suge" Knight. Before the investigation is over, some sources said, federal investigators might try to seize the company.
Knight denies any connection between his company and criminal activity, and said he believes the investigation must be racially motivated.
"This is the most outrageous story I have ever heard," Knight said in an interview at the Los Angeles County Jail earlier this month.
"A black brother from Compton creates a company that helps people in the ghetto, so what does the government do? They try to bring him down."
Sources said the government is trying to build a racketeering case against the company, and is investigating alleged links to street gangs, drug trafficking, money laundering, violent acts, extortion and gun running.
The conclusion of the investigation, which sources say is expected to result in criminal indictments, is months away.
Justice Department officials routinely have declined either to confirm or deny the investigation's existence. But law enforcement sources said that phones have been tapped and agents from the FBI, Internal Revenue Service, Bureau of Alcohol, Tobacco and Firearms, and Drug Enforcement Administration, as well as police in Los Angeles and Las Vegas, continue to investigate several leads.
Known members of the Bloods street gang are alleged to have committed crimes while on the Death Row payroll, according to court records.
Investigators are tracing the "seed" money used to help launch Death Row in 1992 to learn whether any funds came from illegitimate sources.
Authorities are following a money trail that leads to a Las Vegas nightclub that opened only on a handful of occasions when Knight and others were in town. The club never obtained a liquor license. Detectives checked into the backgrounds of individuals involved in the venture, some of whom allegedly have past connections to organized crime in New York and Chicago.
One of the record company's stars, Tupac Shakur, was fatally shot in September in Las Vegas. Knight was slightly wounded in the still-unsolved attack.
Knight, 31, has eight convictions, mainly for assault and weapons charges. His probation in a 1992 assault case has been revoked for his role in a brawl hours before Shakur was shot; he could be sentenced to prison in February.
Knight, who has been jailed since October, also is accused of violating probation in a 1994 federal firearms trafficking case by smoking marijuana.
Knight's continued affiliation with individuals who have had run-ins with the law has led authorities to focus on whether the money used to launch Death Row may have come from drug trafficking or other illicit means.
Federal agents have been examining Knight's relationships with convicted drug kingpins Michael Harris and Ricardo Crockett, both of whom are in prison.
Pub Date: 12/30/96