MindGeek executives and owners – along with Visa and hedge fund Colbeck Capital – face lawsuit in the United States

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Thirty-four women who claim to be victims of Pornhub have filed a federal racketeering complaint against the company’s secret Canadian parent company, MindGeek; its owners and managers; Visa, which processes payments for the porn site; and hedge fund Colbeck Capital, which has taken out debt financing for the company.

“MindGeek is a classic criminal enterprise, according to those who know it best, ‘just like the Sopranos’,” according to the complaint, written by Mike Bowe, a partner at Brown Rudnick, who represents the plaintiffs in the case.

MindGeek is an online pornography company, but according to the complaint, “is also one of the largest human trafficking companies in the world. And it’s probably the largest illegal repository of child pornography in North America. “

The 179-page complaint, which contains details of women claiming to have been victimized by the porn site, was filed in U.S. District Court for the Central District of California on Thursday.

“The MindGeek defendants have gotten rich,” says the complaint. “The major US credit companies and banks, including in particular here the defendant Visa, who was uniquely placed to end this exploitation but instead chose to participate in profitability. “

In a statement sent by email to Institutional investor, a Pornhub spokesperson named Ian said: “Pornhub is currently reviewing and investigating the complaint filed today in California. Pornhub has zero tolerance for illegal content and is investigating any complaints or allegations made about the content on our platforms. He added that “the allegations in today’s complaint that Pornhub is a criminal enterprise that deals with women and is run as ‘The Sopranos’ are utterly absurd, utterly reckless and categorically false.” .

The complaint included Visa as a participant in the program as it designed and facilitated “credit card and financial transactions to siphon off illicit profits and avoid red flags from credit cards,” according to the documents.

II previously reported on the role of credit card companies in the Pornhub business and the lengthy efforts of anti-trafficking activists to convince them to sever ties with the porn empire. As detailed in this story, their efforts went unheeded until an explosive exposition by Pornhub in the New York Times in December, which was followed by an inducement from hedge fund manager Bill Ackman, CEO of Pershing Square Capital Management.

MindGeek Boss and “Over-Bosses”

Bowe, Brown Rudnick’s litigation veteran, alleges that the “bosses” of the criminal enterprise are MindGeek CEO Feras Antoon and financier Bernd Bergmair, who II also previously reported as the majority owners of the company.

Antoon and Bergmair represent “a group of ultra-wealthy owners of the business,” according to the complaint, which calls them the “super-bosses” of the business who are “unknown to the public and even to Antoon because they don’t want to. not to be publicly associated, or even to risk being publicly associated, with the criminal enterprise that they finance and from which they profit, ”adds the complaint.

The complaint also alleges that the MindGeek company “was made up of a network of fictitious entities around the world, the vast majority of which only existed as vehicles through which to carry out corporate rackets and scams and evade criminal acts. taxes “.

“These fictitious entities were directed and controlled by executives of MindGeek, including defendants Bernd Bergmair, Feras Antoon and Corey Urman, who were in turn controlled and directed by the financiers of MindGeek, including defendant Bergmair,” alleges- he does.

A $ 350 million loan from Colbeck Capital was key

The complaint offers a historical account of the funding that has allowed MindGeek to survive and thrive.

“Since its inception, the Enterprise now known as MindGeek has been inundated with crime,” according to the complaint. He said the company was under investigation for money laundering in the 2000s and that “in 2009, the Secret Service seized $ 6.4 million from the company’s bank accounts and those of its then nominal owners “.

“To get out of this public scandal,” according to the complaint, the company was sold to Fabian Thylman, a German national, “who was funded by unknown investors from Eastern Europe”. The “syndicate” has raised more than $ 350 million to buy the company with secured debt financing “through investment banking firm Colbeck Capital, run by two former Goldman Sachs investment bankers.” .

Colbeck Capital did not respond to emails and phone messages.

“The loan was secured by all of MindGeek’s assets, including its intellectual property, and offered substantial control over the management and operations of the business.” It also had an interest rate of 24%, “reflecting the reluctance of dominant legitimate capital to invest in the business due to the myriad red flags of illegality,” the complaint alleges.

In 2012, owner Thylman was arrested for tax evasion and the owners and management of the company “rushed to apparently ‘clean up’ the business, cover his tracks and pretend a new regime was taking over.” indicates the complaint.

“However, the onerous terms of the existing loan, as well as the Bro-Club’s embezzlement of all money not used to pay the loan, left MindGeek with no option to buy Thylman, repay the loan, and make a transition. which would be publicly credible, ”adds the complaint.

It was then, according to the complaint, that Bergmair became a majority shareholder, thanks to a convoluted ownership structure that restructured Colbeck’s debt.

“Like Colbeck Capital executives before him, Bergmair was a former Goldman Sachs investment banker who set out to provide niche financing to legally dubious firms that Goldman Sachs and similar Wall Street firms would not fund,” alleges the complaint.

As II had previously reported, Bergmair’s identity had long been a secret. The complaint alleges that he “took extreme measures to conceal not only his identity, but its very existence” because “he and his investors were fully aware of the legally dubious nature of the business they owned and ran, and some of these investors were themselves subject to international legal scrutiny or associated with those who were. Investors were so uncomfortable being associated with this company that they were enraged at it. ‘idea that even their financier is known. “

Complaint alleges Visa profited from traffic

Visa is named as a defendant in the racketeering scheme because, according to the complaint, she took advantage of the trafficking business.

“Financial institutions processing transactions on which this company monetizes content are uniquely positioned to prevent the MindGeek business from trafficking. Topping the list were the major US credit card companies Visa and Mastercard, ”says the complaint.

The role of credit card companies has become evident with the New York Times‘presentation, which led to Ackman’s involvement.

“But this presentation was not a bomb for Visa and Mastercard”, alleges the complaint. “For more than a decade they were well aware of the facts that New York Times exposed and instead of insisting that MindGeek only market legal consensual content and comply with US laws in this regard, they instead chose to facilitate and profit from MindGeek’s traffic business.

Mastercard has stopped all processing with Pornhub. But Visa didn’t. “Even today, Visa continues to process payments for MindGeek paid sites which are themselves heavily trafficked and which are promoted, marketed and supported by traffic firm MindGeek,” according to the complaint.

The complaint exposes the role of financial institutions, saying they were aware of actual cases of trafficking and pornography through their own compliance efforts. “Indeed, since its inception, it was enough to visit MindGeek’s tube sites to observe tens of thousands of videos (with the help of the search and video algorithm suggested by MindGeek) representing clearly minor subjects, under duress, incapacitated, raped, or covertly exploited. One would also easily observe tens of thousands of additional videos depicting the same content where there was no way to determine whether the content was a consensual representation of a non-consensual or non-consensual event.

These institutions “were particularly capable and best placed to understand this,” he continues. “And they understood that. They simply chose to do business with MindGeek and still profit from their traffic business. “

Finally, last December, Mastercard determined, through its own investigation, that Pornhub was acting illegally. But Visa didn’t go that far, simply acknowledging “allegations of illegal activity,” according to the complaint. “Visa’s investigation revealed the same and more, but it refused to also publicly acknowledge this fact because it wanted to continue doing business with and profiting from MindGeek’s trafficking business. And that’s what he did.

Visa did not respond to a request for comment. But he previously offered this statement:

“Visa’s suspension of acceptance privileges for Pornhub and other MindGeek content-sharing platforms that host user-generated content remains in effect pending the completion of our ongoing investigation. Visa is committed to processing all transactions that are legal. As a global platform, maintaining a neutral position under the law is vital for the free flow of commerce.

In his statement to II, Pornhub added, “We stand in solidarity with all victims of internet abuse. Pornhub takes every complaint about abuse of its platform seriously, including those of the complainants in this matter. The point is, Pornhub has put in place the most comprehensive guarantees in the history of the user-generated platform, which include banning downloads from unverified users, extending our moderation processes, and cooperation with dozens of non-profit organizations around the world. We don’t intend to let the racist undertones and hyperbolic language of the trial distract attention from the fact that Pornhub has a safety and security policy in place that surpasses that of any other major platform on the internet. .


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