Seth Warshavsky says the legal travails which have hit his Internet Entertainment Group this fall spring from envy, but a prominent e-zine says the presumed kingpins of Internet porn aren't quite the gold spinners their image suggests to many observers.
"I'm a young guy, I'm a successful guy, and people want to take potshots," Warshavsky tells Salon, referring to a lawsuit accusing Warshavsky of overcharging credit accounts and other accusations of less-than-savory working conditions in some of his company or company-owned entertainment facilities.
Warshavsky tells the e-zine IEG's online revenues are "substantially higher" than the figures quoted in affidavits in the lawsuit, not to mention denying overcharging, though he accounts for "only two incidents of improper charges." And he admits they involved "several thousand" customers, Salon says but those were reversed.
One of the incidents involved VoyeurDorm, for which IEG handled some billing though it neither managed nor owned the controversial live adult site. VoyeurDorm has been the subject of a zoning battle in Tampa, where the dormitory is based, as city fathers try to squeeze it out of its incumbent location while VoyeurDorm argues no one in the neighbourhood even knows it's a business, never mind an adult business, just to see the house.
But Salon quotes a former IEG customer service supervisor, Matt Fischer, who gave an affidavit in the suit and tells the e-zine that, from January 1998 to August 1999, there were up to seven occasions when customer service calls leaped from a 300-per-day average to 900. And another former customer service worker, Megan Riley, tells the e-zine there was a flood of complaints about VoyeurDorm but the problems weren't just involving that site.
Warshavsky, though, seemed almost flippant about those stories, telling Salon they amount to "$7 an hour telephone operators who don't understand the billing systems" - and never mind that IEG operators earned closer to $10 an hour. "It's like talking to the pizza delivery person at Domino's," Warshavsky told the e-zine.
Warshavsky claims any revenue spikes sprung from batch credit card processing, Salon says, but Fischer tells the e-zine - as he said in his affidavit - that the majority of the calls when customer service calls jumped had been re-activated and billed again.
But Salon suggests that perhaps the real story may be that of a purported e-porn giant which wasn't quite as tall as its image and reputation suggested. For one thing, the e-zine says, Warshavsky offered it company documents he says would back up his account of IEG revenues - but only under an agreement giving IEG virtual veto power over how the information was used, terms Salon rejected.
IEG's recent troubles most likely means any prospects of the firm going public - as had been planned, as late as last summer - is what Salon calls "a distant memory."
"It might be just as well," writes Salon's Mark Gimien. "Perhaps Warshavsky's porn empire has received as much publicity as it has because there is something irresistible about the prospect of profiting from other people's sin. It comes as something of a refreshing shock to find that what goes on at our neighbors' computers is not as bad as we assume it must be."
Three former IEG associates were sued by the company - former chief operating officer Bert Reitsma, editor Evan Wright, and counsel Eric Blank. But Salon says they've "secured a pile of affidavits from former employees" accusing the company of creating revenue by overcharging those who gave IEG credit card access for Clublove, the company's flagship porn site.
Former chief finanicial officer Ron Chao has sworn in an affidavit he refused to over- or double-bill IEG customers. And Reitsma has previously told the Washington Post that IEG revenues while he was chief operating officer weren't exactly what they were cracked up to be - he estimated $700,000-900,000 per month.
The IEG suit against the three has since been settled, Salon says. But the suit's timing probably hurt the company's financial image deeper than anyone might have suspected at the time - Warshavsky had already hit the press running, announcing his plans to bring IEG public. IEG never filed for an initial public offering, though, making it difficult to check Warshavsky's revenue claims, Salon says, causing many observers to just take his word for it that the company was rolling in it.
"It certainly sounded plausible," Gimien writes. "If we assume that there are millions of porn consumers staring lustily at their glowing monitors, why not also a gaggle of porn millionaires making a living off them?"
But IEG has another potential problem to deal with: the Washington State labor authorities may yet probe working conditions at Clublove's host facility, in the wake of several Clublove workers and performers complaining formally, earlier this fall, about unsanitary facilities and supplies.
