RAP EXEC, AUTHORITIES AT ODDS SINCE 1980s

HOUSTON -- James A. Prince says he is a legitimate businessman who made
his millions on gritty rap music.

State and federal investigators say they have long suspected otherwise.

Mr. Prince did not respond to requests for interviews. But he has
repeatedly contended that law enforcement's interest in him is rooted
in what he calls racism and resentment of him as a black man who rose
from Houston's 5th Ward to national success.

"I pay millions of dollars in taxes each year. I don't know why they
assume something illegal is happening within my company. They want to
destroy me because I'm young, black and rich, and did it against all
odds," the 35-year-old man said in an April 1999 interview published in
Link Magazine, a Houston-area publication.

Link noted that Mr. Prince has expanded his business interests to real
estate and boxing management. He recently opened a boxing gym in the
5th Ward and was licensed in December by the Nevada Athletic Commission
to manage several promising fighters. He has been described by the
boxing press as a friend of Mike Tyson's who aspires to become as
dominant in the sport as promoter Don King.

Mr. Smith also told Link that he was being singled out by drug
investigators because, he said, he helps young, disadvantaged blacks --
including some with felony records -- become successful.

Agent Ernest L. Howard, head of Houston's DEA office, said years of
investigating the rap impresario have failed to produce "concrete
evidence" to prosecute him.

But other DEA agents say they have good reason to keep investigating.

"He has legitimate businesses," Agent Howard said. "And whenever you
have legitimate businesses, the more legitimate you become."

The Drug Enforcement Agency's work on Mr. Prince dates to 1988, when
the 35-year-old entrepreneur still went by his birth name, James Andre
Smith. He later legally changed his last name to that of his biological
father, Earnest Prince III.

Alleging A Conspiracy

The DEA's investigation of Mr. Prince became public in 1993, after he
was arrested twice on minor drug and weapons charges. He publicly
complained that he had been harassed by the DEA and Houston police.
News reports indicated that about 100 protesters marched on Houston
City Hall. The charges were later dropped.

Mr. Prince told the Houston Chronicle that there was a conspiracy among
DEA agents and Houston police who targeted him because he was a "great
example" for ghetto kids. "I really don't think the government wants
certain people to be inspired," he told the newspaper in 1993.

In 1997, a Los Angeles crack cocaine dealer told the Los Angeles Times
that he underwrote Rap-A-Lot's startup for Mr. Prince, a friend, in a
1987 handshake deal.

The dealer =96 Michael O. "Harry O" Harris, who was in prison for drug
dealing and attempted murder =96 briefly gained notoriety in the mid-
1990s when federal investigators in California examined his reputed
financial ties to another major rap label, Death Row Records.

Mr. Prince denied Mr. Harris' assertion, telling the Los Angeles
newspaper: "Mike Harris is a pathological lying snitch. I guess he must
be working with the feds trying to bring down black-owned companies. I
started Rap-A-Lot with my own money."

Houston's DEA office brought in Houston police in 1998 for a joint
investigation of Mr. Prince and his associates, records show. In
November 1999, police raided a Houston home owned by Mr. Prince and
occupied by his father, a Houston man with three felony convictions for
cocaine dealing and possession.

In addition to five guns and a sack with $35,000 in cash, agents found
scales dusted with white powder residue, 18 crack pipes, a beaker used
to "cook" crack, and a small rock of the drug. Mr. Prince's father,
Earnest Prince III, had $2,000 stuffed in his socks, a police report
states.

The elder Mr. Prince was convicted on a federal weapons charge. His
lawyer noted that James Prince's employees and friends were often at
the house and brought in some of the guns to protect father and son
from threats "arising out of [James Prince's] position to the rap music
business."

Seeking Label's Assets?

In January 1999, DEA agents operating a reverse sting arrested a Rap-A-
Lot promotions manager and the label's artist coordinator for stealing
6 kilograms of cocaine and $30,000 from a motel room. The promotions
manager, Edward DeWayne "Spook" Russell, was convicted and sentenced to
21 years in federal prison. Mr. Russell's defense lawyer argued during
the trial that agents were going after his client in a bid "to build a
strong case for forfeiture of the assets of Rap-A-Lot."

The lawyer charged in one court pleading that government agents were
being "criminal and vindictive" in trying to link Mr. Prince to an
event that Mr. Russell "insisted" Mr. Prince did not know about.

The second employee, Stephon McCarter, was convicted but was granted a
new trial. That order is on appeal, and he remains jailed on that
charge and other drug charges.

DEA Agent Chad Scott said that Mr. McCarter -- a repeat felon with
arrests or convictions for burglary, robbery, assault and drug dealing
-- was enforcer and money collector for a group specializing in drug
distribution, drug rip-offs, burglaries and carjackings.

A former member of Rap-A-Lot's Geto Boys alleged in a 1998 lawsuit that
Mr. Smith had him beaten for trying to leave the label. He said that
his assailants were Mr. McCarter and another Houston man, Derrick
Washington. Mr. Smith and his company denied the charge. The case was
withdrawn, but the artist's lawyer said it will be refiled.

A search of Mr. McCarter's Lincoln Navigator after his 1999 arrest
netted what appeared to be a ledger with notations totaling more than
$1 million, court records state.

Agents obtained information and guilty pleas from Mr. Washington and
other associates of Mr. McCarter's after tying them to crack
trafficking in Oklahoma City. Records indicate that part of the case
also netted six other arrests and convictions and one of the largest
crack seizures in Houston history.

Retired Harris County narcotics investigator Joe Harris said that he
was invited to Rap-A-Lot's offices to meet with Mr. Prince and his
lawyer in March 1999. In the meeting, which Mr. Harris secretly tape
recorded for the DEA, the retired officer said Mr. Prince and his
lawyer asked him to use his old police contacts to get inside
information on the case.

"What it boiled down to: They were trying to offer me money to find out
what the government has on little James," Mr. Harris said.

Associates Arrested

In April 1999, police arrested another Prince employee for trying to
swap a moving van once owned by Mr. Prince for 6 kilograms of cocaine.
One DEA memo states that the man, who was sentenced to 30 years in
state prison, told police after his arrest that he was once beaten on
Mr. Prince's orders for "disrespect."

A crack dealer introduced to an informant by rap artist Brad "Scarface"
Jordan sold an undercover agent 500 grams of crack, records show. The
dealer and an associate pleaded guilty to federal charges, but federal
prosecutors declined to prosecute Mr. Jordan for drug conspiracy,
investigators said. Court records indicate that evidence against Mr.
Jordan included conversations in which he discussed buying marijuana to
re-sell in "the hood."

The artist pleaded guilty to misdemeanor marijuana possession.