By TOM HAYS Associated Press Posted January 7 2003, 4:48 PM EST

NEW YORK -- An investigation of alleged ties between a rap music label and the city's violent drug trade has resulted in the arrests of two men for credit card fraud, authorities said Tuesday.

The arrests came during raids last week at Murder Inc. records, at a sham business linked to a 1999 murder, and at other locations in the city, according to court documents and interviews.

Murder Inc. is a successful hip-hop label, home to multiplatinum artists Ashanti and Ja Rule, who were nominated for Grammys on Tuesday. Investigators are looking into whether the label's founder, Irv Gotti, had financial ties to a convicted drug gang leader.

So far, federal prosecutors in Brooklyn, who are leading the investigation, have declined to discuss it publicly. But law enforcement sources said more arrests on money laundering and other charges were expected.

A team of FBI agents and NYPD detectives has been assembled to ``see if there's dirty money in the record business,'' said one of the sources. All spoke to The Associated Press on condition of anonymity.

In last week's raids, investigators arrested Jon Ragin and Derek Hayes on federal fraud charges. Court papers accused them of using a phony tuxedo rental business as a front for laundering proceeds from stolen credit cards.

Prosecutors allege several luxury cars registered to the business have been linked to burglaries and other crimes. In December 1999, for instance, ``an individual was surveilled and videotaped dropping the body of a homicide victim, Colbert Johnson, aka 'Black Just,' at a hospital in an SUV registered to Tuxedo Rentals,'' the court papers said.

A lawyer for Ragin declined comment. A call to Hayes' attorney was not immediately returned.

-- Anonymous, January 08, 2003