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Cohen May Have to Pay Judgment

Def Jam label's chief has been told by Vivendi Universal Music Group that it might not cover his $56-million share of award in a fraud case.

July 23, 2003|Jeff Leeds | Times Staff Writer

Lyor Cohen, head of Vivendi Universal Inc.'s Island Def Jam record label, recently appeared with veteran rapper LL Cool J to ring the opening bell at the New York Stock Exchange.

Now, the music industry is buzzing about whether Cohen will have to visit the bank.

Vivendi's Universal Music Group recently told Cohen that it had "reserved its rights" to decide whether to pay his portion of the $132 million in civil damages levied against him and the label in a legal dispute with a smaller rival.

Sources close to the company say the notification doesn't signal a lack of support for Cohen, who is one of the industry's star executives. Instead, they say, it is premature to decide the question before a final judgment is entered in Def Jam's dispute with independent TVT Records. Universal has said it intends to appeal the verdict.

But the question of who pays may land on the front burner soon because the company and Cohen are required to post a bond before they can appeal.

The issue comes in the wake of a New York trial in which a jury found the Vivendi-owned label and its chairman liable for fraud and other allegations for reneging on a deal to let TVT release an album featuring Def Jam rap star Ja Rule. The jury's award, one of the largest ever against an entertainment company, includes $56 million against Cohen personally.

Cohen believes he is fully indemnified for the damages, sources said.

Lawyers for Cohen have asked U.S. District Judge Victor Marrero to reduce the award, saying it exceeds the executive's net worth, which is about $29 million, according to Cohen's court testimony.

TVT contends that the judge shouldn't reduce the damages if Universal ultimately plans to cover Cohen's portion. If Universal were to announce that it isn't paying the executive's share, however, it would risk alienating a key manager at a time when it is in talks to renew his contract, which expires in about five months.

Cohen may have other legal headaches looming. Federal investigators have been examining ties between a convicted drug kingpin and Murder Inc., a Def Jam-distributed label headed by record producer Irv "Gotti" Lorenzo. Court records show that Cohen sits on the executive board of the Murder Inc. venture. That label is home to R&B singer Ashanti, whose album, "Chapter II," debuted at the top of the Billboard chart two weeks ago.

Cohen declined to comment and his attorney, Matthew Dontzin, couldn't be reached.

A Universal spokeswoman said, "We do not believe it is appropriate to comment on issues that are pending before the court."

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