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New York Mafia and Israeli Porn Connection
2003-03-18 16:04:56

The companies busted have changed names and are still in business.

(AP) NEW YORK - A mobster, two executives and five companies bilked Internet users out of $230 million by running bogus "free tours" of adult entertainment Web sites, federal authorities charged Tuesday.

Thousands of users who thought they were taking a free peek at the sexually explicit material actually were charged $59.99 a month, according to Brooklyn U.S. Attorney Roslynn R. Mauskopf.

Authorities arrested Richard Martino, who they described as a member of the Gambino organized-crime family; Bruce Chew, the chief executive of porn Web site operator Crescent Publishing Group; and Norman Chanes, a businessman.

The men tricked customers into submitting their credit-card information for free visits and then made it nearly impossible for them to leave the Web site, Mauskopf said.

Some users discovered that the "go back" button on their browser was disabled, while others couldn't find an "exit" button and racked up fees, the U.S. attorney said.

"The defendants created a web of lies and deception to trap unwary consumers on the Internet," Mauskopf said in announcing the indictment. "Millions of dollars went from consumers' bank accounts and into the defendants' pockets."

The government will attempt to seize the men's multimillion-dollar homes in New York and California, she said.

Martino, 43 years old, of Harrison, N.Y.; Chew, 50, Lloyd Harbor, N.Y.; and Chanes, 56, of New York, were charged with a number of offenses including money laundering, which is punishable by up to 20 years in prison.

Martino and Chanes are charged with using three companies they controlled — Mical Properties, Dynamic Telecommunications Inc., and Westford Telecommunications Inc. — to launder illegal profits. The companies were named on the federal indictment along with Lexitrans Inc. and Harvest Advertising, which controlled or designed the adult Web sites, authorities said.

Martino is charged with funneling more than $8 million of the proceeds to a high-ranking member of the Gambino crime family.

The porn sites are based on magazines published by Crescent, which is cooperating in the investigation. Crescent gained notoriety in 1999 when it published photos of actress Jennifer Aniston sunbathing topless. The "Friends" star sued Crescent, claiming a paparazzi photographer scaled a neighbor's wall to take the shots, and settled out-of-court last year.

Chew, the CEO of Crescent, agreed in 2001 to pay $30 million to settle Federal Trade Commission charges that he billed users for "free" access.


From New York Daily News 3/19/03:

Martino, who made millions as a phone sex pioneer before joining the Internet revolution, and his pals allegedly shared more than $230million in illegal revenues, according to an indictment filed in Brooklyn Federal Court.

FBI Assistant Director Kevin Donovan said the take befitted Martino's status "as one of the Gambinos' biggest earners."

The Manhattan-based operation was unusually sophisticated, with an infrastructure of more than 64 companies, overseas bank accounts, automated credit card billing systems and elegant Web site and software designs, officials said.

Authorities believe Martino funneled millions of dollars to the Gambinos, including his crew chief, Salvatore LoCascio, son of the late John Gotti's consigliere Frank LoCascio, who was convicted of murder conspiracy with Gotti in 1992.

Assistant U.S. Attorney Linda Lacewell said Martino, under various corporate names, created the software used to run the operation and allegedly laundered much of the money.

Chanes' company, Harvest Advertising, bought space in porno magazines advertising the sites, which included climaxmag.com and ygirl.com.

From Primedia:

The indictment continues that Martino and Chanes laundered the proceeds from the scheme through several companies, including Mical Properties Inc., Dynamic Telecommunications Inc. and Westford Tellecommunications Inc. In addition, Martino transferred more than $8 million to "a higher ranking member of the Gambino crime family," it charges.

Chanes and Martino jointly ran companies in the 900 number-phone sex business during the 1990’s. In 1996, they expanded onto the Internet, the indictment continues.

One of Chanes’ mail order firms, Encore House, was raided by postal inspectors in 1983 after several thousand consumers complained about binoculars and other product offers made by its subsidiary Marine Surplus Depot.

....................................

Luke asks: Yishai Habari worked directly with Richard Martino. They controlled all companies involved. Richard's brother, Danny ran day to day operations. New York (Mical, Harvest and FSE Consulting) called the strategies. There were more Israelis involved. Isaac Levy was a big guy that you didn't want to screw with. Yael (the dialer queen) was tight with Isaac. Moshe Tamir was another Israeli involved. He was originally a consultant and then later came on board full time as the Oracle expert.

Harvest Advertising became Webmedia Interactive presided over by the notorious Yishai Habari.

Harvest Advertising Inc
1501 Broadway # 25, New York, NY 10036
Phone: (212) 840-2666

From Web Media's Home page:

Web Media Interactive Inc.
1501 Broadway 25th Floor New York, NY 10036
Phone: 212.856.4700 <Email : info@wmediainc.com>

http://www.wmediainc.com/

From Profit Plantation's Page:

For information contact profits@wmediainc.com
or call us by phone: 212.856.4700

http://www.profitplantation.com/about_us.html

Harvest Advertising and Web Media are the same company. Webmedia runs profit plantation. Both are listed at the same address on the same floor.

Yishai Habari often speaks on panels about his dialer program Profit Plantation.

Here's the Madrid panel description: "ProfitPlantation.com is a premium affiliate program allowing webmasters to take advantage of the dialler billing solution. It allows surfers to enjoy instant access on a "pay per use" basis - no credit card forms, check debit difficulties, passwords, email, hassles or delays! So how does it work in the all-important US market and on an international basis?"

Mutt writes on GFY:

And the same scam basically is going on today and many people who are familiar to all are part of it. One day the same thing will happen to those involved in today scams but when you're making 10's of millions of dollars a year worrying about jail isn't big on your list of priorities. Nobody gives a sh-t, nope. And as I've always suspected organized crime is involved in this one you can bet. The ability to run through hundreds of merchant accounts from all over the world isn't something Joe Webmaster can do - it takes people from the criminal underworld to get that job done.

Very dirty business.

Serge brokered traffic, he had nothing to do with the people who ran it, probably never met Chew. They bought traffic from all over, probably got it from Alta Vista, Yahoo and lots of other sources.

It was dirty though, amazing how many people i've met who got the 60 dollar charges on their credit cards from that operation. I got a few until i realized what it was. Don't think I ever got a chargeback, back then my bank made you go through a whole process, filling out forms, to contest a charge, wasn't worth it to me.

What happened yesterday is merely the criminal side of the original FTC versus Crescent thing. The companies mentioned have not run under those names for several years. Mical, Lexitrans and Harvest (now Webmedia Interactive) all stopped using those names as soon as the FTC busted Chew and company at Crescent.

Mical controls all the others. Mical got its content from Carl Ruderman's Crescent. They hosted off of Cyberdata, Harvest operating the programs and Mical owns several phone companies for dialer billing and all sorts of 1-900 type phone lines. Mical/Cyberdata are still in operation.

Why hasn't the name of Carl Ruderman, the secretive owner of Crescent, emerged?

Go do a whois on Lexitrans. You should find the name Harry Stalnaker attached to the various registration records, either as tech contact or admin contact. Do a google on Harry's name and you will see a return from cdproc.com. That is cyberdataprocessing's site. Cyberdata used to be Lexitrans. They are still in business in Overland Park, Kansas. This is where all of the Crescent sites were hosted (still are, although nobody can join them, FTC made them keep them up for existing members).

I did a search in google on Westford Telecommunications and the top search result was a SPAM overview page with references to a Kenny Schaefer.

Do a google on Kenny Schaefer, you will get a whole lot of returns on him from back in '98 and '99 listing him as the Midnight Spammer, Online 18, all sorts of names. Kenny worked for Mical although many sites associate him with Westford inc. Most of the aliases associated with Kenny are actual real people who worked for Mical and continue to work for the company under it's current name.

Peaches writes on Oprano.com:

I saw almost the exact same situation with a guy a worked for in audiotext. Most of his $$$ are socked away offshore. Yes they took his homes and cars here in the US (kinda funny when you watch the government put a $4mil lien on a $1mil house), and yes he was sentenced to 4 years in Club Fed. But it took 6+ years for him to be sentenced, a year after he was sentenced, he still hadn't gone to prison, and if he ever goes, he'll probably not actually serve more than a year. And when he gets out, he'll have at least a $100mil he can play with for the rest of his life as long as he doesn't spend it in the US.

During a meeting once, we were talking about when they were fined $200K for another scam they ran. "Yeah, but we made $2Mil, so who cares." was the comment from his wife.

Sarettah writes on Oprano.com:

You go to certain restaurants.. You're giving your money to the mob (because, as Nick said, there ain't no mafia)

You go to certain theatres/entertainment ventures, your'e giving your money to the mob.

You buy from certain content providers, your'e giving your money to the mob.

You spend any money on Long Island or in Las Vegas, your'e giving your money to the mob.

Tom Pall writes on alt.tv.pol-incorrect:

I spent 4 hears with multiple on-line companies, notably a company called Lexitans, in Leawood, KS, USA (It has since changed names to Cyber Data Processing, though the 900 number company retains its name Overland Data Systems). We took no pictures. We provided bandwidth (multiple DS3s), picture and chat. Soem of the sites where http://www.twogirlsex.com www.coedsex.com, www.playgirl.come (which is NOT for women).

The growth of income looked like we're reach 10 US Billion in just a few years. The Federal Trade Commission plus the Credit Card Companies cause most of the $US millions a day to be charged back.

We received numerous unsolicited letters from women and men, hoping to strike it big in porn. They included resumes, references and, yes, pictures.

There a million guys and girls, straight and gay, with terrific builds, all hoping to just be something to be a hamburger flipper or an office girl/buy. And it's no longer a "bad" thing. When I mentioned that I filed on my income tax, occupation "pornographer", most people wanted to know where they sign up.

I was an Oracle DBA. It was a work a day work. Yes, I had access to all dirty picures. But I've referred CNN.COM.

White collar crime pays. Always has, always will - the repercussions just AREN'T that severe. And I'll bet if you ask ANY of these guys if they had the chance to do it again, even with all the penalties and prison time, they'd say "Yes" w/o giving it a second thought.

.........................

Here are some other companies involved with Mical:

Indus Venture Group is the newly-created venture arm of Mediacom Holdings, a closely-held, New York-based company with businesses in the telecom, Internet, wireless, customer service, and logistics sectors. Mediacom currently generates approximately $600 million in annual revenue, and has 570 employees, with operations in New York, Kansas City, Dallas, India, Israel and the Dominican Republic. Mediacom's companies include:

CyberData Processing, a commerce solutions, web hosting and fully integrated telephone switching and IVR company that maintains billing relationships with all domestic RBOC's and long-distance telephone companies CBXI, a full service billing management company with 40 clients and a 300-seat call center.

Online Advertising, a marketing company that controls more than one billion page views per month.

NetServ, a software development and programming company with 15 full-time programmers.

New GlobeCom Telecommunications Inc., a facilities-based inter-exchange carrier that provides dedicated and switched service as well as data and Internet networking.

LEC L.L.C., provides management services and acts as a holding company for several telephone exchanges in Texas, Missouri, and Kansas. LEC also owns and operates cellular properties in various parts of the U.S. Mediacom's international properties include a 10 person R&D center in Israel, a 100-seat call center in the Dominican Republic and a satellite company in India. Two of Mediacom's portfolio companies, a DSL provider called Red, and CoolEmail (Nomad Technologies), a unified messaging company that has just secured investments from Lucent and Qualcomm, have already seen a valuation upside of more than 10x their initial funding.

The Indus Venture Group is managed by Kevin Fortuna, former VP of Business Development for NBC Internet, and Roy Rodrigues, who spent two years in the Internet Investment Banking Group at Bear Stearns, where he managed several financings and M&A transactions, such as the IPOs of L-3 Communications, Xoom.com, Wit Capital and Intermedia..

cyberdata processing
CyberData's CEO, Harry Stalnaker, has built upon his experience as a former senior executive at Sprint to focus the company on providing premier hosting, monitoring and billing services in the Internet distribution pipeline. Processing over ten million credit card transactions a year, CDP has established itself as a leading Internet billing service. Drawing on this experience, CDP, working together with NetServ, CBXI and Overland, creates custom solutions in web site development and web hosting, web marketing strategies, and Internet-based billings and collections. The company currently has more than 175 clients, including DVD Express and WWF Internet Properties. CyberData currently employs approximately 40 people, and is based in Kansas City. CBD also operates a fully-integrated switching center as well as a voice response unit. The company supports numerous "900" and "1+" dial-up services. CBD has billing relationships with all the major long-distance phone services and Regional Bell Operating Companies (RBOCs). We have the ability to bill through local phone bills (as opposed to credit card billing) and are currently doing this on behalf of several of our portfolio companies. CBD's Product Manager, Wayne Wier, is a former Sprint executive with more than a decade of high-level experience in the telecom industry. The company currently has over 40 clients, including Sprint and Northstar.

convergent billing exchange, inc. (cbxi)
CBXI is a full-service billing and information management services provider to Internet and communications companies. CBXI offers a variety of cutting-edge direct billing and "pay-per-net" billing platforms, as well as a platform that allows billing through local telephone companies. Through arrangements with third-party billing clearinghouses, the Company can arrange for billing through 1,300 local telephone companies. CBXI also operates a 300-seat call center, through which it supports its clients' billing and customer service needs. The company currently employs 60 full-time staff members, serves approximately 40 clients, and is located in Kansas City.

new globecom telecommunications inc.
New Globecom is a facilities-based inter-exchange carrier that provides dedicated and switched service as well as data and Internet networking. Through its strategic alliance with other international long distance providers, New Globecom has the ability to exchange capacity, thereby creating a seamless transport product with competitive rates in all regions of the world. This unique networking capability also allows a single source for provisioning service to multinational companies that generally favor a "total" telecommunications solution. New Globecom is based in New York.

international
Our international properties include Mediaserve Israel, a technology and business development center in Israel. Mediaserve Israel's 10 employees are closely linked with Indus, providing Israeli entrepreneurs a seamless Israeli-New York connection vital to the development and growth of Israeli companies looking to enter the U.S. market and U.S. companies searching for Israeli partners. We maintain a satellite company in India and are establishing an India-based software development and service center as well. We also maintain a 100-seat call center in the Dominican Republic.

Our wholly-owned telecom and technology properties provide entrepreneurs with a fully integrated suite of business infrastructure and revenue enhancing offerings. Building upon the management experience and synergies amongst our companies, Indus will fashion innovative solutions for seed and growth-stage businesses.

online advertising
One of the largest traffic brokers on the Internet, Online Advertising transacts over one billion page views per month. Based in New York, the company purchases traffic in bulk from the larger Internet portals, generates traffic through a community of sites and the use of proprietary technologies, and resells this traffic to smaller sites on a "per click" basis. Through its in-depth knowledge and experience in the market, Online Advertising constructs custom solutions to direct value-added traffic for a wide variety of demographics. We currently drive traffic to several of Indus' portfolio companies.

outreach communications
An integrated systems provider of broadband technology catering to rural LECs (there are approx. 1,300 LECs, with 6 million access lines). OutReach, a Kansas City, Missouri based company, provides wholesale distribution of communications equipment and sale of enhanced communications services, enabling these LECs to become providers of integrated advanced communications services (including voice, video and data) in their respective markets. Recently, Outreach announced the company ’s formation and the signing of a preferred vendor partnership with Next Level Communications, a leader in ATM/IP optical interactive DSL broadband systems.

netserv
Netserv, a 15 person programming team based in New York, is an Internet development company that specializes in the development of advanced web-based programming and software. It acts as the Internet development arm for the Indus family of companies. Netserv works with Indus' portfolio companies to identify successful models for moving businesses to the Internet and helps to optimize revenue and traffic on Indus portfolio company websites. Netserv's CEO, Archie Rosenblum, spent ten years at Prodigy Communications, where he developed some of the earliest applications for the Internet.

new globecom telecommunications inc.
New Globecom is a facilities-based inter-exchange carrier that provides dedicated and switched service as well as data and Internet networking. Through its strategic alliance with other international long distance providers, New Globecom has the ability to exchange capacity, thereby creating a seamless transport product with competitive rates in all regions of the world. This unique networking capability also allows a single source for provisioning service to multinational companies that generally favor a "total" telecommunications solution. New Globecom is based in New York.

international
Our international properties include Mediaserve Israel, a technology and business development center in Israel. Mediaserve Israel's 10 employees are closely linked with Indus, providing Israeli entrepreneurs a seamless Israeli-New York connection vital to the development and growth of Israeli companies looking to enter the U.S. market and U.S. companies searching for Israeli partners. We maintain a satellite company in India and are establishing an India-based software development and service center as well. We also maintain a 100-seat call center in the Dominican Republic.

kevin fortuna, managing partner
Kevin Fortuna has worked in the Internet space since 1996. From 1999-2000, he served as Vice President of Business Development at NBC Internet, where he closed several of NBCi's largest revenue deals and managed joint strategic initiatives with NBCi's parent companies, the NBC Television and Cable Networks and General Electric Co. From 1996 to 1999, he served in senior product management and business development roles at Juno Online Services, where he built Juno's electronic commerce division and sourced and executed many of Juno's largest strategic partnerships. Prior to Juno, he launched and managed a profitable division of a family-owned retail business, Fortuna, Inc. He graduated summa cum laude from Georgetown University in 1993.

alan surchin, principal and general counsel
Alan Surchin has been providing business and legal counsel to technology companies since 1996. As an Associate with Kramer Levin Naftalis & Frankel's corporate and technology departments, he advised startup and growth stage companies and venture capital funds on various financing and technology transactions. From 1995 to 1998, Alan was a member of the corporate group at Simpson Thacher & Bartlett, where he specialized in M&A and securities deals, including the initial securities offering of Sprint PCS and the sale of Universal's television assets to QVC. Alan has also lived and worked in Israel, and he maintains strong ties to the Israeli technology community. A native of New York, he holds a JD from the Duke University Law School and a Bachelor of Arts from the University of Virginia.

guhan selvaretnam, principal and business development specialist
Prior to joining Indus, Guhan served as a Manager in the Business Development Group at NBCi, where he was responsible for numerous high-profile strategic and revenue partnerships and the integration of various NBCi properties into the NBC family, including AllBusiness.com. From 1997 to 1999, he served in Price Waterhouse Cooper's Entertainment and Media Corporate Strategy Group as a consultant for several global media companies, including Time Warner and Disney. While at Price Waterhouse Coopers, he led the most comprehensive analysis to date of telecommunications procurement, a project for Disney. Prior to joining Price Waterhouse Coopers, Guhan was at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., where he worked on numerous public offerings and was part of the team representing America Online in its acquisition of Compuserve.

joey fortuna, cto
Joey Fortuna comes to Indus from his position as Vice President of Technology at Pseudo Programs, Inc. - a New York-based broadband entertainment company. In his five years with Pseudo, Joey managed a team of 30 programmers and network engineers and established many of the systems which enabled Pseudo to establish a firm first-mover advantage in the broadband space. His contributions included developing a information and development platform; engineering a communications client which included streaming video, instant messaging functionality, gaming features, and avatar creation; and inventing an operating system for producing entertainment on a global communications network, which is currently awaiting patent approval.

Joshua M. Harris is the Chairman of Pseudo Programs, Inc., and a founder of Jupiter Communications. Pseudo Programs is the premier provider of online entertainment and the first-ever Internet television network. Mr. Harris founded Pseudo in 1994, after recognizing the burgeoning demand for original and compelling web-based programming. Prior to founding Pseudo, Mr. Harris started Jupiter Communications, LLC (which recently merged with Media Metrix), one of the Internet’s most highly regarded research and consulting firms. Mr. Harris served as President and CEO of Jupiter from 1986 to 1994, and as Chairman from 1994 to 1997. Previously, he was the Senior Videotex Analyst for LINK Resources, an online analyst with Arlen Communications and an editor for CBS ExtraVision Teletext. Mr. Harris is frequently quoted in the national press and on television. He holds a bachelor's degree in communications from the University of California at San Diego. Joshua M. Harris, age 38, currently resides in New York City.

Roy Rodrigues is a Vice President in the Technology Group within the Investment Banking Division of Bear, Stearns & Co. Inc. A native of India, Roy has over seven years of professional experience in the technology industry. Previously, Roy was a member of the Corporate Development team at NBC Internet. From 1991 to 1995, Roy was a Senior Consultant at the Business Advisory Division of Arthur Andersen in Bombay, India, where he worked with companies in the IT sector.

Raj K. De Datta has served as Senior Vice President, Strategic Development and Commercial Affairs for FirstMark Communications since September, 1999, prior to which he was Vice President, Business Development. Mr. De Datta is a founding member of the FirstMark management team and has been a key factor in expanding the Company to its current size and scale. FirstMark Communications Europe recently raised $1bn in private equity and debt (known to be the largest private equity raise in European history) to create a Pan-European broadband communications network, providing phone services, high-speed internet connections and video services for small businesses. As a provider of broadband access through fixed wireless, fibre and DSL, FirstMark's strategy is to fill the gap between the giant corporations that can afford high-speed, fibre-optic links, and traditional monopolies relying on the older, clunky system of copper phone lines. Prior to joining FirstMark Communications, Mr. De Datta was an investment banker in the Global Telecommunications and Technology Group at Lazard Freres & Co. LLC in New York where he advised clients including SBC Communications, US WEST, Baan Company, MCI Communications, Viatel and Phillips.

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Alli at Topbucks.com writes on YNOTNews.com 11/28/02:

[Yishai] Habari began the seminar with some interesting statistics. “Three to four years ago, the U.S. represented 85% of adult Internet traffic”, he stated. “However, recently, those numbers have changed as foreign Internet users grow in quantity ten times faster then U.S. users. Now, statistics show that adult Internet traffic is currently only 30% U.S. users and 70% foreign users.” Although these are significant changes, they do not have to affect the bottom line of adult Internet companies. There is money to be made on international traffic and Habari says, “The key to making the money is knowing how to bill.”

Although credit cards are the most prominent way for billing in the U.S., they can be problematic in other countries and Habari commented that there were two specific problems associated with foreign credit cards. The first problem that exists is that there is a very low penetration of the credit card in foreign countries. So much of the foreign population either does not have or does not use credit cards. The second problem is that international charge backs on credit cards are very high. With the lack of success of foreign credit card processing, it is necessary for companies to determine other ways of billing this high quantity of foreign traffic.

Alternative billing companies specialize in making the most of this foreign traffic. “Using dialer technology, an IP look-up can be done to determine where the surfer is coming from and compare it to a detailed breakdown of the best billing methods for that area, sending the surfer to a page offering their preferred processing method,” said Habari. Dialers are often the preferred method of billing for foreign surfers. Foreign surfers on broadband connections, however, are unable to use dialers, so dialer technology offers a solution to that as well. SMS (Short Message Sending, also known as mobile messaging) billing bills surfers through their mobile phone numbers for access to the site content. Habari also mentioned that some dialer technology can even go as far as automatically determining the connection type and send dialer candidates using broadband to a SMS billing page. By using the surfers' preferred billing method, a company is able to maximize earnings as well as minimize charge backs and credits.

Feds: Mob behind massive Internet fraud
2003-06-02 12:05:05
From Newsday.com:

(AP) NEW YORK -- In the late 1990s, Richard Martino and other investors made a killing by peddling pornography on the Internet.

The problem, federal prosecutors now say, was twofold: Customers' credit cards were billed without their permission. Worse, millions of dollars went to the mob.

The $230 million Internet fraud scheme _ believed to be the largest ever prosecuted _ produced a series of recent arrests of alleged members and associates of the Gambino organized crime family in New York and Florida. And it's brought shame on self-proclaimed gangland purists who consider profiting from porn a sin.

"I have never been involved ... with any business regarding the sex industry _ EVER!" John "Junior" Gotti, the former acting boss of the Gambinos, wrote in a published letter after reading about the case in prison.

His dignity intact, young Gotti put down his pen and resumed serving a 5-to-7 year federal term for racketeering, bribery, extortion conspiracy and illegal gambling.

Gotti's reaction aside, authorities say the case shows a new generation of mobsters has rewritten the code of ethics since losing much of its grip on the gambling industry, construction unions and other traditional sources of income. They allege Martino, as customary for a Gambino soldier, "kicked up" an $8 million cut to Salvatore LoCascio, a reputed Gambino captain.

With his gift for consumer fraud, Martino became one of the Gambino's major assets, authorities said. His schemes allegedly earned LoCascio more than $40 million, including $8 million for the Internet porn scam.

Prosecutors say the evidence includes a 1990 surveillance tape of "Junior's" father, the late Gambino boss John Gotti discussing Martino's future with the family. On it, the late "Dapper Don" tells his cohorts that he likes prospects like Martino who can "do more than killing."

Said Gotti: "Ten years from now, these young guys we straightened out, we're going to be really proud of them."

Gambino thugs plead guilty to X-rated ring

1/15/05

A half-dozen Gambino mobsters copped pleas yesterday to the biggest consumer fraud in U.S. history - preying on hapless porn Web site users and phone sex customers in a huge $650 million scam.

Brooklyn U.S. Attorney Roslynn Mauskopf said thousands of customers in the U.S., Europe and Asia were victimized by the vast operation - which pelted dupes with bogus credit card and phone bill charges - between 1996 and 2002.

Martino and a business partner, Norman Chanes, devised the Internet and so-called "phone cramming" scams, which grossed sums that dwarfed the mob's traditional bread-and-butter rackets like gambling and loansharking.

Operating behind a maze of 64 companies, they lured suckers to X-rated Web sites promising "free tours" of the lurid content. The viewers were required to give their credit or debit card numbers as proof of age. Then the unwitting victims were hit with charges of up to $90 on their card.

Under the deal struck yesterday, just hours before jury selection, Martino will serve 10 years and forfeit $15 million.

LoCascio will get seven years and have to pony up $4.7 million. Gambino associate Zef Mustafa will get five years and forfeit $1.7 million.

Gambino soldier Andrew Campos and associate Thomas Pugliese face two years and $300,000 in restitution. Family associate Daniel Martino, Richard's older brother, will serve five years and pay $1.5 million.

Richard Martino

Salvatore LoCascio

Two Years After Indictment, Richard Martino Pleads Guilty

Carles Carreon (who won back sex.com for Gary Kremen) writes at 4:25pm, February 19, 2005 on ragingblog.com:

For those of you watching the Crescent Communications imbroglio over the years, you may remember Luke F-rd's opening post on the topic. (It's at the bottom of this post, if you need a refresher on the facts). Well, the other shoe just dropped with some Federal convictions of several very financially successful webcriminals. A dozen more cases like this, and we'll be making a good start on cleaning up the Net for ordinary decent pornographers.

I remember meeting Richard Martino after a day of meetings back in December 2000, right after Gary Kremen and I won Sex.com. Yishai and Richard were both very polite and pleasant, and were talking about the plan to buy the Missouri phone company he turned into a fraud and money-laundering operation. At that time, I had no experience with the online adult business, and was impressed by their operation, which seemed entirely devoted to counting clicks and dollars, and primarily employed accountants, not techies. In retrospect, I'm certainly glad I didn't continue to do business with him, although he seemed a nice enough man, a respectable businessman, you might say.

Kansas Company Pleads In Mob-Tied Phone, E-Porn Scam

From AVNOnline.com 2/19/05:

BROOKLYN - An Overland Park, Kansas company has pleaded guilty in the case of a telephone and Internet porn scam tied to reputed members of the Gambino crime family.

USP&C pleaded February 17 to conspiracy to commit mail and wire fraud, letting any local phone companies with billing relationships to the company back out of their contracts without fear of litigation, according to federal prosecutors.

USP&C was believed under the control of Gambino Family caporegime Richard Martino and his brother Daniel, both of whom pleaded guilty in the case earlier this week. The company was considered the middleman between local telephone companies and third-party companies offering private 1-800 numbers—offering adult entertainment services and psychic hotlines—voice mail, call forwarding, and other services.

USP&C was launched in 1997 by Kenneth Matzdorff, who runs Cass County Telephone Company in Missouri, with a reported $200,000 in startup funds Richard Martino provided. Two years later, Matzdorff sold his shares to Michael Lauro.

Matzdorff pleaded guilty in January for his role in both the phone cramming and a scam involving purportedly free tours of Internet porn sites, said to have been masterminded by Martino.

The Martinos also face charges in Kansas City involving a plot to fatten Cass County Telephone's expenses—a case in which Matzdorff pleaded guilty to inflating the expenses to qualify the company for federal subsidies and reimbursements, according to published reports.