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Aaron Milenski on Tax Scam Releases

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Shit-Fi is proud to present an interview with Aaron Milenski, co-author (with Patrick Lundborg and Ron Moore) of the recently released The Acid Archives, on the subject of tax scam releases. Because Shit-Fi is concerned with the economics behind the production of music, especially the oddities and mysteries that challenge—or illuminate—conventions, this particular phenomenon is highly interesting to us, even if the music on many of these records otherwise would not warrant our attention. It’s true that the tax scam is a strange footnote to the history of the record industry, but looked at another way, it demonstrates exactly what is simultaneously alluring and repulsive about the industry, which remains rife with rip-offs, scam artists, criminality, and injustice. The history of the American music business prior to the corporate consolidation of the 1980s could not be written without mention of organized crime, but even as mainstream musicologists recognize the role of criminality in the business, we are not aware of anyone other than collectors who has documented the tax scam phenomenon.

 S-F Could you define what a tax scam release is?

AM In 1976, some record label executives discovered that it was possible to create an entire label as a subsidiary to the major label, and to write it off as a huge tax loss to help the “real” label remain profitable. The idea was that a large number of albums (for instance, Tiger Lily and Guinness released almost 100 records each in just under two years) would be on the new label, and the entire batch (ie, every copy of all of the records) would be listed as unsold. They would probably list something like 10,000 copies pressed of each record, even though it’s possible that they pressed up only a few hundred or so. The ones they pressed were never even attempted to be sold; they were sent as promos and dumped into warehouses with cutouts.

Where this gets even more interesting is that in order to create 100 albums in just over a year’s time, the labels had to dig up everything they had in the vaults: demos, albums that were intended to be released but were not, tapes that were purchased from other labels, re-releases of albums that they had released on real labels under different names, stuff that was not ready to be released yet, etc. Many of these are clearly not finished or not properly mastered. The album covers follow a bare bones principle: a simple cover photo and a white back cover with a minimal amount of info (song titles, label info, maybe credits, though many of those are missing and/or fake.)

Apparently whatever loophole they discovered was closed by 1978 or so, as every one of these labels existed only in the years 1976–1978 (although it is suspected that the legit label B.T. Puppy, run by the Tokens, released about a dozen or so albums purposely at a loss in the early ‘70s, as there are many albums on that label that are very very rare, and the official word is that the small releases were “contractually obligated,” whatever that really means.)

Obviously, every one of these labels was associated with a larger label, but nobody knows the actual connections, except in the case of the most famous tax scam label, Tiger Lily, which was a subsidiary of Roulette, run by Morris Levy, who is known to have had connections to the Genovese crime family. The other very large tax scam label is Guinness (and Dellwood, which is another name for the same label), which released about 100 albums. Other known tax- scam labels are Tomorrow, Tribute, Illusion, Rocking Horse, and Crazy Cajun, and a few more are suspected. There is also one called “Album World,” which pulled the neat trick of giving every release a different “label” name, though they all had catalogue numbers that started with AW and all had the Album World address on the back cover.

S-F When and how was the phenomenon of tax scam releases first discovered?

AM This was way before my time as a serious collector of oddities, so I don’t know who first figured it out or how. I assume that some rare record dealers and collectors noticed that more than one very interesting rarity was on the Tiger Lily or Guinness label, and then they started to seek out other albums on the label, as collectors often do with interesting labels. How they then figured out the rest of the story is unknown. What I do know is that some people in the bands were tracked down, and in the vast majority of cases, they did not know that their album ever actually got released, so there is no question that Tiger Lily and many of the others basically stole the material and released it illegally. One exception to this is that a few artists on Guinness admitted to having willingly participated in the scam, because they could also claim a loss on their taxes, for studio time or whatever. It is notable that certain artists had multiple releases on these labels, and that certain producers and artists were connected with several of the bands on the labels. For instance, Bob Gallo released two albums on Guinness as Robert John and produced one on Guinness by Snowball. James Cahool Lindsay was in Daddy Warbucks (on Tiger Lily), had a solo album on Tiger Lily and played on some other Tiger Lily albums. My guess is that these guys had connections to the bigger label and helped them gather some material. Many of these albums were clearly intended for real release (ie, the Roland Jade and Brother Bait albums on Tiger Lily have full artwork, and one Tiger Lily album is the “Reading Festival ‘73” compilation that was released in several European countries with the exact same album cover) but got sucked into the tax scam instead. Also, several albums that were originally released on the Family label got re-titled and re-released on Tiger Lily: Sleepy Hollow, Peter Anders, Velvert Turner, Heavy Cruiser. (It makes one wonder if one of the as yet undiscovered Tiger Lily albums is a version of the first Billy Joel solo album, which was on Family!) Also, Jasper Wrath released two albums on Dellwood under fake names: Arden House and Zoldar & Clark, the latter of which is one of the two or three best albums on any of the tax scams.

Some of us have created lengthy discographies, and there are blank numbers, which means there are still some albums to be discovered. There are also many tax scam albums where a very small number (ie, five or fewer) of copies have ever been found. It’s not known why certain ones (especially on Guinness) seem to show up more than others. I have to wonder why they ever actually sent these out to the public in the first place rather than just destroying them (thank goodness they didn’t!) The most common release is the one by Richard Pryor on Tiger Lily—for some reason there were several thousand copies made of that one.

S-F How did you become interested in this phenomenon?

AM When I first found out about this, it just fascinated me...and even more so when I discovered that some of the music on these albums was fantastic (though, to be truthful, most of it is mediocre or lousy.) I find them just plain very fun to collect, and am curious to hear everything on Tiger Lily and Guinness. What’s neat is that in most cases these have an unlikely combination: very rare records that were actually recorded on a major label budget.

S-F Do you know if these records were covered in the music press at the time?

AM There is no way to know for sure, but I will confidently say no. Here’s why: First of all, no collector has ever found a review, and many of these collectors have collections of magazines from the time period. The way the records were dumped into warehouses guaranteed that they would not surface for a while anyway—it’s possible that none of the records were even seen for a few years.

The only thing I have heard is from a guy who worked in a Florida record store in the late ‘70s and early ‘80s. He remembers a distributor having the John Scoggins and Daddy Warbucks albums on Tiger Lily and recommending them to him. I’m guessing this would have been maybe 1980. Both of these albums are quite rare now, so my guess is the distributor had at most a few copies of each. I have only ever seen one copy of the Daddy Warbucks album for sale (my copy), though I know a few people who have heard it, so others must be in some collectors’ collections.

S-F So even though the records were called “promos,” they probably weren’t sent out for review?

AM I believe every copy was stamped “for promotional use only,” which made it easier to claim no profit from them. That doesn’t mean any were necessarily sent out for promo purposes, though a few have surfaced at radio stations.

The weird thing is when used copies show up at record stores. How did they get there? Nobody seems to know.

 S-F A Stonewall LP recently surfaced in a junk shop in Finland, correct?

AM Yes, how Stonewall ended up in Finland is another great mystery!

S-F Have you been in touch with any of the band members who played on these records and what was their reaction?

AM Yes, I chatted via e-mail with Richie Zito and Joey Carbone of Snowball (released on Guinness), both of whom became very successful afterwards as producers and songwriters. Neither of them had any idea the album was actually released. In fact, when I sent off a quick e-mail to Joey Carbone (I found his e-mail address on the web) asking about the album, within less than 5 minutes I got a response that simply said: “This album was released? You have a copy?” He later confirmed that it was recorded by Bob Gallo in 1970 but somehow never got released at the time. They were pretty amazed when I told them the story about tax scam records and what they were. Members of many other bands on these labels have been contacted and also did not know about the records.

S-F Which records would you recommend among the tax scam releases, especially those that have been reissued, to neophytes in the Acid Archives world?

AM I’m hesitant to recommend certain ones lest other collectors find them before I do. Ha! But, in all honesty, obviously the best way to start is with those that have been reissued. I think Stonewall is the best album on any of these labels. It’s a killer ‘70s hard rock album with a punky edge. I think that fans of any kind of hard rock will like it, and the recent vinyl reissue (the US one, not the misnamed Italian one on Akarma) has exact artwork and even the Tiger Lily label.

The main songwriter from Stonewall was found, but has no insight into what happened, and apparently never did anything else. Only about 5 copies of this album have ever been found, and it is generally considered the best tax scam record. It has sold for $5000. I wish I had a contact at Scorpio, because I would love to know how they did the reissue—it appears that they had access to the actual artwork and master tapes, though nobody knows for sure.

Paul Major:

The Stonewall was found in California and sent to me back in the ‘80s. No one’s ever remembered seeing those Tiger Lily label LPs for retail sale back in the day. Someone who knew the Morris Levy story told me long ago that they were made as a tax loss scam and ditched. The members of Crack never even knew an LP had came out, they had just sent a demo tape to Roulette. The Scoggins LP on Tiger Lily—seems he did know it came out; the same is true for Velvert Turner as well. So not all were demo tapes pressed up without the artist knowing. I was told the labels cheaply pressed up some LPs and wrote off bigger amounts than it cost them to do so without ever really trying to sell the LPs. The Tiger Lily LPs used to turn up here in New York City way back but always in thrift shops or used stores, sometimes in batches of titles. The numbering indicates there were lots of them. I’ve seen maybe 15 or 20 titles but there should be several times that.

A funny story about Stonewall: rare record dealer Paul Major discovered it, and at the time put it in his catalogue for $60. This was the early ‘80s, when people rarely paid that much for an unknown album. He gave it another listen and realized what a monster album he had, and luckily nobody bought it from that catalogue. He quickly put it away after that, and eventually its value rose into the thousands. (See sidebar.)

Another Tiger Lily album that has been reissued is the Jackson Sisters, which I have not heard, but is said by knowledgeable people to be an excellent soul/funk album. One of the very best tax scam albums is a Van Morrison–like singer/songwriter rock album on the Tomorrow label, by “Michaelo.” That album has also been officially released as a major label record, “Michael O’Gara” on the London label. It is easy to find and cheap, so it is an inexpensive way to check out this very good record, though of course it doesn’t have the same mystique as the tax scam version. Some others have been reissued: Radioactive reissued Crack “Day of Doom,” a Tiger Lily prog/AOR album that is pretty good.

There are a few good ones that can still be found cheap. Fans of pop/power pop should like the album “Time to Give” by Felix Harp. It is one of the easier to find Guinness albums, and is usually cheap (and has a really weird album cover.) The Richard Pryor album on Tiger Lily is plentiful, so if someone is just looking to have a real Tiger Lily album in their collection, it is an easy way to start.

Unfortunately, some of the very best tax scam albums have not been rereleased, even as bootlegs. I think a smart reissue label should try Zoldar & Clark (Dellwood, a killer prog album), John Scoggins (Tiger Lily, a fantastic guitar pop album), Adam Taylor (a good west coast styled singer songwriter album in a Neil Young mode w/ great lead guitar), and Lift “Caverns of Your Mind” (Guinness, another great prog album). Lift was re-released as a bootleg, but that boot is as rare as the original.

S-F Though these records tended to have major label budgets, because some of them were culled from the archives (or dustbins) of these labels, are there any that stand out in terms of being “out there” or particularly primitive?

AM There are not too many primitive ones (though some are clearly demo recordings not intended for release), but there are certainly some really weird ones. Some of the Album World ones are very clearly more than one artist listed as just one. There is an album by “London Bridge” on Rocking Horse that consists of four long jazz-rock instrumental covers of well-known songs, given fake names. Others have just a truly bizarre mix of styles. Hotgun (on Guinness) mixes solo acoustic folk, blazing hard rock, and carbon-copy cover versions of “Afternoon Delight” and “Silly Love Songs.” Do you think that possibly could have been intended for real release?

The most interesting story of all is Steve Kazcorowski, who made an album as Steve Drake on Tiger Lily. Basically, this guy took songs from other albums (in the case of the Tiger Lily album, he just taped songs from Be-Bop Deluxe, Stackridge, and Babe Ruth records) and passed them off as his own! There will be an article about him in the next Ugly Things magazine.

S-F Is there any evidence of 45s on any of the tax scam labels?

AM There are a couple on Dellwood, but I don’t know if they were released before or after the albums. My guess is that Dellwood was a real label, and then was transformed into the tax scam, or else they tried to do something legitimate later on. It’s hard to tell. Guinness albums all say that Guinness is distributed by Dellwood, whereas the Dellwood ones have the exact same cover design as the Guinness albums but without that particular note. The odd thing about this is that there are way more Guinness albums than Dellwood ones.

Wouldn’t it be nice to find someone who actually worked for these labels?

S-F The statute of limitations has probably run out by now, so maybe the truth is still out there. Unfortunately Morris Levy seems to have taken his story to the grave. With the end of The Sopranos approaching, I have my doubts that Hesh, the shabbily dressed, racehorse-owning, Jewish record mogul character based on Morris Levy, will be afforded a subplot involving a tax scam subsidiary label. But I’d love to hear Stonewall in the soundtrack.


Shit-Fi Conclusion

My own speculation is that the tax scam phenomenon Aaron discussed was particularly effective. It was just one permutation of his expert criminality and greed (though it may not have been technically illegal if there was a tax loophole permitting it). His undoing, which eventually led to his indictment for extortion, involved a legitimate wholesale deal on cutout LPs (overstock) and relates to the tax scam phenomenon. Here is what Fredric Danner, in Hitmen, writes about it:

The case had begun innocently enough. In 1984 MCA decided to unload 4.7 million cutouts—discontinued albums—including past hits by Elton John, The Who, Neil Diamond, and Olivia Newton-John. Morris had been, in his day, the biggest-ever wholesaler of cutouts. MCA asked $1.25 million for the shipment, which came to sixty trailer-truckloads. Morris signed the purchase order and helped arrange for the records to go to John LaMonte, who was in the cutout business with a company called Out of the Past, based in Philadelphia. LaMonte, incidentally, was a convicted record counterfeiter.

On the surface, it looked like a simple deal, but it wasn’t. A number of alleged mafiosi, including Morris’s old pal Gaetano “the Big Guy” Vastola, all converged on the deal, expecting to make a “whack-up,” or killing, of in some cases a hundred grand apiece. So they said, anyway, in conversations secretly monitored by the FBI. It was never clear how they would have made this whack-up since the deal went sour. And when it did, violence and an extortion plot followed.
[…]
Morris was also unlucky in the choice of John LaMonte to receive the cutouts. LaMonte turned out to be a deadbeat. His refusal to pay Morris back for the records—he said they were all schlock and not the ones he ordered—ruined everybody’s plans. There would be no whack-up at all unless LaMonte could be persuaded to pay.
Vastola, who had joined Morris in picking LaMonte to get the records, was furious.
“Moishe, Moishe,” the FBI heard him say, “you knew the guy was a cocksucker before you made the deal, didn’t you?”
“That’s right,” Morris agreed.
“Why did you make the deal with him?”
Because, Morris explained, he had believed LaMonte was “a controllable cocksucker.”
[…]
On May 18, 1985, Vastola confronted LaMonte in the parking lot of a New Jersey motel and punched him in the face. LaMonte’s left eye socket was fractured in three places, and his face had to be reconstructed with wire. (53-55)

I suppose it is possible that there would have been a tax scam involved had the plan come to fruition, exploiting some new tax loophole Levy’s lawyers could have identified. Regardless, the reason I believe the tax scam Aaron has detailed was effective is, as Paul Major says, some of the records on Tiger Lily showed up in batches in used record stores after their release. My speculation is that after Levy had received the benefit for the lost revenue attributable to the “unsold” Tiger Lily records from the Internal Revenue Service (IRS), some associate of his, perhaps with mob involvement, then bought the few actual copies of the records in existence in order to sell them later through usual outlets for cutouts. Basically, Levy and his associates had the potential to make money coming and going on records that were barely released. For instance, he could claim a loss on 10,000 unsold LPs and if 100 copies had actually been manufactured, these few copies could be wholesaled by corrupt and connected dealers outside the typical retail channels and into used-record stores. This pathway also, it seems to me, explains why the records are, on the whole, so rare. If the portion of the scam related to the IRS worked properly, it would not have been necessary to try to reap the additional, probably small, benefit from selling the extant copies. If they were sold, good for Levy et al; if not, and they ended up in a dumpster (surely owned by another mob associate), the loss was not great. It’s difficult to imagine that folks like LaMonte or the Big Guy, described above, cared if the records landed in consumers’ hands. Records to them were just another vehicle to make an illicit buck. Furthermore, LaMonte apparently welched on the deal described by Tanner because he felt that Levy was giving him garbage rather than the usable records he promised (when it comes to ‘80s Elton John cutouts, this must’ve been a thin line indeed). Surely someone like LaMonte would have considered a totally unknown record on Tiger Lily to be unusable garbage and treated it as such. With Levy in the upper echelon of the music industry for decades, and, as his prosecutor argued, the mob involved in the conception of the cutout scam, I can’t help but think that the entire corrupt industry must have treated records merely as a vehicle for moneymaking, rather than as an end in themselves, as many of the musicians who recorded them surely did.