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Bob Johnson Takes Over Private US
2003-05-19 15:23:39
AVN.com fluffs Johnson and Private USA:
Besides video production, highlights of Johnson's 15 year career in adult
include a stint as VP of Editorial at Crescent Publishing, which publishes
High Society, Cheri and Playgirl, among others, and establishing the Web
operations of Vivid Entertainment.
"Basically, I'm a triple-threat. Print, Web and video. That fits very
well with Private North America," Johnson said.
[A few months later, Johnson was fired
and he went to work for Playboy.com.]
...............................
From the archives of l-keford.com for January 19, 2001, an interview with
someone who worked for Bob Johnson:
XXX says: Bob Johnson, from Brooklyn, is now a project manager for Vivid's
internet operation. He's an interesting story. He's a Satan worshipping
former editorial director for High Society aka Crescent. He's a Hallmark
Satanist. He would quake in his boots if he ever ran across an honest
to God Satanist. But he had all the Satanic accoutremont at his office.
It made people wonder if there wasn't something to worshipping Satan because
the guy did absolutely nothing. He never lifted a finger. He did no work.
People who worked for him would actually write on the galleys that people
would send round, and everybody would sign off on it, that "Bob Johnson
is a scum bag and he will never read this." And he would just sign off
on it. A very lazy guy.
He moved from the editorial director's position to the head of the internet
(1998) when they first broke the internet off and made it a separate entity
on a separate floor. He is credited within the company, by most employees,
of thinking up the scheme of the free tour. Getting people's credit card
numbers to supposedly verify age. Promise the surfers the tour was free
and they would not get charged. Then charge them up the yazoo.
Bob Johnson, his real name, possibly implemented a similar scam at Vivid
in April - June 1999.
He's an avowed worshipper of Satan, but only in the most superficial way.
Almost as if someone said, 'I'm going to be a punkrocker.' And they get
their hair cut, and they get the jacket, and the boots and they go to
the concert. But next week they could be Britpop fans.
Every Halloween was his High Holiday [Rosh Hashannah, Yom Kippur]. He
would decorate his office and give out free donuts.
His big coup was when he interviewed Satanist Anton LaVey. That was the
one piece of work that anybody could attribute to him. He got on a plane
because he wanted to meet his hero Anton LaVey. A two part interview that
appeared in High Society and the numbers on those issues tanked. They
put an inset of LaVey's face on the cover and they sold about half the
normal amount of newsstand copies. And not only did those two issues tank,
but they affected the numbers for the next half dozen issues that came
out.
Anton LaVey wrote "The Satanic Bible" which to this day rakes in tons
of money. He had an affair with Jayne Mansfield. He had the affair with
her and supposedly put a curse on her that resulted in her deadly car
accident. He litigated to have Satanism recognized as a religion that
deserves the same constitutional protection as other religions. He's based
in San Francisco and heads the American Satanic Church. He's the self
proclaimed pope of Satanism in North America. He's well traveled along
the fringes of Hollywood celebrity.
Bob Johnson was editorial director at Crescent from 1984 to 1998, when
he moved to the internet.
I had Vivid sources swear to me, Luke, that Bob Johnson had nothing to
do with Crescent's internet operation when in fact he was the evil mastermind
behind the ripoff.
XXX says: "Johnson's such a natural fit for devising the free tours scheme.
Every time there was a questionable photograph of topless celebrity taken
by paparrazi that may or may not have been ripped out of a European magazine,
any time there was questionable material, do we have rights to the picture?
His standard operating procedure was, 'Just run it.' He was a known photo
thief.
"What's he good at? He's good at developing relationships with people
like Bruce Chew and Carmine Bellucci, to be well liked..."
There were layoffs at Crescent a year ago. But six months prior, many
people in the internet division were shifted around. They were sitting
in offices not doing much of anything. Then after the FTC story broke,
they got scared. And they started saying, 'We don't know what happened.
We had people working for us that we let go... They must've gone too far.'
Bruce Chew's concept meetings would get interrupted and Bernstein, the
CFO, would say, 'We're having problems with VISA. They found another one.'
And Chew would respond, 'f-ck 'em. We'll go to Guatemala. And if they
find us down there, we'll move someplace else.' There's enough anecdotal
information like that to put the smoking gun in Bruce Chew's hands. He
knew exactly what he was doing. He was willfully avoiding VISA. American
Express cut them loose early on.
Luke: So what is Bob Johnson good at? What's his talent? How does he run
these things?
XXX says: "That's the joke. It's a real mystery to anyone who's worked
with him on a daily basis. Maybe there really is something to worshipping
Satan because look how far this guy's gotten with no talent, no skills
and no work ethic."
Luke: "And no morals either."
XXX: "Maybe that is what he's good at. Cutting corners and screwing people
over. Maybe that was recognized by his superiors there. He only had two
- Carmine Bellucci and Bruce Chew (real name). Maybe his underhandedness
was something they recognized."
Luke: "I hear that Bellucci and Chew are ruthless people."
XXX: "Extremely. Carmine fired somebody for breaking his chair. This guy
was a little overweight and he broke Carmine's chair. That was it. He
was fired the next day. Bruce Chew was famous for threatening people with
strangulation in concept meetings. There were the terms, 'I really got
Brucified,' or 'I really got chewed out this time.'"
Luke: "Bob Johnson's been at Vivid almost two years."
XXX: "When we heard about that, everybody was saying, my god. They probably
just want to keep him for six months, find out everything he knows and
then cut him loose. Vivid, that's top of the heap. It doesn't get any
better than that."
Luke: "They were running that free tour scam in May of 1999."
XXX: "They're not still doing it, are they?"
Luke: "No."
XXX: "Even after the FTC story broke, Crescent was still doing it."
The numbers for Crescents magazines, like High Society, are in the toilet.
They made a conscious decision a year ago to go more hardcore and introduce
pissing, penetration and transvestites, thinking it would bring the numbers
up.
In 1995, Crescent published about 300,000 copies of High Society, of which
about 40% sold on the newsstand. They're run has been reduced to 86,000.
A lot of the copies would wind up getting destroyed. They did big print
runs to impress their advertisers etc.
Their distributor was Cable who had a liberal return policy.
The big hit was when they got taken off the military bases.
If you look at their magazines now, it is poor. There are no serious articles.
The design is cheap.
Cheri's always been the little sister to High Society. But now their numbers
are better.
.............................
Born in October, 1941, secretive secular Jew Carl Ruderman owns a huge
porn empire that stretches from the internet, to magazines like High Society
to phone sex.
A prolific womanizer, he once dated actress Victoria Principle.
Ruderman, the November 1983 Hustler "Asshole of the Month," maintains
posh residences in Florida and New York.
In 1976, the publisher of High Society and other sex magazines, New Yorker
Carl Ruderman, wanted "a twist on an old theme," says Gloria Leonard.
"He wanted a female publisher of a mens magazine. I was chosen because
I had a strong background in PR and journalism. We [porn folks] also have
other lives besides porn. I worked on Wall Street for many years. No one
ever asks me my advice on the market. When the word 'porn' comes up, it's
as though that's all you have ever done or will do…and I resent that.
One of the reasons that I can successfully call myself a survivor is that
I did not let the adult business be the be-all and end-all of my life.
I still go to the theater, I still listen to jazz… I have friends who
work outside the industry. It is part of my life, it is not all of my
life. I'm sure that you [L-ke F-rd] and others would like to think that…
We are compelled to live a certain lifestyle 24 hours a day to fulfill
a certain fantasy."
Phone sex took off in 1983, with Gloria Leonard and High Society magazine
leading the way. "We tried to figure out how to make some money off our
phone lines. At first we simply used them to announce the contents of
our coming issue. Then we wrote sexy scenarios [jerk-off routines] which
the centerfolds recorded." On special days, like Christmas or Valentine's
Day, Gloria recorded her own masturbatory fantasies.
Although Carl Ruderman is widely known in smut circles as 'The Father
of Phone Sex', in point of fact he pilfered the idea from the true originator
of dial-a-porn, editor Jeff Goodman, whom Ruderman fired when the idea
took off.
Goodman writes Luke 7/3/01: I actually got the idea of paid phone sex
when I worked for David Zentner as an editor. He used to spend long hours
on the phone having masturbatory conversations with women he would meet
through his publications. I always wondered that if David loved to do
this so much, so would millions of guys.
We first set up phone sex with 2 ordinary answering machines in the High
Society office when I went to work there. Ruderman claimed no one would
call, I insisted they would. We put a number on a centerfold in one issue
saying you could "hear the girl"...the answering machines BURNED OUT before
the issue hit the stands from guys working at the presses calling and
telling their friend. Then we bought 9 commericial heavy duty machines
and they ran off the hook 24 hours a day with more phone lines being put
in weekly. Still no revenue from it though.
Pretty soon the phone company was calling...."What are you doing there?
Our Manhattan switches can't handle the call levels....millions of calls!"
I negotiated a way to get paid a few cents per 976 call. Everyone at phone
company said they could not pay us, impossible, never done before, but
finally met with someone with a brain who realized the potential and a
way to set it up. Ruderman had his first million dollar check copied and
framed on his office wall at Drake Publications.
There is a video tape, made to document the company at the time around
1982, which actually shows me explaining, inventing, and setting up the
first phone sex lines...a dubious honor. "Jeff, I'll take care of you",
was Ruderman's speech to me. I was 22, dumb, believed him. He went on
to make many tens of millions, I indeed got the dump when it took off,
never got a cent. I was a stupid kid, should have signed a binding contract
with royalties. Many, many more interesting facts if you are interested.
I was in porn business for many years as editor, packager, publisher with
virtually every player. Now am in other business. I have a new idea which
will be many times bigger than phone sex, am looking for venture capital...it
will be expensive, but, if I must say so myself, will be the biggest thing
since sliced bread (another fav phrase of Carl Ruderman).
10/26/99
Deep Throat tells Luke: Well it seems you have a relationship with Serge
Birbair already. The guy is brilliant, a story unto himself. He's made
millions of dollars by working the adult webmaster chatboards through
charm, intellect and bully boy tactics. I think he's a thief in that he
herds up cattle (innocent web surfers) and hands them over to be slaughtered
by the company he provides clicks for. Maybe you don't think this is illegal
or a scam but I don't have any doubts that one day the rumors will come
true and Multimedia Forum the company Serge works for will be charged
by the FTC.
Serge claims he doesn't give a sh-t because he is only an advertiser for
the compay. I'm no lawyer but I think his role is more, legally anyways,
and he has known all along about the fraudulent way his bosses do business.
Here's how Multimedia Forum does business and remember that of all the
major players in the online sex industry they are the ONLY one who does
business this way. Why? Because all the others know they could lose their
businesses running the same scam bullsh-t.
Serge refers to his boss as Yishai [Habari], Israeli? Anyways they publish
the glossy girly mags High Society and Celebrity Skin amongst others [publisher
Carl Ruderman, a king of phone sex and possibly credit card churning].
Here's how they work their scamming Luke. Serge provides them with 1 million,
give or take, fresh victims a day. check out http://www.pcdataonline.com
, they are the Nielson ratings of the online world, SergesLinks the site
that Serge redirects his traffic from ranks usually about 50, right up
there with the big boys of the Net, among adult sites he is 4th now in
terms of traffic.
Usually when a surfer winds up on the doorstep of an adult website, they
are offered a tour, along the tour there is always a join button/link,
often there is some sales shpiel about a FREE TRIAL or a FREE WEEK. The
big credit card companies have mostly put a stop to the free trials, those
sites with their own merchant accounts and with the right processing company
still do them. Ok, when a surfer thinks he'd like to take advantage of
this FREE or 1.95 trial he's taken to a join page, legally at this point
BEFORE a customer enters his credit card info there is a link to the Terms
and Conditions of this business transaction.
The credit card processors usually demand this to protect themselves too.
The terms and conditions usually tell the surfer that he is getting a
free or cheap trial for 3 or 7 days BUT if he doesn't cancel the subscription
before the time period expires the membership will RECUR at 30 bucks a
month until he does cancel. RECURRING BILLING is the lifeblood of the
industry, there are real concerns that the government is going to pressure
the credit card companies to outlaw it.
Half the adult online businesses would fold up if this happened. Responsible
companies like CEN run by Joe Elkind have been warning that companies
like Serge's bosses are going to bring government heat via the FTC, Joe
just posted a warning last week or so on Netpond, of course he xxxx'd
out the site names but everyone knows the ones he's talking about.
Ok, here's what happens when Serge sends you to one of Yitzhai's sites,
say http://www.cun-tv.com ....... the surfer sees it, it looks slick and
he's intrigued by the FREE SEX TOUR graphic, so he clicks on it and he's
whisked away to an html page with a form on it to input his info, at the
top of the form is a shpiel that tells the surfer that he must enter his
credit card information to prove he's of legal age to view the material
BUT that his CREDIT CARD WILL NOT BE BILLED, at the bottom of the page
in BIGGER letters it is repeated. THERE ARE NO TERMS AND CONDITIONS ON
THIS PAGE.
So the surfer at this point sees no harm in entering his cc info he's
so horny to see the naked girlies for free. Once he submits his information
he is taken to a page where they ask him to choose a nickname and password
to enter the site, buried on this page there may be a link to some terms
and conditions BUT it's way too late, the surfer thinks he's getting a
free tour. If the surfer is smart enough and he does find some terms and
conditions he will see that he's about to become a member of the most
expensive website on the Net, they don't quote a per month fee like 99%
of other adult sites do, the sleazballs quote their fees on a per day
basis, i've seen Serge's bosses sites at 1.99/day, not illegal but a definite
attempt to confuse the consumer, nobody else does it.
A month later the surfer opens up his Visa statement and he finds out
that FREE TOUR for which he would NEVER BE BILLED just cost him from between
50 and 80 bucks. I know ....... they got me twice about two and a half
years.
By the way, the sites suck. They are bad for the industry, I can't even
tell you how many people who don't know I am in this business have told
me they were scammed, they are amazed when I tell can tell them the name
of the site they were scammed on. Now it's a fact that 97% of people will
NOT refute a porn purchase, most people don't even know what rights they
have with the credit card companies and most men are embarassed to report
that they were purchasing porn so they write it off as a bad experience.
They also don't join another website because Yitzhai and Serge burned
them :( Hurts the rest of us porn peddlers.
With recurring billing, some of these memberships get rebilled for months
before the customer realizes something's wrong. Here's the scope of how
much money is involved. Serge sends them I million fresh surfers per day,
industry average is 1 in 500 surfers decide to join, with Serges bosses
sites its probably higher because of the FREE tour and the GUARANTEE YOUR
CARD WILL NOT BE BILLED scam, also notice that when you attempt to leave
any of these sites in succession no less than 10 new browser windows will
open with 10 other new sites owned by Yitzhai and High Society. Some people
will bite on one of those sites.
So let's say that 1 out of every 350 people are sucked in by Yitzhai.
That makes 2857 new members of Yitzhai's website everday of the week,
365 days a year. Multiply by that exorbitant 60 buck membership fee that
170,000 dollars a day flowing in, multiply that by 365 days it's over
62 million per year, work in recurrings and its easily over 100 million........and
this has been going on for nearly three f-cking years.
Serge Bribair is a straight shooter with webmasters who send him clicks,
he pays for raw hits at a decent rate because it doesn't matter how 'good'
the quality of the traffic is when the sites he's sending the traffic
on to has such a good scam waiting for it.
Now when Vivid announced that they were entering the online biz in a big
way and were going to offer webmasters 35 dollars per signup they could
send I was pretty excited. I like their stuff, the only porn I watch is
the stuff with Vivid type girls, gorgeous chicks who you can't believe
would be f-cking on video. When I got to there site to check it out I
couldn't believe the web design was EXACTLY done in the same style as
Serge's bosses, the same mousetrap, wording etc........... they have either
used Yitzhai's operation as a blueprint or are in some kind of deal with
him, I haven't been able to find that out.
There is a slight difference in how Vivid Video is running their sites,
probably an attempt to walk the line of legality on advice of their lawyers.
On the page where they ask you to enter your cc info and of course remind
you THAT YOUR CREDIT CARD WILL BE BILLED there is a link to some terms
and conditions. Totally confusing, on one hand they're telling me to go
and enter my cc number and on the same page they're telling me if I go
one step further I owe them 60 bucks. Thats why I sent them two emails
trying to find out as a naive little surfer what the real deal is..........
no response to either letter :) It looks like Vivid is using the same
scam that Yitzhai/highsociety is.
Here's what I know about the cc scam. As "Serge [Berbair] " described,
the "free" tour actually charges you $50. There's now an entire floor
of the Crescent building (201 2nd Ave) devoted to customer service, answering
calls and cancelling accounts. A ton of money comes from first time users.
Crescent (formerly "Drake") owns some 150 web-pages and have already been
fined by the FTC. They are also the publishers of High Society, Playgirl,
Cheri etc. It's the porn half of a publishing company that also puts out
Travel Agent and Unique Homes. You never see or hear from Carl Ruderman,
whose precise relation to the company now is mysterious (although the
assumption is that money goes to him first). The important names in the
day-to-day stuff are Bruce Chew (President), Carmine Bellucci (V.P.) and
Steve Loshiavo (editor of H.S.). Bob Johnson, now at Vivid, was for a
long time at Crescent. I know nothing about genuine criminal activity,
only rumors of mob involvement. The funniest part of the company, I think,
is Playgirl. Since they're homophobic, they have to pretend that the magazine
is really for women, while they really know that it's read by gay men
only. They only allow a female staff to run Playgirl, to keep the illusion
going.
8/23/00
Crooks At Crescent Creamed
Luke: Here's a story I've been following for over a year. Check out my
links to Serge Birbrair and this story here.
From the AP: WASHINGTON (AP) - Owners of scores of adult Web sites have
been charged with billing thousands of Web users for supposedly free services,
and billing other consumers who have never visited the Web sites at all,
the Federal Trade Commission announced Wednesday.
Both the FTC and the New York attorney general's office filed suit in
U.S. District Court seeking to halt the billing practices and have asked
the court to freeze the defendants' assets in order to reimburse consumers.
Crescent Publishing Group, Inc., based in New York City, and its owner,
Bruce Chew, as well as David Bernstein are named as defendants in the
complaint, along with 64 affiliated corporations that operate the adult
Web sites, which include Playboy.com and Highsociety.com.
According to the complaint, the "Free Tours" generated income of $188
million between 1997 and 1999 - $141 million of which was generated in
the first 10 months of 1999 alone. The FTC said the defendants operate
the Web sites and promote them as free, saying that consumers' credit
card numbers are required solely to prove that the visitors are of legal
age to view the material - a common practice on adult Web sites. The sites
say that the credit cards will not be billed, but thousands of customers
were charged monthly membership fees from $20 to $90, the FTC said.
"I never saw any terms or conditions regarding how to become a paying
member of the site," one consumer stated to the commission in the complaint
brief. "During my time on the Web site, I never thought that the free
tour had ended or that my credit card would be billed for visiting the
site."
The complaint says that while consumers enter their credit card information,
they view adult pictures in the margins of the page. Once the consumer
presses a "Continue" button at the bottom of the page, the card is billed,
although no Web page says the tour has ended or that their cards will
be billed. Consumers who tried to dispute the charges were thwarted, according
to the complaint. The defendants used billing names different than the
names of the Web sites, so consumers often had no idea who was billing
them.
In the complaint, the FTC cited one consumer who visited Highsociety.com
and had no idea why he received five subsequent $49.95 withdrawals from
his checking account by companies named Split Back, Romulust, and Arachne.
The corporations, 65 in all, were all owned by Chew and have the same
business address, the FTC said. Also, the consumers had difficulty contacting
the defendants.
Bruce writes Luke: Is there a Vivid video angle to this FTC investigation
of Crescent ??? A guy [Bob Johnson] who used to work at Crescent has been
running Vivids site under similar methods........... wouldn't be surprised
if Vivid was under investigation as well.
Lensman writes on Netpond: The hypocrisy. I don't know of a SINGLE major
freesite/TGP/freehost that wasn't sending traffic to Crescent. The only
thing that matters to webmasters is money. Now that they are gone, it
easily makes Amateur Pages the largest conversion free program on the
web.
Raw Alex writes on Netpond: As for Cresent... well... let's just say that
gravy train is obviously over. Programs that depended on them to buy traffic
are basically going to have problems paying their bills.
Anne Marie writes on Netpond: Interesting article about Crescent. I suppose
they had to have 64 companies to have been able to maintain merchant accounts,
opening new firms and new merchant accounts as the old companies' merchant
accounts were closed. What amazes me is that one guy owned all the companies
and used the same address and raked up 188 million in transactions. Either
the credit card companies don't read applications or use any due diligence
or those penalty fees are proving to be profitable enough to turn a blind
eye.
Mutt: I never 'looked the other way'. Others who didn't publically and
I assume privately, JoeE, MikeAl, Brad Shaw. I gave up discussing Crescent/Yishai/Serge
on the boards long ago. Dirty filthy money all of it. The one thing you
can't call Serge is a hypocrite. He basked in the glory of sending the
sheep to slaughter. Who looks the most ridiculous in this? The self anointed
saviour of online porn, Andy Edmond. I'm sure the politicos he's been
busy dazzling will be thrilled to know that the Jesus of Porn sold millions
of hits and victims to Crescent knowing full well the scam they were running.
Hmm writes: What I would like to know is how did Crescent manage to get
away with it for so long without being shut down? If I did what they did
I would have enormous chargebacks, I would loose my merchant account,
and I would probably not be able to get another merchant account. It makes
me think that people in high places at banks or Visa were in on the deal,
maybe getting big pay for approving new merchant accounts.
Justice writes on Netpond: Ok, it is time for Serge Birbrair to go down!
We've all seen him brag his childish f-cking mouth a thousand times about
how he got rich as a part of the Crescent/Yishai scam. Always bragging
about making $30 million last year from the scam etc etc. Well, I will
tell you all this right now. If just 1 or 2 of you takes the initiative
and talks with the FTC, within a matter of DAYS all of Serge's assets
will be frozen and taken by the GOV'T most likely. Goto this FTC article,
and use the contact info at the bottom: http://www.ftc.gov/opa/2000/08/crescent.htm
Make certain the FTC knows about Serge being so proud of making $30 million
off this scam last year alone. Believe me, I have assisted in busting
scams before, and one or two helpful people calling the right person can
quickly bring these scum to justice. These people are destroying our business,
and we must put a stop to it. Brad, this is your chance to destroy Serge
once and for all. For all our sake, pick up the phone and help. In no
time, we can all be here laughing about them taking Serge's cars and houses
and every penny he has, which is justice!!!
Luke says: An FTC source says they know about Serge and Yishai Habari
but did not charge them with any crimes because he solely functioned as
a click broker, and not as an operator of the Crescent scams.
1/19/01
Crescent Publishing Lays Off Third Of Workforce
XXX writes: "Crescent just laid off 1/3 of their workforce today in a
Black Friday situation. Supposedly the move was necessitated by the price
of lawyers to keep company president Bruce Chew of jail."
The layoff mights mean action in the FTC case against Crescent soon.
The Crescent Publishing employees know the company is an incredibly sleazy
operation with dishonest billing practices. High Society got frequent
letters from disgruntled customers who'd been ripped off by Chew's sleazy
operation.
Carl Ruderman is the real owner of Crescent, not this Bruce Chew frontman,
who may own a big stake in the company.
Ruderman has a bronze bust of himself on the 16th floor of his building
located a stone's throw from the United Nations on 901 Second Avenue between
42nd and 43rd Streets in Manhattan. Crescent takes up most of the building
with the exception of half a dozen floors. NPR has their national office
on one floor. And then there are a few non-profit groups.
Ruderman's father started High Society in 1973 and Carl inherited it.
Initially the company specialized in technical manuals such as "How to
rebuild your '67 Mustang." Carl vastly expanded the company's porno operation.
ThePosition.com named Ruderman one of the 100 most important people in
sex. "The most famous unknown pornographer in America. Co-publisher of
High Society and other sex magazines. The first to mass-market phone sex."
Ken Kimmel knows the history of Crescent well. He served for years as
the executive editor of Cheri until a corporate shakeup in July, 2000.
Then he ran the young girl books. The guy who ran the young girl books
[magazines], took over the internet operations of Crescent, just a week
before the FTC's big bust of Crescent in August, 2000.
One day, Ruderman's limo got a flat tire in front of a McDonalds. The
limo driver said, 'Mr Ruderman, we have a flat tire. Why don't you just
a seat in McDonalds? As soon as I get it taken care of, we'll move on.'
The limo driver goes in there an hour later and says, 'Ok Mr Ruderman.
We have the tire fixed. We can go now.' And Carl replies, 'But the waitress
still hasn't taken my order yet.' He'd never set foot in McDonalds.
Ruderman has several homes around the world and he stocks them all with
the same CDs, the same books, and the same furnishings, so that whenever
he goes from one house to another, he won't have to feel out of place.
Supposedly he's next door neighbors with Phil Donahue in Connecticutt.
XXX says: "I've often heard the receptionist on the 16th floor say, 'Oh
no, Mr. Ruderman isn't associated with us in any way.' He's concerned
about his yacht club acquaintances."
When the FTC busted Crescent, it took pages of legal briefs to list all
Crescent's aliases.
1/28/01
FTC's Injunction Against Crescent - What It Means
Click here to read with Acrobate Reader the Federal Trade Commission's
Preliminary Injunction against Carl Ruderman's Crescent Publishing.
Here are excerpts from the PI:
Defendants operate pornography web sites that have offered viewers "free
tours" of parts of the contents. In order to take a "free tour," however,
a visitor was asked to enter his or her credit card number. The visitor
was assured that the card "will not be billed" during the free tour and
told that the card number was necessary so that the defendants could verify
the user's age. Once the visitor entered a valid card number, the visitor
was permitted to begin the "free tour." At some point, however, the "free"
part of the tour ended, and the defendants began billing the visitor's
credit card...
Defendants Bruce Chew and David Bernstein, together with an allegedly
passive investor, Carl Ruderman, and their corporate entities, own and
operate "adult content" web sites... The practices of these web sites
are a moving target.
Defendants have long been identified by credit card and related companies
as having strikingly high levels of "charge backs"...
Defendants high level of charge backs caused related problems with Card
Service International (CSI) and Heartland Payment Systems (HPS), businesses
that help set up merchant accounts. CSI opened several merchant accounts
for Crescent and affiliates between late 1996 and mid-1998 , and for a
few months in 1999, both times eventually closing the accounts because
of consistently high charge back rates. Likewise, HPS processed more than
$22 million in bank card transactions for eight of the Bernstein - Chew
businesses in 1998, but later that year closed all eight of the accounts
because of excessive charge backs.
Crescent and affiliates had an average charge back rate of 10.51 percent
in 1999. High in itself, this figure does not reflect the full extent
of customer dissatisfaction as it does not include the additional 28 percent
of sales that the companies credited back to customers during the same
period...
...[D]efendants did not provide the name of Carl Ruderman, Crescent's
"investor and economic beneficiary," in either of their voluntary disclosures
to the FTC. This late-breaking news that defendants' have a silent partner
makes defendants seem less than forthcoming...
Here's an exclusive picture of Ruderman with his arm around a black man.
Martin Finklestein writes: The effect of the opinion should be obvious
to the reader, but a brief overview is warranted.
The suit was filed under two different laws by two parties: A suit under
the FTC Act (unfair and deceptive practices) by the FTC, and a suit with
identical allegations under NY law very similar to the FTCA filed by the
NY attorney general's office.
The issue was whether or not to grant a Preliminary Injunction. A PI is
an order that a party do or not do something, granted soon after filing
a case, after a highly abbreviated showing of evidence. The purpose of
a PI is to maintain the status quo or remedy on ongoing wrong before the
lengthly trial process. It is not a final disposition on the case.
Many of the details of the PI issued by the court are not contained in
the decision. Crescent offered its own version of the PI, which was identical
to the one offered by the FTC/AG in nearly all respects. The judge's opinion
therefore dealt only with the areas where the two parties differed: Largely,
the questions of whether or not to protect Crescent's assets/profits to
pay off a future judgement or settlement, and if so how to do so.
The judge granted the FTC/AG's request to prevent Crescent's owners from
taking money out of the company. He granted the FTC/AG's request for a
very large bond to be posted against damages. He denied the FTC/AG's request
to place Crescent into receivership, saying that he was reluctant to order
such a severe remedy on the basis of the incomplete evidence presented
in a PI hearing. He also ordered Crescent to move all its money back to
the US, except what had to be foreign for business reasons (presumably,
offshore merchant accounts.)
Interesting question at this point: What, exactly, did Crescent mean when
it said that their money just happened to pass through a bank account
in Guatemala on its way to the US? Why would anybody do that? I mean,
did their money just need a South American vacation before being put hard
to work back in NYC?
The judge's refusal to grant receivership is interesting only because
the opinion drips with indications that the judge is suspicious of the
defendant's intentions and behavior. The answer is that Kaplan is known
as a very cautious judge, many judges are wary of governmental power and
reluctant to grant extreme remedies on the basis of incomplete evidence,
and the judge apparently felt that the other restrictions he placed on
Crescent and its owners' behavior were sufficient.
Two significant questions are evident from the opinion: 1) There's $113M
or so that Crescent took in and claims it doesn't have; where is it? and
2) What is the impact of the fact that attorney generals are now bringing
FTC-style suits against internet companies?
1) According to the opinion, they had something like $188M in revenue
over two years, but weird net assets. The opinion says that they describe
their net worth at $16M, but include in that a debt from Ruderman of $10M
(from an "advance" paid to him) and "inventories" of $18M. (It's difficult
to imagine what possible "inventories" the company could have, without
that its net worth would be negative; but, accountants can legitimately
do things that to the rest of us seem pretty odd) It also says that in
1999 they did a stockholder distribution of $15M out of net income of
$12M. A lot of the money (I think upwards of $50M) is tied up in bonds
and letters of credit to satisfy Visa on chargebacks. So, where's the
other $113M?
The opinion makes not-so-subtle points about a bizarre corporate structure,
attempts to hide that Ruderman was a partner (the judge apparently was
told, and did not believe, that Ruderman is a silent partner) and offshore
bank accounts. It also says that Chew is the sole shareholder. (The $15M
appears to have gone to him.)
So what's the relationship with Ruderman if he doesn't own any shares?
Did he loan them money, if so for what compensation? Does he have a contractual
relationship with Chew? Does he take some sort of salary from the company?
Let's take a look at the numbers for a moment. In the first 10 months
of 1999, they took in $141M, had net income of $12M, and paid dividends
to the single shareholder (Chew) of $15M. But how did Ruderman get paid,
and if so for what? If his relationship to them is based on debt (he loaned
them money) or a salary (he performs some service) then that would be
deducted from the $141M before net income was counted, and be counted
as a liability, which might be why they claim a net worth of only $16M
(really, a negative net worth once you deduct the claimed inventories
and the "advance" apparently to Ruderman.)
From the way they appear to be structured, it doesn't look like his "up"
was stock options; draining $15M out of $12M in net income isn't a way
to increase the value of the shares; they were maintaining this company
to have _low_ assets. (There are legimate reasons for doing this in a
non-public company; then again, there are also illegitimate reasons for
doing it.) Many private companies with a single owner compensate the owner
with a salary rather than dividends from the stock; this has legitimate
tax purposes, and is an entirely wholesome way of structuring a company.
But Ruderman doesn't own any stock, and Chew took out as dividends in
1999 more than the company's claimed profits! So how the heck were these
guys being compensated? And for what was Ruderman being compensated?
Another possibility is that Ruderman had no direct relationship with Crescent;
he had instead a relationship with Chew, who in turn owned all of Crescent.
Chew would then pay Ruderman out of his salary or dividends as payment
on a personal debt or contract rather than one of the company. That would
have interesting implications for who could be held personally liable
for misbehavior by the company. But if that's the case, why is the company
giving Ruderman a $10M "advance"? Advance on what? (By the way, the opinion
only notes that this was probably Ruderman, the company said it was their
"beneficial owner"; if Ruderman isn't that beneficial owner, who is?)
Some of the $113M must have been expenses --- content, employee salaries,
webmaster payments, hosting expenses, etc. But some of it must have been
owner/controller compensation --- much larger salaries or other compensation
paid out instead of shareholder distributions to Chew and Ruderman. But
the court also says, when it says that Crescent can't pay out any disbursements,
loans, etc. to its major beneficiaries so that the company's profits are
retained as a fund against its liabilities, that salaries can be maintained
at their present level, so the big-player compensation doesn't appear
to have been in salaries.
One of the really interesting things about the opinion is that the relief
doesn't talk about Ruderman. The court appears not to know very much about
him, or the nature of his relationship to Crescent, and hints that the
defendants were deceptive about it.
Where's the missing $100+M? One possibility is that a lot of it is with
Ruderman. Another is that margins in web porn, once you pay for the content,
the free webmasters, the bonds to Visa, the transaction fees, the legal
fees, and the hosting costs, just aren't as large as the industry would
have you believe. In other words, a lot of these guys are lying about
how much money they're making. A third possibility, and note that Chew
pleaded the 5th and refused to answer questions, has to do with foreign
bank accounts like the one in Guatemala. The Crescent story appears far
from over.
2) Another thing to keep in mind, in the context of the industry's present
Ashcroft related fears, is that this wasn't a pure FTC suit. The state
AG was also involved. That's not a good sign for the industry if they
believe (you know I think its bullsh-t) that these suits are realy a cover
for an anti-porn jihad.
First off, by the way, Ashcroft has nothing to do with the FTC, its an
independent agency not part of the justice department. On the other hand,
the FTC doesn't bring criminal cases, the justice department does; when
an FTC case turns criminal, it has to hand it over the the justice department.
Second, the state AGs have started suing. New York, like many states,
has state laws nearly identical to the one the FTC sues under. If they
can bring actions independently of the FTC against websites under those
laws, what happens to the justice department won't matter a wit. All of
those Southern and Western states that the industry is so afraid of (like
that stuff with the Cambria list) have AGs, many of whom make Ashcroft
look like a liberal. Each of them can bring actions just like the FTC
actions against these web porn companies. If they catch on (Spitzer is
a very aggressive AG, but they've all been getting aggressive recently)
what happens with the FTC is pretty irrelevant; you won't have one anti-porn
jihad, you'll have 50 of them. And they won't be brought by independent
agencies with long tenures like the FTC, they'll be brought by officials
who have to run for reelection every four years, and satisfy their Southern
and Western constituencies.
2/6/01
Luke says: I was just reading the July 19, 1999 issue of Screw magazine
which featured this satirical article by Johnny Scorpio about his days
working at High Society magazine, owned by Carl Ruderman's Crescent. Here
are some excerpts:
The vice-prez [Carmine Belluci] was a tall fellow named Guinea, and he
wore a silk shirt, unbuttoned to show off a bunch of gold chains and his
graying chest hair. He wore diamond pinkie rings on each pinkie and he
spoke with a lisp...
When we filed out of Guinea's office, a weirdo wearing a bathrobe and
pajamas almost ran me down, and didn't even say excuse me. He was unshaven
and muttering to himself like a shizo; he reminded me of some nut you'd
see feeding pigeons in the park. He walked into the VP's office and slammed
the door.
"Who was that?" I asked Morty, our editor-in-chief [Ken Kimmel]. "Oh,
that's Mr. Rutterman [Carl Ruderman]," he said. "He's the owner of the
company. He's a little eccentric. He comes by every so often to see how
things are going."
So now I was admitted into the inner circle of the porn magazine's hierarchy;
I had gang-f-cked a chick with the vice president and the editor-in-chief.
That's when I was invited to take part in a kind of Satanic virgin sacrifice
hosted by the reclusive executive editor, a man with a shaved head who
rarely left his office and was allegedly a High Priest in the Church of
Satan (I'll call him Chuck). [It's Vivid's Bob Johnson.] It took place
at Chuck's Park Avenue mansion. Chuck comes from money and just works
in the porn field for kicks.
...Each guy chose a girl and proceeded to tear her clothes off, and once
they were naked Chuck began uttering some cryptic incantations and dousing
their bodies with goat's blood...
JohnnyScorpio@hotmail.com writes Luke: I worked for Crescent as associate
editor of CHERI in '95-'96. I heard that Marc Medoff used to work there,
and I know that he knows a lot about the business... He writes and takes
photos for lots of men's mags, or at least he used to. (I read on your
site that he has his own business now, dealing with photos and editorial
material. I wasn't clear what it was. Does he supply men's magazines with
material? Is he like an agent who receives photos and stories from others
and he markets them?) Once I met Medoff when he was editorial director
for Gallery and Fox--he interviewed me for a job but didn't hire me. I've
written porn freelance for SCREW and others for about ten yrs. But I only
heard gossip when I worked in the Crescent offices. I sat in meetings
with Bellucci and Chew, and Ken Kimmel was my Ed-In-Chief, and Bob Johnson
was Executive Editor of all the mags. I am still writing stories for Live
Young Girls (a Crescent pub) but maybe that's over after this big shakeup
at the company.
BTW, I met Seth Warshavksy. in Seattle when he flew me out there (from
NY) to interview me for a vacancy for executive editor of Club Love (in
'96). Scott Schalin (who used to be with Hustler) had the position and
was leaving. Seth promised to hire me and I quit Crescent. But then he
ignored my phone calls, leaving me high and dry, without a job, 'cause
I quit as associate editor at CHERI. He hired someone else for executive
editor.
Crescent had 200 employees when I was there, and editors there went to
different mags at different companies. Rick Hall was managing editor of
High Society. He went to Hustler's Leg World when they started it, and
he was ed-in-chief. He's not there anymore, he left 1 or two yrs. ago.
Mike McPadden worked at Crecent and he went to Genesis and was its managing
editor. Then Genesis was sold to Swank about 3 or 4 yrs. ago, so everyone
there lost their jobs. Originally, McPadden was an editor at Barely Legal,
when that magazine was still pretty new. The art director of SCREW worked
with McPadden at GENESIS, then he went back to Screw. So it's a lot of
the same people working at different publications. McPadden wrote a bunch
of porn scripts for Gregory Dark, too. I like the world of porn magazines,
it's interseting. I currrently contribute articles and stories to a funky
San Francisco sex newspaper called YANK. It' s sold in street boxes in
the Bay Area for one dollar and 25 cents. Mostly it has hooker ads in
it, but it also has writing in it. Does L.A. have something similar?
Four or five years ago Crescent started with the young girls mags, because
they noticed that Barely Legal was selling really well. So they changed
LIVE magazine to LIVE YOUNG GIRLS. Then they put out a few other young
girl titles--purely 18, candy girls, finally legal. And like you said,
lately I noticed that CHERI is doing hardcore and raunchy stuff, penetration
and pissing. Do they sell that in Canada, I was wondering? I attributed
it (the ever raunchier content) to their trying to compete with the Internet.
From what you're saying, that High Society's sales figures are way down
from five years ago, it sounds like this may be the last gasp of men's
magazines. Do you think that they are going to die out before too long?
You're welcome for the Screw story. The sex part was just bs (mostly).
The Japanese amateur girl was true, but I did not share her with the rest
of the guys. Colleen I think was an ex-stripper, but she didn't give bj's
to the staff. Screwin' the woman on the conference table was made up--but
the ed's would get girls (potential models) to strip down in the conference
room. Never heard of any actual banging on the table. A couple of parties
they threw I went to were pretty good. One was a bachelor party, for the
art director. Took place on a Saturday afternoon, in a rented space on
East 14th Street (NYC). About a dozen porn chicks and models doin' lap
dances, getting nude, doing lezzie stuff. But no out-and-out f-cking and
sucking. Maybe some guys got a blow job, but I didn't. X-mas party had
a girl named Bella (I think she uses the name Sasha Sweet in X-vid's)
dressed as Santa claus, and I was dressed as elf. China Lee was there,
and another familiar chick (can't think of ! her name). This party was
in the office. The girls strip down, there's a band playing, etc.
Morty in the story is Ken Kimmel, who was ed-in-chief of CHERI for a long
time. Mr. Ruderman--no, he didn't walk in with a bathrobe. He would drop
in occassionally. Once I happened to ride up in the elevator with him.
He seemed a little nutty. He was with this middleaged lady who is like
his assistant or something. They were communicating through signals in
the elevator.He was dressed all in denim garb--jacket jeans cowboy boots
and hat. Maybe bolo tie too.
Guinea is Carmine Bellucci (VP--but while I was there he got his title
changed to Sr. VP). David Bernstein is the guy who signs the checks (CFO).
Reclusive exec editor character is Bob Johnson. But it's not true that
he came from money and was working in porn for kicks. While I worked there
he lived in Staten Island. (That's one of the five boroughs of NYC, the
most suburban one.) He was pretty nice to me. When I moved into a new
apartment he gave me some furniture-- a nice couch, an ottoman, a lamp,
etc. I went by his house on a Saturday when I moved and loaded the stuff
into the moving van. He showed me around his house; his wife and daughter
were out at the time. He actually wanted me to stay and hang out for awhile
but I told him I should be going because I had hired a van and two movers
and I was being charged by the hour. In his office at Crescent he had
a framed certificate that said he was a priest in the Church of Satan.
That Church of Satan thing was no big deal. He was a regular guy, it wasn't
like he tried to project an evil character. He told me that Satanism is
basically Social Darwinism. I read the Satanic Bible but put it down halfway
through. It's a common sense kind of book, it doesn't have to do with
casting spells and magic. I read Johnson's Anton LaVey article and thought
it was pretty good. Johnson seemed smart about the magazine business.
He was aware of the big picture I think. He was very good at coming up
with catchy coverlines. He knew the finer points of punctuation--editors
would ask him questions and he knew the rules. The comments he made in
meetings were insightful. Originally he was editor of HAWK magazine. I
think he started Hawk. I noticed one time that the H in Hawk on the cover
of the mag had an eagle figure on it--the German eagle that the Nazi's
used as an insignia. I pointed this out to Bob and he said, "That's scary--you're
the first person who ever noticed that." I had nothing against Bob Johnson,
I thught he was basically a good-natured guy. Others seemed to resent
his position of authority (executive editor), and were perhaps jealous
of his paycheck. When I was there he was getting 86,000. The Satanic party
in the story is all made up.
The dildo sucking photo shoot in amsterdam was true--it's called the "CHERI
SUCKATHON" and it was an annual feature (this was before they started
showing hardcore) in which models sucked on dildos. This was Carmine Bellucci's
idea. BTW, many of the photo sets come from Europe.
Here's an exclusive picture of Carl Ruderman with his arm around a black
man.
2/22/01
Crescent Publishing Scam
From CNET.com: NEW YORK--U.S. prosecutors are investigating allegations
that X-rated Web sites owned by a New York man defrauded customers who
spent $196 million viewing pornography online, according to court documents
in a related consumer probe by state and federal authorities.
More than 20 sites owned by the man [Bruce Chew] offered visitors "free
tours" if they entered their credit card numbers, purportedly as a way
to verify ages, court papers state. But after people clicked past the
fifth screen, the sites began billing them $1.50 per day.
The sites were enormously popular, generating revenue of more than $141
million in 1999 alone, court papers indicate. Even after refunds of nearly
$100 million to customers who complained of improper billing, the sites
earned at least $196 million over four years, according to a civil suit
filed by the Federal Trade Commission and the New York Attorney General's
Office.
The Web sites' owner, Bruce Chew, said in papers filed in response to
the suit, that he'd been told by his lawyer that "there is a grand jury
investigation being conducted" by prosecutors in Brooklyn, New York.
Attorneys with the FTC suspect the Web sites may have defrauded viewers
out of as much as $120 million.
4/23/01
Zack writes: Hey Luke, Crescent Publishing may already be violating the
FTC injunction. As you know, they are prevented from doing business on
the web without posting a 10 million dollar bond. I'm sure they haven't
posted that bond, since they claim not to have the money and since they
appeared to have shut down all their sites. But, at least one or perhaps
three (or more) of their sites is still up. Celebrityskin.com is still
up and is definitely run by Crescent. Liveyounggirls.com is also up and
is most likely run by Crescent, since they publish Live Young Girls Magazine.
That site bounces you to 18n'Horny.com. They might be able to claim that
Celebrityskin.com is not "doing business on the web," since it's not a
pay site. It is however an advertisement for Celebrity Skin Magazine.
Liveyounggirls.com and 18'nHorny are both pay sites and both ask for your
credit card number for a "free five day memborship." Conspicuously, both
Liveyounggirls.com and Celebrityskin.com were Crescent sites not named
in the original indictment. Anyway, the FTC should be tipped off.
18Nhorny will bounce you to a rabbit warren of other pay sites: sugarwalls.com,
puref-ck.com, orgasm.com. Each asks for your credit card number for a
free 5 day membership. Puref-ck has the audacity to offer you a year for
free and then claim that they need your credit card because the "government
requires them to use it for age verification"! Are these all run by Crescent?
Are they so stupid to think that they can simply change the names of their
sites and get away with the same stuff?
03/20/1998 Media Daily
Playgirl editor Ceslie Armstrong has been fired following a row with the
brass at Playgirl Inc. over their intention to run unauthorized nude photos
of actor Leonardo DiCaprio in the magazine's July issue.
Armstrong said she "went ballistic" when she discovered that her bosses
had undercut her authority and made a decision that "goes against everything
I feel about people's privacy." She claimed she was going to issue a threat
to quit but never got the chance -- she received a call last Wednesday
from president Bruce Chew , who terminated her employment "over speaker
phone ... after a very brief conversation," she told First Day.
"I was shocked and I am very sad that I was fired," said Armstrong, who
vowed to "evolutionize" the 500,000-circulation title upon joining it
in July. "There was no forewarning. I was never counseled or put on probation."
She claimed she briefly resigned two months into her tenure following
an argument over her bosses' wishes to publish a hodgepodge of other celebrity
nudes. She won that battle and returned, convinced her "plan for the magazine
was understood."
In a brief statement released on Monday, Playgirl contrasted Armstrong's
claim, saying her "termination was in no way related to the publication
of any photographs or editorial content in Playgirl." Spokeswoman Kathleen
Giulini said, "It would be character assassination if we were to say anything
else."
06/27/1989 The Wall Street Journal
NEW YORK -- Few champions of free speech are as tight-lipped as Sable
Communications, the plaintiff in last week's landmark Supreme Court ruling
that eased a congressional ban on dial-a-porn.
Operators at Sable's Manhattan office answer the phones with a cryptic
"Good morning, 5100" (the phone number's last four digits). Asked to give
his name, the company's publicist replies, "We don't have one," adding
that he prefers to be identified as "public information." Asked a question
about Carl Ruderman , the man who runs Sable, the publicist says, "I don't
know the name."
Even Laurence Tribe, the Harvard Law School constitutional scholar who
argued Sable's case, says he knows virtually nothing about the company
and only dealt with it through another law firm.
Within the porn industry, however, Sable is known as part of a secretive
and prosperous empire, Drake Publishers Inc. Drake publishes Playgirl,
Cheri and High Society, a magazine known for unearthing nude photos of
Hollywood movie stars.
Drake also made news last fall when it unveiled "SzexPress," a Hungarian
publication that it billed as the Eastern bloc's first sex magazine. Just
this month, it made a bid for mainstream readers, agreeing to buy Venture,
a troubled monthly about entrepreneurs.
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