Wu-Tang Clan is Sumthing ta Fuck Wit

Cappadonna (far left) and Ghostface Killah (second from left) are said to be the closest Wu-Tang allies of Lord Michael Caruso (second from right). but he also club-hops with musical mastermind RZA (far right).

Earlier this year, when a Wu-Tang Clan promotional van pulled up outside the midtown club Speed, a member of the venue's security staff wondered who the goofy-looking white Negro was in the front passenger seat. As he stepped out of the Ghostface Killah poster-emblazoned vehicle, the gold fronts on his teeth glinting in the half-light, he looked dimly familiar, as well as kind of comical—what with his baggy jeans and exaggerated gait, not to mention the carefully arranged cornrows in his hair. The bouncer experienced a shock of recognition when he realized it was Michael Caruso, a/k/a Lord Michael—at present employed as Wu-Tang Clan rapper Cappadonna's personal manager, but formerly the Ecstasy kingpin—who, after he was arrested three years ago, ratted out club owners Peter Gatien and Chris Paciello to the government in order to save his own skin. Caruso had also supplied false information about the bouncer's friends, who had been charged with distributing drugs, but were later acquitted. The bouncer refused, of course, to let him into the club.

Caruso's exterior has altered dramatically since the days when he ran a violent drug ring at the Limelight disco in the '90s. Gone are the designer clothes and clean-cut looks. "He dresses like a hood rat," says the security guard. "I got the strong impression that he's changed his appearance to protect himself from retaliation. He has to try and blend in with a black crowd because all the Italian kids hate him." From downtown's version of Sammy "the Bull" Gravano to Staten Island's answer to Vanilla Ice in one easy move—and all under the watchful eye of the feds.

Two years ago, as he sat on the witness stand at Limelight owner Peter Gatien's drug-conspiracy trial bawling his eyes out in a badly fitting blue suit, Michael Caruso's life seemed effectively over. The big-time promoter—the man who first brought techno music to Manhattan and turned Staten Island on to Ecstasy—confessed to a string of brutal crimes: bank robbery, home invasions, extortion schemes, kidnapping attempts, wholesale drug trafficking, and more. These should have put him behind bars for 20 years. But in exchange for leniency, he became the centerpiece of the government's case against Gatien, betraying a man who he'd told associates was closer to him than his own father. Caruso's testimony about the inner workings of the Limelight's drug network, which he himself created, not only provided a glimpse of the seamy underbelly of club culture—the violent demimonde of dope peddlers, gangsters, professional party-goers, and police informers hidden behind the superficial veil of fun and fabulousness—but helped put behind bars many of his former colleagues.

But even though the jury ultimately didn't believe him, and eventually acquitted the probe's primary target, Gatien, the feds nonetheless used Caruso in another high-profile case. He is now a cooperating witness against his former business partner Chris Paciello. The information he supplied about Paciello's alleged mob ties played a major role in bringing about the Miami club king's current legal troubles. Caruso is expected to testify against his onetime pal at an upcoming September trial.

Insiders had predicted that, by now, Caruso would be dead, in prison, or a permanent guest of the witness protection program. In the immediate wake of the Gatien trial, he told friends he expected to do five years in the slammer, but his sentencing date has been repeatedly postponed (most recently to June 30), and now he expects to get parole. He's yet to serve a single day in federal lockup, and he's experienced an amazing turnaround of fortune—as a manager for the world-famous hip-hop collective the Wu-Tang Clan.

Other than changing his appearance, he's made little effort to keep a low profile. He's frequently seen in public, club-hopping with Method Man, RZA, and Ol' Dirty Bastard, though the Clan members he's said to be closest to are Cappadonna and Ghostface Killah. (He also manages the rap group Authorize FAM, featuring Caruso's and Cappadonna's respective brothers.) He says he's not scared of reprisals from people he's informed on because the belligerent rap group—formed in the projects of Staten Island—is watching his back. The man who used to be so scared of reprisals from drug dealers he'd robbed that he hired around-the-clock bodyguards now has his own personal hip-hop Praetorian Guard.

Caruso just returned from a 25-date national tour with Wu members, even though his government cooperation agreement expressly forbids him from leaving New York or associating with people who have criminal records—which pretty much covers most everybody in the Wu-Tang Clan.

In what may or may not turn out to be an amazing coincidence, the Wu are reportedly at the same time the subject of a federal gunrunning probe, sparked by two murders of Wu-Tang associates involving weapons purchased near the Clan's compound in Steubenville, Ohio.