from www.adultcybermart.com -
On October 27th, 2010, the FBI raided the Center City Philadelphia offices of National A-1 Advertising, alias HotMovies.com, and there are probably a few more aliases none of us are aware of.
The Feds, carrying search warrants, descended on the corporate offices at 7th Street near Chestnut, around 9 a.m. FBI agents refusing to show the search warrants to managers on site, detained about 120 employees.
At the time of the raid, director of marketing James Cybert wrote on his Twitter page, "Nothing like having 100 plus federal agents in your office."
Cybert described how the agents were particularly tightlipped about what they were looking for.
During the afternoon and into the evening, a steady stream of city police, state troopers, IRS agents and representatives of the U.S. Attorney's Office also entered and left the Washington Square building. Agents drove up a U-Haul truck about 5:40 p.m., but it sat empty in the front of the building until 8 p.m.
Then authorities formed a line from the building, stocking the truck with boxes categorized by item number or by floor. One young woman, according to reports, was denied entry into the building in the afternoon and began answering reporters' questions.
She said she worked for National A-1 as a phone operator, but while she talked, a woman who claimed not to work for the company whisked her away. The woman then refused to talk about her job.
FBI Special Agent J.J. Klaver declined to comment on the search and would confirm only that agents were at the location. Meanwhile, Patty Hartman, a spokeswoman for the U.S. Attorney's Office, said the office "does not confirm or deny the existence or nonexistence of investigations."
Hot Movies, which takes in at least $20M annually according to some other reports, is a subsidiary of National A-1 which is owned by Richard Cohen. So is gaymovies.com.
Cohen is described as reclusive, making him the new Howard Hughes of the adult business. The old one was Mark Carriere, now retired, who ran LeisureTime. Cohen is a Drexel University graduate and National A-1 serves as a clearinghouse for thousands of porn videos. At the time of the raid, more than 30,000 videos were stored on servers there under tight security.
Besides Hotmovies.com, National A-1 also owns or operates a phone sex operation, PrimeTel Communications and a host of other online porn websites. Just in case you want to marry the babe you just met on the hotline, National A-1 likewise owns and manages National Watch & Diamond, on 8th Street near Chestnut, near Jewelers' Row. A store employee confirmed the establishment was also owned by Cohen, but declined to comment further.
Many just as soon assumed the raid had something to do with another of National A-1's operations, escorts.com. A CBS report stated the feds' search was related to prostitution, possibly in connection to escorts.com.
In an interview with the Philadelphia media, Northeast Philly native Paul Fishbein, founder of AVN Media, claims that in his visits to the company's offices he saw no evidence to support that.
"This [type of raid] happens in obscenity cases," Fishbein said.
After covering the adult-entertainment business for 28 years, he said, "I know the pattern. They are going after a big name [within the adult-entertainment industry]. Cohen has advertised with AVM over the years, said Fishbein, who called him "a good customer and friend."
Cohen, Fishbein added, "pays his taxes, and he's good about protecting kids from getting on the sites."
"The good guy gets visited by the FBI."
Several days later, however, another raid as part of "Operation Cross Country" was aimed at an Internet prostitution ring in Fort Wayne, Indiana. It appeared to have a connection with the raid on National A-1.
After a six months investigation, Fort Wayne police netted 90 arrests, among them were suspects from five other states: Illinois, Kentucky, Michigan and Texas. In all, nationwide there were 900 arrests and all were part of an investigation into online prostitution which discovered that strippers were touring the country and booking clients online. Escort.com was one of the sites being looked into as a means of setting up those meetings.
But adult industry attorney Paul Cambria, speaking during the past AEE show in Las Vegas, indicated that the Justice Department had no interest in the case.
"It's really new [legal] ground," Cambria said of the raid, observing that courts around the country have held that advertisements posted on a host website are merely 'republished' material, with the host having no responsibility for the ads' contents."
However, as Cambria also noted, the FBI has taken the position that allowing such ads to be posted on the sites amounts to "facilitating prostitution," and that the web host could be charged with criminal facilitation and even money laundering-both very serious federal felonies.
So while Cambria had some words of encouragement for National A-1, he had cautionary words for sites that carry ads which the government might deem the advertising of prostitution and although most domainers do not operate adult sites most use landing pages on which ads appear and therefore any adult domain owner should pay attention to the ads that appear on its domains.
The latest twist to this raid now emerges with an AP story reported this week about Cohen's Phone Sex operation. Although phone sex is pretty much dead and buried as a profit-making venture, it still seems to be live and well in Philly.
Records obtained by The Associated Press show that over the past 13 years National A-1's phone sex operation, PrimeTel Communications has quietly gained control over nearly a quarter of all the 1-800 numbers in the U.S. and Canada, often by grabbing them the moment they are relinquished by previous users. As of March, it administered more 800 numbers than any other company, including Verizon and AT&T.
Most of those 1.7 million numbers appear to be used for redirecting callers to a phone-sex service, according to the AP story. Following a similar business model adopted by Jay Grdina, Jenna Jameson's ex husband which took advantage of misdials, PrimeTel is supposed to have made a ton of money the same way.
PrimeTel appears to have benefited by grabbing numbers associated with famous names, like 1-800-Beatles, or numbers that have recently been canceled but are still advertised widely.
From the late 1980s until around 2005, teenagers who dialed the national hotline used by Teens Teaching AIDS Prevention would reach a call center in Kansas City, Mo. When that program ended, the number was soon routed to one of National A-1's sex lines.
When New York City's Fire Department relinquished its toll-free fire safety hotline a few years ago because of an administrative slip-up, PrimeTel grabbed it the moment it became available. Soon enough, 1-800-FIRETIP was ringing into one of National A-1's phone-sex lines.
The same thing happened to the Cook County Jail in Chicago when it canceled its toll-free inmate information line, and to rape counseling hotlines in Maine and New Mexico.
The Republican National Committee once printed a fundraising mailer with a toll-free calling code and was publicly embarrassed when the calls began ringing in to one of National A-1's chat lines.
Dial 1-800-Chicago and instead of reaching a tourism hotline, you will hear a woman offering "one-on-one talk with a nasty girl" for $2.99 per minute. A similar thing happens if you punch in the initial digits of 1-800-Metallica, 1-800-Cadillac, 1-800-Minolta, 1-800-Cameras, 1-800-Worship or 1-800-Whirlpool.
All those numbers contain messages redirecting callers to erotic chat lines operated by National A-1 Advertising, a company that shares an office building with PrimeTel.
The companies have common ownership [Richard Cohen] and list many of the same people as executives or business contacts.
Founded in 1995, PrimeTel is one of around 400 companies registered as toll-free service providers for the U.S. and Canada. That gives it the same power to reserve and assign unused toll-free numbers as big phone companies with millions of customers. But PrimeTel appears to be amassing numbers predominantly for National A-1.
According to a database maintained by an industry organization, PrimeTel was listed as the administrator of record for at least 1,667,000 out of around 7.87 million active 800 numbers as of this March. Industry experts said PrimeTel also holds a dominant share of numbers with other toll-free codes, like 888 and 866, giving it several million numbers overall.
The AP story further notes that PrimeTel over the years has been hit with lawsuits and complaints alleging that it is violating federal rules banning toll-free service providers from hoarding digits. Federal Communications Commission rules say that "routing multiple toll-free numbers to a single toll-free subscriber" is usually considered hoarding.
The FCC has never taken formal action against PrimeTel or National A-1, although federal authorities have expressed renewed interest lately in companies that handle toll-free numbers.
In the fall, authorities sent subpoenas to several, including PrimeTel, asking for information on how they acquire numbers and why. And that's when federal agents and Philadelphia police spent two days removing records from National A-1's office suite, although it is unclear if the action was related to the phone business.
The man listed on many government records as the top executive at both PrimeTel and National A-1 is Cohen. A lawyer for both companies, Charles Helein, would not discuss their business dealings in detail but said PrimeTel isn't breaking any rules or engaging in prohibited practices such as selling numbers or obtaining ones it doesn't intend to use.
"They are extremely sensitive to the FCC. They wouldn't have them if they didn't need them," Helein said of PrimeTel's huge pool of numbers. He said the company's large share hasn't caused any shortages: "Everybody's got all the numbers they need."
Helein insists the raid last fall was not aimed at PrimeTel, though National A-1 and its owners have a variety of business enterprises headquartered at the same address, including a website sometimes used by prostitutes to advertise their services.
People in the telecommunications industry who are familiar with PrimeTel say that in addition to snapping up familiar 1-800 numbers, the company may be trying to capitalize on people's fat-finger dialing mistakes by acquiring numbers that are just a digit or two away from a major company's number.
Helein also denied PrimeTel was trying to capitalize from misdials or engaged in a strategy to intercept calls made by customers of other businesses but admits PrimeTel has been the target of complaints from other industry players who are "jealous" of the company's computer systems.
Bill Quimby, founder of Tollfreenumbers.com puts it less delicately in an interview he did with philly.com
"They're more mafia-like than any organization I've seen or heard," said Quimby, a national expert on the industry.
"They forge paperwork, yank numbers; they don't care what other people think about them."
According to Quimby, National A-1 in the person of PrimeTel has control of 1.9 million of the 7.8 million toll-free numbers that are available. They're sitting on $1 Billion worth of phone numbers."
A former National A-1 phone-sex supervisor who spoke on the condition of anonymity said that the company's CEO, Cohen, "was a good guy" but that the office atmosphere was "shady. It was definitely shady."
The conglomerate had been known as National Telephone Enterprises for some time, and then suddenly it wasn't, he said.
" 'If anybody asks about it [NTE], you don't know anything,' " the employee said he had been told by a manager. And there were other issues related to the communications industry.
"This thing they used to do with these telephone lines in Bell South areas, like Florida, anywhere in the South, they had these . . . numbers like 2-1-1 that would take you to local chatting lines," he said.
Unknowing people with children who may have played with the phone would call to inquire about mysterious charges that would show up on their phone bills, the employee said.
Quimby said that it's the PrimeTel way.
"If the amount of money you made was based on the amount of wrong numbers you received, and the amount of wrong numbers you received was based on good toll-free numbers you had, how many toll-free numbers would you want?" he said.
Jan Uzzo, a New York businessman who says PrimeTel took a toll-free phone number he controlled, called the latest news "wonderful."
"I think a company like PrimeTel deserves everything that happens to them," Uzzo told the Daily News. "They have been skirting the law - nobody has been policing them."
