July 07, 2000 12:16pm
Cyber porn mogul under siege
Source: ZDNet News
by: Sarah Chase
The 27-year-old Internet porn entrepreneur and founder of Internet Entertainment Group Inc., Seth Warshavsky, whose site has risen to the forefront by posting numerous controversial tapes, is once again in the limelight.
A story in the Washington Post earlier in the week reported that Warshavsky's business associates are being questioned by Federal agencies about possible credit card fraud and income tax evasion at Internet Entertainment Group (IEG). At least four people have been questioned by Assistant U.S. Attorney General Mark Bartlett regarding operations at Internet Entertainment Group, according to the Post. What's more, the FBI and the Internal Revenue Service were said to be involved in some of the interviews.
Warshavsky's former attorney, Eric Blank, told the paper that he was asked "a lot of questions about Seth and IEG operations." Also questioned were a long list of formers. Former IEG chief editor Evan Wright, former chief financial officer Bert Reitsma, and former business partner Peter Steichen have all been interviewed by investigators. Former customer service technician Matthew Fischer has a pending appointment to meet with an IRS investigator.
Warshavsky's team: It's news to me
The usually quotable Warshavsky, has lain low since the report ran earlier in the week. After numerous attempts to contact him went unanswered, ZDNet received a statement from his representatives saying that the U.S. government has not made any contact with IEG about an investigation.
"We cannot comment on something no one has told us about," the statement said.
Warshavsky isn't new to legal woes. Actress Pamela Anderson Lee and her musician husband Tommy Lee, as well as radio personality Laura Schlesinger, have sued him for putting nude photos of them on his site. Schlesinger's suit was dropped, and the Lees settled out of court. In addition, Warshavsky's own employees also have attacked him during earlier legal battles.
In October, affidavits filed by two former IEG managers and a former IEG lawyer in a separate case claimed that Warshavsky had raised cash by charging the credit cards of subscribers to his porn service multiple times.
Fischer said in his October affidavit that he noticed that IEG was wrongly billing members' credit cards by reactivating inactive accounts for no reason. When customers would complain, Fischer was told to explain the cause of the problems as a computer glitch, the Post said.
Several affidavits from current and previous employees confirming the accusations of overcharging were sealed when Warshavsky settled one of the lawsuits. Warshavsky maintains that any overcharges were unintentional and that all customers have since been reimbursed.
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