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July 05, 2000 11:16pm
Report: Web Pornographer Targeted
Source: AP

(SEATTLE, WA) -- Internet pornographer Seth Warshavsky, whose Internet Entertainment Group Inc. is one of the leading online porn companies, is under investigation by the federal government, according to a published report.

The Washington Post reported in Thursday's editions that Warshavsky and his company are being investigated for possible credit card fraud and income tax evasion.

IEG faxed a statement Thursday saying it has not had any contact from the government.

The allegations stem from affidavits filed in connection with a lawsuit against Warshavsky, which claimed that IEG was overcharging its customers' credit cards. Warshavsky settled the lawsuit, and said the overcharged customers were reimbursed.

He then sued two former company managers and a former company attorney, who also claimed that Warshavsky misstated IEG's revenues and financial health.

According to the Post, a federal grand jury here issued a subpoena for the lawsuit's case file, which had been sealed. The Post said that Assistant U.S. Attorney Mark Bartlett has interviewed at least four potential witnesses in the last several weeks.

Federal investigators told those interviewed that they were investigating whether Warshavsky laundered money through overseas accounts to evade income taxes.

The cybersex entrepreneur told the Post that he was confident there were no tax violations. He added that he's hired a new chief accountant and is concentrating on putting his financial affairs in order.

Warshavsky, who runs one of the Internet's most profitable companies, has always been a controversial figure. He made headlines last year by publishing nude photos of talk show host Laura Schlessinger. The radio host sued IEG, but lost.

IEG settled out of court with television star Pamela Anderson Lee after the company acquired and distributed a video of the actress and her husband, drummer Tommy Lee, having sex.

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