Two Years After Indictment, Richard Martino Pleads Guilty
For those of you watching the Crescent Communications imbroglio over the years, you may remember Luke Ford'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.
[quote="http://www.lukeisback.com/stars/stars/richard_martino.htm“]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: I'm not sure of Yishai Habari's role in all this. Richard Martino controlled all companies involved. His 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.[/quote]
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.
AVNOnline.com wrote:
Kansas Company Pleads In Mob-Tied Phone, E-Porn Scam
By: Charles Farrar
Posted: 5:00 am PST 2-19-2005
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.
Victims who called the 1-800 numbers asking for free samples unwittingly kicked over a recurring monthly charge on their phone bills from USP&C, according to prosecutors, charges made to resemble standard phone charges hiding the adult entertainment and psychic hotline triggers. This was believed to be good for $50,000-60,000 a day from 1997 through 2001 and over $420 million gross overall, prosecutors said.
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.
He told the court that after he bought Cass County Telephone, with apparent help from the Martinos, Richard Martino suggested he launch USP&C. He also told the court he was unaware that Martino controlled the new company's clients or that they'd be responsible for excessive chargebacks thanks to later customer complaints of improper charges.
The Martino brothers and four other Gambino-tied defendants pleaded guilty February 14 in the phone cram and porn scams. 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.
Matzdorff told the court during his plea date that he met the Martino brothers when looking for financing to buy Cass County Telephone, with the Martinos presented as prime players in a New York pay phone company, InfoAccess, reputed to make money setting up services for children to call Santa Claus during Christmas holiday season.
http://www.avnonline.com/index.php?Primary_Navigation=Web_Exclusive_News&Action=View_Article&Content_ID=217064
[quote="http://www.lukeisback.com/stars/stars/richard_martino.htm“]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: I'm not sure of Yishai Habari's role in all this. Richard Martino controlled all companies involved. His 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.[/quote]