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Company Town | THE BIZ / CHUCK PHILIPS and ALAN ABRAHAMSON

Rapper Leaves Tangled Financial, Legal Legacy

December 24, 1996|CHUCK PHILIPS and ALAN ABRAHAMSON

Slain rap star Tupac Shakur sold more than $60 million worth of albums this year alone, making him one of the top-selling domestic artists. Yet, at the time of his death, the rapper owed his record company $4.9 million, Shakur's attorney says.

Shakur's mother--who last week won a court battle forcing Death Row Records and two other companies to stop selling unauthorized Tupac merchandise--believes Death Row shortchanged her son out of royalty payments and has hired an auditor to conduct an independent accounting of the rap label's books.

The allegations stem from an unusual handwritten three-page contract drafted and signed while Shakur was in prison in 1995.

The dispute illustrates how recording artists' contracts are skewed in favor of record companies. Even if Shakur had recorded additional albums, he would likely have remained in debt for years to come, sources said.

"Tupac was one of the most successful artists in the music business--and yet somehow, on the day he died, he had absolutely nothing to show for it," said New York attorney Richard Fischbein, who along with Afeni Shakur is co-administrator of the rap star's estate. "We believe that Death Row withheld royalty payments from Tupac and failed to deliver many of the advances promised under his contract."

A representative for Death Row denied that the company has mishandled Shakur's account, blaming the rapper's debts on his own extravagant spending habits.

In the year preceding his slaying, Death Row had advanced Shakur large sums of cash to buy several cars for himself and a house for his mother--funds that the rapper was required to pay back, Death Row sources said. Shakur also charged to the company lease-payments for three residences as well as a slew of lavish bills, including a $300,000 tab at the Peninsula Hotel and hundreds of thousands of dollars in invoices for jewelry, furniture, security and limo service, sources said.

In addition, Shakur ran up more than $2 million in advances for recording and video costs--which, according to standard industry practice, must be recouped by the record company before his account can turn a profit, Death Row sources said.

Nevertheless, when Shakur's mother threatened in October to sue Death Row and bar the release of her son's posthumous "Makaveli: The Don Killuminati" album, Death Row's distributor Interscope Records worked out a deal to pay an immediate $3-million "nonrefundable" advance to Shakur's estate, Fischbein said.

The papers were drawn up at a Nov. 1 meeting between Shakur's mother, Fischbein, Interscope co-founder Jimmy Iovine and a group of attorneys. Death Row owner Marion "Suge" Knight was in jail at the time on a probation violation and could not attend the meeting. Death Row attorney David Kenner was also not present.

During the meeting, Interscope's attorneys also pledged an additional $2 million in advances to be paid before April and helped negotiate an upgrade in the royalty rate (from 12% to 18%) paid to her son for past releases.

Fischbein insists that Interscope attorneys forgave about 50% of the $4.9-million debt--a point with which Death Row adamantly disagrees.

"It was Jimmy Iovine who took the lead in getting the ball rolling to straighten this mess out," Fischbein said. "Nothing would have happened if it wasn't for him. Death Row never even came to the table to have a discussion."

Shakur's mother has also cast doubt on the validity of the recording contract that Death Row struck with her son on Sept. 16, 1995.

Unlike a standard recording agreement, typically thick and laced with dozens of complicated terms and conditions, Shakur's pact with Death Row is hand-written and just three pages long. Shakur signed the agreement, Fischbein suggests, because he was unhappy and had been incarcerated for months on a sex abuse charge before Knight showed up with a promise to bail him out.

"This contract is not like any other agreement I've ever seen in my life," Fischbein said. "It's nothing but toilet paper."

The agreement, which grants Death Row the right to release as many as four albums, spells out a series of advance payments promised to Shakur--many of which Fischbein alleges the rapper never received.

Fischbein also complains that Shakur did not have proper representation when he signed the agreement. According to Fischbein, the rapper appears to have been represented by Kenner, who also was the attorney for Knight and Death Row at the time.

Fischbein accuses of Kenner of having a conflict of interest when he drafted the contract and gave advice to Shakur about signing it. Kenner--who was fired by Shakur about three weeks before the rapper died--denied any conflict of interest, insisting that Shakur was represented at the time by attorney Charles Ogletree. Ogletree could not be reached for comment Monday.

It's unclear whether Shakur's mother would seek to have the handwritten contract disavowed. But Fischbein said Death Row has yet to provide the necessary books that would allow the estate to conduct an independent audit.

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