Here’s why NY now shares a business with Jay-Z after auction of Damon Dash’s shares in Roc-A-Fella Records

New York is technically in business with Jay-Z — at least for a while — after the state government bought a third of his legendary Roc-A-Fella Records at a federal auction last week.

The state became a bizarre part of hip-hop history because the label’s embattled co-founder, Damon Dash, owes New York $8.7 million in back taxes that the Empire State would like to recoup.

But that’s not why Dash, 53, was forced to go to auction — it was actually an $823,000 judgment from a movie producer’s lawsuit that led to the court-ordered sale, according to Billboard.com.

Damon Dash on the Upper East Side in September. GC Images

Dash’s financial fortunes have soured mightily since the good old days when he opened Roc-A-Fella with Jay and Kareem “Biggs” Burke in 1996.

So when the judgment came down, the man who’s said he’s “proud broke” apparently had nothing left to give. As a result, the court demanded the US Marshals Service auction off Dash’s 33.3% stake in Roc-A-Fella Inc., whose main asset is the rights to Jay-Z’s classic debut album, “Reasonable Doubt.”

It’s been a shocking fall for Dash, who hip-hop historian AJ Woodson said was once the ground commander of Jay-Z’s burgeoning empire.

“If Jay-Z was the artist — and possibly the CEO — Dame Dash was the one who did the day-to-day stuff,’ Woodson, who authored the 2023 book “We Got Our Own Thang: A Look at Hip-Hop from the 914,” told The Post on Wednesday.

Dash and Jay-Z formed Roc-A-Fella with Kareem “Biggs” Burke back in 1996 and released Jay’s debut album. Getty Images
Former partner Jay-Z at Roc-A-Fella’s New York City offices in June 1995. Getty Images

Woodson recalled first meeting Dash when he was writing about another hip-hop group back in the day — at the time, Dash was Jay’s biggest hype man.

“There was this guy, with this big mouth, basically like, ‘Oh we got the best rapper in the game! He’s about to take over the game, we’re gonna take over fashion, we’re gonna’ do all of this.’

“I kind of wrote him off,” Woodson said. “You hear this every day — everybody’s the greatest.”

Years later, Woodson admitted to Dash that even though he didn’t believe his brash proclamations at the time, the trio did everything they said they would — and more.

Kanye West, Damon Dash and Twista during Twista Performs At S.O.B.s in 2004. WireImage

But as Jay-Z catapulted into superstardom’s rarefied air, Dash got left behind. And it’s only gotten worse over the years as he became embroiled in bitter lawsuits and besieged by child support payments that led to his 2019 arrest for failing to pay more than $400,000 to two different women with whom he shared children.

New York is still demanding more than $145,000 in unpaid child support from the fallen mogul, and will likely be paid from the bid money, Billboard said.

Dash’s latest spate of financial woes stem from the movie lawsuit, which producer Josh Webber brought after Dash was canned from a film called “Dear Frank,” the outlet said.

In the suit, Webber and Muddy Water Pictures claimed Dash, a Harlem native, was trying to dupe the public into thinking he had ties to the movie even after he’d been dropped from it, TMZ reported in 2019.

“Dear Frank,” the movie that Dash claimed he was a part of even after he was canned from the production team. IMDB

Dash had been part of the production three years earlier, and was supposed to direct the film. But TMZ said he wasn’t up to the task, and was allegedly “often high” on set when they shot on his Sherman Oaks property.

Webber and the production company dropped Dash in 2018 and made the film without him.

But when the exiled director tried to say he’d been part of the work, Webber sued — and his courtroom victory led to the auction, which the feds originally scheduled for Aug. 29.

Movie producer Joshua Webber, who sued Dash for defamation and copyright infringement — and won a massive settlement. Getty Images for Muddy Waters Pictures/Webber Films

Billboard said the minimum bid for Dash’s stake was $1.2 million.

“I’ve gotten a lot of calls, a lot of offers,” Dash said in a summer Instagram post. “We’ll see who shows up. But I definitely got some very healthy offers, and I appreciate those.

“So if you do want to buy one-third of Roc-A-Fella Inc., you are gonna’ have to bring some bread,” he continued, adding that if the winning bidder paid more than $10 million, they’d get “an original Roc-A-Fella chain from off my neck.”

But then Jay-Z intervened, delaying the auction and claiming future ownership of “Reasonable Doubt,” which he said will contractually become his and his alone in 2031.

That means the winning bidder would only own a piece of the album for six years.

Lawyers for New York tried to dispute his claim, but a judge granted the rapper’s request, Jay’s reps said.

On top of that, Roc-A-Fella’s deep catalog of hits is owned by others and wasn’t part of the sale, Billboard said.

Damon Dash leaving Bronx Family Court after getting arrested for unpaid child support in 2019. James Messerschmidt

So in the end, last week’s auction didn’t net nearly as much cash as Dash thought it would.

An anonymous Albany rep entered the winning $1 million creditors bid, which means the state doesn’t have to front the money and can now resell its stake at no risk.

“Mr. Dash’s legacy is now New York state property,” Webber’s attorney, Chris Brown, said after the sale.

State officials reportedly plan to flip the shares to shrink Dash’s tax debt.

The whole ordeal has served as a capstone to Dash’s fall from grace. But if you ask him, he went broke because he followed his dreams.

“Somebody asked me how I got so broke: Investing in my dreams,” Dash said in an Instagram video.

“You know, when you’re investing in your dreams and you dream big, you’re always gonna be broke,” he continued.

“You’ll have a lot of s–t. But I don’t have no money for nobody else. That’s what you call broke. But that’s what it is.”