Major record labels often bemoan that it’s illegal downloading and music piracy that are pilfering from their pockets.
In the case of Warner Music however, it’s not just changes in music consumption that’s hurting their profit margins. Instead, they’re smarting from a million dollar hole in profits owing to the actions of a former executive.
Danielle D Smith was a talent scout for the Warner Music-owned Atlantic Records, searching the country for new urban artists to sign to the major label, and a new court case has accused the 45-year-old of embezzling more than $US 1 million from the company during her tenure, as The New York Post reports.
Smith, who was also a prominent fundraiser for President Barack Obama’s re-election campaign, was turned into the Manhattan District Attorney’s Office earlier this week and was arraigned on charges of first-degree grand larceny after she pleaded not guilty.
The court heard that while working for Warner’s urban music department – from subsidy Atlantic Records’ Californian office – Smith reportedly used a company credit card to live the high life while scouting for artists for the label, as well arranging travel and lodging plans for signees.
Between 2007 and 2011, Smith reportedly used major label money to book lavish hotel accommodation, airline tickets for personal holidays, as well as splashing out on other “luxury goods”, tallying a $US 1.3 million debt, prosecutors said.
Smith was under an internal investigation for the excessive credit card expenses when she resigned from Atlantic in late 2011.
Following her departure, the former Warner exec reportedly turned to campaign fundraising. In 2012, she was named as a top contributor – pulling between $200,000 and $500,000 – in funding towards the campaign bid to get President Barack Obama re-elected for another term.
The Obama connection was mentioned in the case, which is set to continue later this week, but was not related to her music label charges, which Smith denies.
“She denies the allegations and we look forward to exonerating her,” said Smith’s lawyer, Scott Leemon, who has represented rappers 50 Cent and Jim Jones in previous cases.
A spokesperson for Warner Music says the label has declined to comment on the case, owing to the ongoing trial and criminal investigation.
