Music promoter Joseph Isgro, the target of a failed federal prosecution in a 1980s payola scandal, was arrested Saturday on loan sharking and extortion charges, the U.S. attorney's office said Monday.
Isgro, 52, was taken into custody in front of Le Grand Passage shopping center in Beverly Hills, a location that he and his associates often used for confrontations with debtors in arrears, authorities said.
According to an FBI affidavit, Isgro and a crew of collectors and enforcers extorted hundreds of thousands of dollars from scores of victims, charging interest rates of up to 5% a week. The loan sharking operation had been going on since 1994, the FBI said.
Some witnesses who fell behind in their payments told of being punched, slapped and threatened with more serious physical harm, the affidavit said.
One alleged victim, Bernard Beyda, a 66-year-old businessman from Rancho Palos Verdes, went to Beverly Hills police with his story early in January, triggering a joint FBI-Beverly Hills investigation.
Beyda told detectives he had already paid $70,000 in interest on a $30,000 loan from one of Isgro's associates and didn't have money for the next payment.
On the day the payment was due, Beverly Hills police set up a video surveillance of the sidewalk in front of Le Grand Passage on Canon Drive.
They taped back-to-back meetings by Isgro and his associates with Beyda and with two other debtors who appeared to fork over an undetermined amount of cash.
After counting out the cash, they said, Isgro folded it into a wad so fat that he needed a rubber band to hold it in place, and then stuffed the roll into his front trousers pocket.
During a confrontation outside Le Grand Passage in February, debtor Frank Arico said, he was whacked on the side of the head by an Isgro lieutenant who "took a windup, like a baseball pitcher," before striking him, the affidavit said.
"Next time, I'll split your head open," the Isgro associate reportedly warned.
Arico, fearing for his life, left town.
On March 4, investigators fitted Beyda with a concealed recording device which he wore to a showdown meeting with Isgro outside Le Grand Passage.
Isgro, authorities said, was accompanied by four muscular associates, including one man who stood about 6 feet 5 and weighed about 280 pounds.
The business executive told Isgro he would have his overdue installment in three days, adding, "I'm terrified not to," according to a partial transcript included in the affidavit.
Isgro, in a gesture of kindness, then volunteered to reduce the man's "vig" (a loan sharking term for interest rate) from 5 to 3 points per week.
Beyda expressed relief and repeated his promise to pay up.
"Do you know what it's gonna be like if I have to come after ya?" Isgro then asked him.
"Yeah," he replied.
Federal prosecutors said the video and audio tapes make clear that Isgro was in charge of the loan sharking operation.
They also cited "pay and owe sheets" bearing Isgro's initials that were seized from the home of co-defendant Anthony Saitta, 63, of Beverly Hills. Saitta was arrested March 13 on related charges.
FBI agents and Beverly Hills detectives seized records of transactions dating back to Jan. 10, 1994, according to the affidavit.
Isgro, who was arrested along with alleged underling Valentino Bartolone, 35, of Los Angeles, is being held at the federal Metropolitan Detention Center pending an initial hearing before a federal magistrate on Friday.
Isgro is being represented by noted criminal defense attorney Donald Re, who handled his case in the payola prosecution.
Isgro currently operates Private-I records in Tarzana, an independent label that recorded such R&B legends as James Brown and the Gap band. He was executive producer of the 1992 movie "Hoffa," starring Jack Nicholson and Danny DeVito.
In the 1980s, he was a highly successful member of the Network, a loose affiliation of independent music promoters who reportedly charged the record industry $60 million a year to ensure radio airplay for songs. Isgro was accused of offering payola to radio programmers, a claim he denied.
Isgro was charged in 1989 with racketeering, obstruction of justice and numerous other crimes.
U.S. District Judge James M. Ideman threw out the case a year later, finding that the main federal prosecutor on the case had failed to disclose evidence that could be used to exonerate Isgro.