Feds Probe Massive Royalties Theft; Court Issues Injunction

The phrase “You stole my heart,” has cropped up in more than one popular song. But the people who write the songs also have a decidedly non-romantic theft issue: stolen royalty payments. And the feds want to know a few details. Charles Sanders, special counsel for the Songwriters Guild of America (SGA), recently confirmed that his group is cooperating with the FBI, the IRS and the U.S. Postal Service in a federal investigation of a suspected embezzlement scheme engineered by its royalties manager, Marsha Aiken, and several relatives and associates. Investigators estimate the total missing funds at $1.25 million. To understand how bandits within the SGA have pulled off the royal scam, it’s essential to know a few things about the guild itself.      


The Nashville-based Songwriters Guild of America, with an office in Weehawken, N.J., across the Hudson River from New York City, represents about 5,000 songwriters and estates. The group negotiates royalty agreements, informs songwriters of applicable copyright laws, and holds songwriting seminars and workshops. Under longstanding arrangements, members may elect to have the guild collect royalties on behalf of them from music publishers and other organizations. That’s potentially a lot of money. The SGA now collects nearly $16 million a year in royalties, holding roughly 2 percent of that amount when it cannot find current addresses for writers.


In 2002 Marsha Aiken (no apparent relation to popular singer and recording artist Clay Aiken) became the guild’s royalties manager. Not long after that, alleges a federal civil suit filed in July, she created a fraudulent membership account under the name “Anthony Ray.” The Internal Revenue Service later identified this man as her cousin. Aiken wrote unauthorized royalty checks to Ray from the SGA’s general account – where funds for unlocated writers are held – and mailed them to him in Rhode Island. In compliance with federal regulations, a Rhode Island bank notified the IRS that someone had attempted to cash an SGA check for more than $10,000. The IRS then contacted the guild. Aiken stonewalled the inquiry. In June of this year the IRS contacted a guild executive and pointed out that Aiken and the recipient of the check, Anthony Ray, were related.

At that point, the guild launched an internal investigation and fired Aiken. On August 17, a U.S. District Court in Brooklyn, N.Y. issued an injunction prohibiting Aiken, Ray, Michael Levy, Monique Aiken Adams, and anyone “in active concert” with these persons from selling property in St. Albans, N.Y., which the SGA claims was acquired with embezzled funds. In the meantime, SGA President Rick Carnes, a prominent Nashville-based country songwriter, has begun implementing improvements in the organization’s security and insurance claim procedures.  (Washington Post, 9/5).