The federal government launched “Project Sound,” a nationwide investigation into the black music industry and allegations of payola today (June 24, 1975).
In total, 19 people were indicted from six corporations, by U.S. Attorneys in Newark, New Jersey, Philadelphia, Los Angeles and New York.
Clive Davis was charged failing to report $90,000 worth of income from 1970-1972.
Davis’s assistant David Wynshaw, who was former director of A&R for Columbia Records, was also charged with avoiding $145,000 in taxes.
Additionally, Wynshaw was accused of billing Columbia Records $75,000 in expenses that did not exist with companies he operated with organized crime boss Patsy Falcone.
According to the book “Hitmen: Power Brokers and Fast Money Inside the Music Industry,” Patsy Falcone was an associate of the Genovese crime family.
Falcone’s partner was a man named Frank Campana, who managed a variety of black artists.
Together, they managed Ben Vereen, Lynn Anderson and O.C. Smith of “Little Green Apples” fame.
O.C. Smith was forced to be managed by the pair, after they prevented West Coast mobsters from assaulting him over gambling debts.
But it was Falcone’s involvement in smuggling heroin, that started the entire investigation.
Authorities found an address book containing David Wynshaw’s phone number, and Wynshaw ended up becoming a cooperating witness.
The investigation had a profound impact on Columbia/CBS Records, which was forced to fire Clive Davis.
During the investigation, David Wynshaw claimed that payola started in 1971, after distribution deals with Philadelphia International and Stax Records were signed.
Gamble & Huff were accused of shelling out almost $40,000 in cash, airline tickets and other items for DJs.
Nat Tarnapol was accused of avoiding taxes on $300,000 in earnings, by selling illegal copies of artist on Brunswick Records and cheating artists.
In the end, no one was jailed as a result of “Projects Sound” and the investigation was deemed a failure.
The charges were dropped against Leon Huff. Gamble reached a plea bargain with prosecutors, where he admitted to giving gifts such as air travel and clothes, but he denied it was for radio airplay.
Nat Tarnapol was also acquitted of any wrong doing.
Of all the executives indicted, only David Wynshaw pleaded guilty to conspiring to defraud CBS with Patsy Falcone.
Falcone was sentenced to two years in prison, along with a 10 year sentence for smuggling heroin, while Wynshaw was sentenced to a year in prison.
Clive Davis was charged with failing to pay taxes on $8,800 worth of vacation expenses.
He was fined $10,000, but given no prison time. Due to Davis’ absence after being fired from CBS/Columbia, both Philadelphia International and Stax began experiencing difficulties with CBS, that helped undo both deals.