July 09, 2001 12:00 PM

More than 20 years have passed since the airwaves reverberated with Irene Cara’s first hit song, “Fame,” the title track to the 1980 blockbuster movie in which she also played feisty star-in-training Coco Hernandez. But people still remember her name. While recording at an Orlando studio last May, Cara, now 42, was spotted by an agent. “Is that Irene Cara?” he whispered to his young client. “She was huge…huge”

Indeed, Cara’s soulful voice carried two of the 1980s’ most memorable summer anthems—”Fame” and “Flashdance…What a Feeling”—winning her an Oscar, two Grammys, a Golden Globe and pop-icon status. But then she fled the spotlight, mired in an eight-year legal battle against her former record company and disenchanted by the experience. Now she’s back behind the mike with new material and a new band, Caramel. Producing and financing the first album (which she will soon shop around to labels) for the six-member pop girl group she formed in late 1999 “is a risk,” Cara admits, “but I’m a woman with a mission. I’ve learned to believe in myself, my vision and to do things the way I want them done.” Says coproducer Robert Wawoe: “She always gives 150 percent.”

But not always knowingly—at least when it came to past earnings. In the $10 million breach-of-contract lawsuit she filed in 1985, Cara accused Al Coury Inc. and Network Records of withholding her royalties from the Flashdance soundtrack, as well as her solo albums, 1982’s Anyone Can See and l983’s What a Feelin’. “I’ll never be that trusting again,” she says, “believing accountants and lawyers have my best interests at heart.”

When the case finally went before a California jury in 1993, the singer was awarded $1.5 million. But it proved a Pyrrhic victory. In the intervening years, Cara says, the music industry had “virtually blacklisted [me]. All of a sudden, I was hearing stories about how difficult I was to work with, ridiculous rumors about drugs and what a diva I was.” Though she admits to using cocaine briefly in the early ’80s, “It was blown out of proportion,” she says. “I never had to go to rehab or a program.”

Having sunk much of her savings into court costs, Cara—who appeared in a few forgettable movies, such as D.C. Cab, but recorded only one more album during the ’80s—left Hollywood for San Francisco in 1991. “I worked on me, my spirituality,” says Cara, who had also just split from her husband of five years, stuntman Conrad Palmisano, now 53. “I went through my bitter, angry periods because these people took so much from me.” Says her aunt Rosemary Redding: “She had been through hard times, but she’s a fighter.”

She always has been. Raised in the South Bronx by her mother, Louise, 78, a retired cashier, and father, Gaspar, a Puerto Rican-born sax player and factory worker who died in 1994, Cara began singing and dancing on local Spanish TV at age 7. A year later she won a role in the Broadway musical Maggie Flynn. After a few TV roles (Roots: The Next Generations), getting cast in Fame at 20 “brought me worldwide recognition,” she says.

That kind of stardom may yet come again, but Cara remains wary. She lives quietly with two cats in a three-bedroom house in New Port Richey, Fla. (where she moved in ’98 to be closer to her aunt and mother). What if Caramel does light up the sky like a flame? “I really don’t think about that,” Cara says. “I’m more concerned about coping with life.”

Jennifer Wulff

Marianne Armshaw in Florida

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