FBI Investigating Internet Sex Mogul

S E A T T L E, July 7, 2000 -- 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.

Warshavsky’s company faxed a statement Thursday saying it has

not had any contact from the government.

“The government has not requested any documents and has not

issued any subpoena or any letter to the company. We cannot comment

on something no one has told us about,” Internet Entertainment

Group said.

Suits and Countersuits

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. The FBI and IRS were involved in some of those interviews.

“They asked me a lot of questions about Seth and about IEG

operations,” Eric Blank, IEG’s former attorney, told the Post.

Federal investigators told those interviewed that they were

investigating whether Warshavsky laundered money through overseas

accounts to evade income taxes.

The pornography mogul 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.

Controversial Figure

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.