Jay Z was under the impression that he'd lost some very important masters from 1998-2002-- until he was recently approached by a sound engineer to buy them back.

The recordings-- which are valued between $15-20 million --had been missing since 2002, but it turns out a man named Chauncey Mahan had possession of many of them at his storage facility in Northridge, Ca. 

Mahan, who worked as an engineer on plenty of Roc-A-Fella songs in the late 90s and early 00s, contacted Live Nation with a proposition-- that they buy the masters back for a $100,000 "storage fee", or he would auction them off himself.

Apparently, Mahan was talked down to $75,000 for his proposed storage services, but when he arrived at his facility to make the exchange, the feds were waiting for him.

Hov's team had contacted the LAPD when they felt they were being extorted, and the cops subsequently took Mahan in for questioning. The police force has seized the tapes until ownership is proved in court.

As far as whether the engineer will go down for extortion, it will have to wait until the Beverly Hills PD conduct their investigation, but until then, he's a free man.


[UPDATE: Engineer Responds To Accusations Of Extortion]

Yesterday we reported on audio engineer Chauncey Mahan allegedly attempting to extort Hova for his own master recordings, dating back to the '90s.

Now Chauncey has spoken to TMZ about the whole debacle, and gives his version of events. He says he was not extorting Jay Z, simply holding on to the masters because back in the day Hov was reckless with his intellectual property. He says Jay "was a stupid kid smoking blunts."

The engineer says he's been attempting to get the masters back to Jay Z for over ten years now, however he kept getting blown off. He says he finally asked for money last week when he could no longer afford to store them-- thus the $100,000 was to compensate him for keeping them safe for twelve years.

The master recordings consisted of music from Jay Z's Dynasty and Volume 3 albums, including tracks like "Big Pimpin."

We'll keep you informed as this story continues to unfold.