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In return for the
free goods, Rossi alleges, retailers were asked to scan the discs multiple times to boost releases’ SoundScan numbers.

L.A. TIMES: DEF JAM SUED OVER ALLEGED SOUNDSCAN SCAM

Former Exec Files Suit Charging Liles, Espy, Giaco With Using Free Goods to Manipulate Sales Numbers
According to a report in today’s L.A. Times, a former BMG Urban Marketing distribution exec and Billboard R&B chart editor has filed suit against UMG, its subsidiary Def Jam and execs Kevin Liles and Mignon Espy, among others, for allegedly using her in a scheme to artificially spike sales numbers by distributing free product to independent retailers.

The plaintiff, Theressa Rossi, says Def Jam hired New York marketing firm Giaco Entertainment to distribute free CDs to indie stores. In return for the free goods, Rossi alleges, retailers were asked to scan the discs multiple times to boost the releases’ SoundScan numbers.

Merchants that didn’t cooperate in the inflation of sales data, the suit says, faced the threat of stock delays. Rossi’s filing does not specify individual album titles used in the alleged racket.

Giaco President Joe Giaco was also named as a defendant in the lawsuit, which demands $22 million in damages.

Times reporter Jeff Leeds notes that while Universal said it hadn’t received a copy of the litigation yet and wouldn’t comment, Giaco’s attorney, Steven K. Meier, dismissed Rossi’s charges as “patently untrue.”

Rossi asserts that UMG had been prompted to cease its dealings with Giaco after a 2001 Times story describing the sort of possible chart manipulation described in the suit.

Because of this, she claims, Liles and Giaco conspired in the birth of Entertainment Marketing Services as a front to avoid detection by the parent company, enlisting her as point person.

Rossi further alleges that when she asked to see Giaco’s financial records, he had her fired and kept her portion of the proceeds.

In his report, Leeds notes that SoundScan numbers "are widely considered the most trustworthy measurement of consumer tastes."

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