Lorenzo Bros. Surrender

Irving “Gotti” Lorenzo and his brother Christopher, both of whom head rap label The The Inc. (formerly Murder Inc.), surrendered to the FBI January 26th on charges of laundering more than $1 million in drug-trafficking proceeds, according to an unsealed indictment.

The alleged money laundering took place through two corporations, IG Records Inc. and MI Records Inc., controlled solely by Irving, The Wall Street Journal reported. The allegations reportedly have no ties to Universal Music Group, parent company of The Inc., according to the U.S. Attorney’s Office for the Eastern District of New York in Brooklyn.

The Lorenzo brothers are charged with laundering money on behalf of an organized-crime enterprise that involved murder and drug-trafficking and was controlled by Kenneth “Supreme” McGriff, according to the paper. McGriff – a convicted crack dealer who is currently in prison on a gun violation – was childhood friends with the brothers, according to the indictment.

The brothers were released on $1 million bonds January 26th after pleading not guilty in federal court.

According to the WSJ, Roslynn Mauskopf, the U.S. attorney for the Eastern District of New York, called MI Records “a ready vehicle through which McGriff and the Lorenzos were able to launder over $1 million in proceeds.” The indictment also reportedly alleges that McGriff used a film he produced featuring several famous rappers to launder drug money.

McGriff and Irving Lorenzo then allegedly used the money to guarantee a $500,000 loan from Universal – referred to in the indictment as “the other company” – to produce the movie’s soundtrack, according to the paper. The movie was released straight to video in 2001, but the soundtrack was never made.

The indictment seeks to seize Irving’s personal properties and his two music companies but does not target The Inc. – a division of Universal’s Def Jam.

Meanwhile, Irving’s lawyer, Gerald Lefcourt, said the brothers had been unfairly targeted for trying to help a respected figure from the rough Queens neighborhood where they grew up.

“It’s just unfortunate that this investigation has constantly been dragging [Irving] through the mud,” Lefcourt said. “Ultimately, he will be vindicated.”

Federal agents began to close in on the Lorenzos and McGriff in recent months with the arrests of Ja Rule‘s manager, Ronald “Gutta” Robinson, and a bookkeeper from The Inc. At least five other defendants, including associates of McGriff, have been charged.

Irving, who founded Murder Inc., has made about $200 million since it was founded in 1997, according to a source familiar with its operations who insisted upon anonymity.

The source said The Inc.’s partnership with Def Jam was set to expire in about a year. New Def Jam bosses L.A. Reid and Jay-Z don’t seem eager to embrace Irving, said Elliot Wilson, editor-in-chief of the rap magazine XXL.

“We haven’t had a case like this before when the feds have gone this hard after a music guy,” Wilson explained. “This is an unprecedented thing, where the music guy is being charged as a gangster.”