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Old 04-13-2004, 06:01 AM   #1
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FBI Hikes Gambino Site Take at $750 Million

FBI Hikes Gambino Site Take at $750 Million

OVERLAND PARK, Kansas ? Federal authorities now believe that the Gambino crime family?s online adult business generated $750 million in revenue, XBiz has learned.
XBiz reported last month on new federal indictments alleging that Lexitrans and other shell companies in Overland Park, Kansas, were used to help run adult Internet sites and 900 numbers that advertised free trials but charged customers anyway.

Thousands of adult surfers who thought they were taking a free peek at the sexually explicit material actually were charged $59.99 a month, FBI spokesman James Margolin told XBiz.

?Based on our belief, this is the largest consumer fraud in U.S. history," Margolin said. ?The FBI is working with the Federal Trade Commission on the case, and we?re confident the figure will exceed $750 million ? the numbers are growing, not shrinking.?

The scheme originally was thought to have bilked customers out of $230 million when the FBI made the indictments Feb. 10.

Lexitrans Inc. was allegedly founded by members of the Gambino family, including Richard Martino, who partnered with Norman Chanes, producer of several low-budget Hollywood movies and an alleged associate of the Gambino organization, to create an informal joint venture with Crescent Publishing Group Inc.

Lexitrans moved from New York in 1996, after up-and-coming members of the Gambino crime began looking for a new home.

The company?s Overland Park offices contained 7,000 square feet of data center space, with redundant power and huge fiber-optic pipes. One source as saying that Lexitrans paid $50,000 a month for Internet access alone.

The adult websites Lexitrans ran were flourishing.

?Ridiculous amounts of traffic, ridiculous amounts of refunds,? a former employee said in court papers.

Before federal indictments started landing, Lexitrans attracted little attention.

Crescent owned adult magazines such as Playgirl and Live Young Girls, and the ideas was to create Internet sites for the magazines, according to court papers.

A source said that at one point the company was spending $100,000 a day for placement on search engines such as AltaVista. He also said that Lexitrans paid $50,000 a month for Internet access alone.

Lexitrans programmers, the source said, hatched the idea of inundating users with pop-up ads for related pornographic sites. With a fraction of people going to those sites and signing up for free tours, the idea worked.

Each of the shell companies was controlled by the Mafia and used to defraud consumers through Internet and telephone schemes, according to the indictment.

The Federal Trade Commission and the New York State Attorney General settled a lawsuit against Crescent in 2000. Crescent, according to the indictment, has been returning one of every three dollars of revenue the sites generated in 1999 as part of the settlement.

So far more than 450,000 claim forms have been mailed to potential claimants to those who were billed for the following sites: Playgirl.com, Playgirlde.com, Playgirldeutschland.com, Playgirldeutsch.com, Playgirlmag.com. Allwetsex.com, Bi-curioustv.com, Candygirlsmag.com, Chateudesade.com, Cheri.com, Cherimag.com, Cheritv.com, Climaxmag.com, Cock-tv.com, Cun-tv.com, Hotyounghunks.com, Fastlanesex.com, Fleshfest.com, Freeskinparty.com, Fukvision.com, Hawkmag.com, Highsociety.com, Highsocietymag.com, Highsocietydeutsch.com, Highsocietydeutschland.com, Highsocietytv.com, Lusthighway.com, Planetflesh.com, Schoolgirls4u.com, Sexundersurveillance.com, Sexcityintl.com, Sexonthestrip.com, Teenplaythings.com, Xxxposure.com and Ygal.com.

http://www.xbiz.com/news_piece.php?id=2820
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Old 04-13-2004, 06:03 AM   #2
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Holy shit that's a rediculous amount of money. So I wonder if they had their own merchant accounts for all this? I would presume as much.

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Old 04-13-2004, 06:05 AM   #3
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that sux
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Old 04-13-2004, 06:05 AM   #4
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Well thats just great - not the kinda thing that improves the rep. of this biz...
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Old 04-13-2004, 06:08 AM   #5
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There are some good tips in that article.
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Old 04-13-2004, 06:10 AM   #6
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I don't believe much of that.
$100K a day on se traffic?
I know of people spending tons of money on se traffic but not even close to 100K a day.
$750M sounds too high as well.
At $50 a sale they'll need 15M sales/rebills.
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Old 04-13-2004, 06:12 AM   #7
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never thought crime families would take the time to even start something of that sort. Considering the risk and the amounts of money they were dealing with.
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Old 04-13-2004, 06:14 AM   #8
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I don't believe much of that.
$100K a day on se traffic?
I know of people spending tons of money on se traffic but not even close to 100K a day.
$750M sounds too high as well.
At $50 a sale they'll need 15M sales/rebills.
I tend to agree... I mean, that much money floating around they'd have to be well known in the business. Are we supposed to believe they did this all on their own and never sent even exit traffic out or paid any of the content providers for lease plugins? The numbers just don't add up... of course I don't know how many years they were doing this.. but look at their numbers to the amount of business someone like IBILL did in total.

Perhaps they were also using the business to "launder" money so not all of the revenue wasn't genuinely from surfers?

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Old 04-13-2004, 06:15 AM   #9
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Old 04-13-2004, 07:12 AM   #10
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I don't believe much of that.
$100K a day on se traffic?
I know of people spending tons of money on se traffic but not even close to 100K a day.
$750M sounds too high as well.
At $50 a sale they'll need 15M sales/rebills.
Your missing an important point. The perps that were spending the money were generating it through massive fraud. Your experiences are with folks trying to make a go at legitimate business. You cant apply real world analysis of retention, conversion and the economics of getting a true ROI with seach engine spending because they were not following legal boundaries. When you are propped up by illegally charging cards two, three and four times each for $50-100 a pop, spending 100k a day in search engine listings was a small marketing price to pay to get leads on more sheep to slaughter.
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Old 04-13-2004, 07:16 AM   #11
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I tend to agree... I mean, that much money floating around they'd have to be well known in the business. Are we supposed to believe they did this all on their own and never sent even exit traffic out or paid any of the content providers for lease plugins? The numbers just don't add up... of course I don't know how many years they were doing this.. but look at their numbers to the amount of business someone like IBILL did in total.

Perhaps they were also using the business to "launder" money so not all of the revenue wasn't genuinely from surfers?

Brad
Brad, the same goes with content. Your thinking about a real business model where you have to have content to sustain a transaction. This was fraud, Crescent didnt have to put up high quality content because they planned on charging cards multiple times under many, many different billing descriptors. They didnt care about anything but getting more names and more credit card numbers.
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Old 04-13-2004, 07:35 AM   #12
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Holy shit that's a rediculous amount of money. So I wonder if they had their own merchant accounts for all this? I would presume as much.

Brad
they did, the people running the processing were here in florida.
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Old 04-13-2004, 07:35 AM   #13
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And people wonder why Visa and Mastercard have so many rules and policies.
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Old 04-13-2004, 07:41 AM   #14
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If only they had been running a 60/40 affiliate program
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Old 04-13-2004, 07:48 AM   #15
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And people wonder why Visa and Mastercard have so many rules and policies.
And you have to wonder how many people in our business knew what was going on and kept quiet about it: despite the damage it would do to the industry.

I guess it's possible this operation was totally isolated, but whenever a scam (whether of customers or webmasters) is exposed, there always seems to be a crop of people popping up and claiming to have known about it.

I get more p*ssed at people who turn a blind eye to the cr*p that goes on, than at those who dish it out. Because if legitimate webmasters can't be bothered to protect the industry and each other, we might as well hang out a sign saying "shysters welcome".
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Old 04-13-2004, 07:53 AM   #16
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that's peanuts
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Old 04-13-2004, 07:56 AM   #17
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they did, the people running the processing were here in florida.
what impossible, there are no mobsters in florida!!!!
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Old 04-13-2004, 07:56 AM   #18
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Something to do with Paris Hilton Scam?

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Old 04-13-2004, 08:01 AM   #19
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And you have to wonder how many people in our business knew what was going on and kept quiet about it: despite the damage it would do to the industry.

Lots of webmasters sold traffic to Crescent back then so I am sure enough people had an idea of what was going on.

Oh well the power of money.
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Old 04-13-2004, 08:03 AM   #20
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Who would have thought the MOB fell that low and do PORN online


ROTFL

Ge Ge, who would have thought.. What's the world coming too..

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Old 04-13-2004, 08:03 AM   #21
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there go thousands of customers who will barely ever buy a porn membership again
(in case its really true)
those numbers look a little bit big to me....but... who knows)
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Old 04-13-2004, 08:05 AM   #22
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Look who purchased their domains


http://www.playgirldeutschland.com/
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Old 04-13-2004, 08:07 AM   #23
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Old 04-13-2004, 08:08 AM   #24
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Look who purchased their domains


http://www.playgirldeutschland.com/
Whats wrong with that?
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Old 04-13-2004, 08:09 AM   #25
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there go thousands of customers who will barely ever buy a porn membership again
(in case its really true)
those numbers look a little bit big to me....but... who knows)

don't worry, every day thousands more suckers discover the wonders of internet
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Old 04-13-2004, 08:13 AM   #26
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A few domains sounds familiar. Did they buy clicks from that Serge Clicks program?
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Old 04-13-2004, 08:17 AM   #27
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I actually received a letter regarding the class action lawsuit against Trans Digital saying they wrongly charged my credit card 59.99. I had to sign a paper saying I agreed with that amount and send it back...still waiting for my 59.99
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Old 04-13-2004, 08:26 AM   #28
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never heard of them before
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Old 04-13-2004, 08:29 AM   #29
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And you have to wonder how many people in our business knew what was going on and kept quiet about it: despite the damage it would do to the industry.

I guess it's possible this operation was totally isolated, but whenever a scam (whether of customers or webmasters) is exposed, there always seems to be a crop of people popping up and claiming to have known about it.

I get more p*ssed at people who turn a blind eye to the cr*p that goes on, than at those who dish it out. Because if legitimate webmasters can't be bothered to protect the industry and each other, we might as well hang out a sign saying "shysters welcome".
Quote:
Originally posted by DarkJedi


don't worry, every day thousands more suckers discover the wonders of internet
What a difference in attitude. One guy who says unless we clean up our act we will always be bottom opne to scammers, the other who newcomers are suckers. Wonder which view will prevail in the long term?

But the worse side of this is Visa. At what point did they say to themselves "There is something wrong with this account" Was it when the FBI were standing in there offices?

How come they did not just cancel the account, or were they just looking at the bottom line?
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Old 04-13-2004, 08:35 AM   #30
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What a difference in attitude. One guy who says unless we clean up our act we will always be bottom opne to scammers, the other who newcomers are suckers. Wonder which view will prevail in the long term?

But the worse side of this is Visa. At what point did they say to themselves "There is something wrong with this account" Was it when the FBI were standing in there offices?

How come they did not just cancel the account, or were they just looking at the bottom line?

Nigga please.

You know damn well that 90% of affiliate programs fuck surfers over in some way (be it a shitty members area or free trials/cross-sales bullshit)
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Old 04-13-2004, 09:08 AM   #31
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Brad, the same goes with content. Your thinking about a real business model where you have to have content to sustain a transaction. This was fraud, Crescent didnt have to put up high quality content because they planned on charging cards multiple times under many, many different billing descriptors. They didnt care about anything but getting more names and more credit card numbers.
You're right, I wasn't thinking outside the legal box. LOL

I wonder how many merchant accounts and shell companies they went through.

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Old 04-13-2004, 09:47 AM   #32
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You know damn well that 90% of affiliate programs fuck surfers over in some way (be it a shitty members area or free trials/cross-sales bullshit)
So let me put your two posts together and see if I have the logic right. Because there are new surfers every year, we can afford to keep "fucking surfers over in some way"?

Maybe I'm missing something and for sure some surfers will get bitten a few times before they learn the lesson. But doesn't that mean that instead of enjoying an ever increasing market, the best we can hope for is to be fighting over the same number of innocents each year?

Perhaps the picture isn't quite as black as that. But is there some major downside to the programs that don't undermine the market, which makes it worthwhile supporting the programs which do?
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Old 04-13-2004, 09:49 AM   #33
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If only they had been running a 60/40 affiliate program
and do you think you would have gotten paid? wake up.
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Old 04-13-2004, 10:04 AM   #34
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Your missing an important point. The perps that were spending the money were generating it through massive fraud. Your experiences are with folks trying to make a go at legitimate business. You cant apply real world analysis of retention, conversion and the economics of getting a true ROI with seach engine spending because they were not following legal boundaries. When you are propped up by illegally charging cards two, three and four times each for $50-100 a pop, spending 100k a day in search engine listings was a small marketing price to pay to get leads on more sheep to slaughter.
This explains how AV was able to get away charging $50 CPM for banner ads.
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Old 04-13-2004, 10:09 AM   #35
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A source said that at one point the company was spending $100,000 a day for placement on search engines such as AltaVista. He also said that Lexitrans paid $50,000 a month for Internet access alone.
And I thought I was a medium player in the PPC SE game. Although I still think this 100k per day is exaggerated.

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Old 04-13-2004, 10:20 AM   #36
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And I thought I was a medium player in the PPC SE game. Although I still think this 100k per day is exaggerated.

WG
They probably were getting anything they wanted out of AltaVista for that $100k/day .

Could you imagine what you might be able to get these days over at google for such a commitment? 3 mil a month...
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Old 04-13-2004, 10:21 AM   #37
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if any of you believe that figure you are dumb.

this is exxagerated as it ALWAYS is to make the public turn an eye and pay attention.

this is another smear campaign being launched against this industry.

to see it any other way is denial.
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Old 04-13-2004, 10:57 AM   #38
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Your missing an important point. The perps that were spending the money were generating it through massive fraud. Your experiences are with folks trying to make a go at legitimate business. You cant apply real world analysis of retention, conversion and the economics of getting a true ROI with seach engine spending because they were not following legal boundaries. When you are propped up by illegally charging cards two, three and four times each for $50-100 a pop, spending 100k a day in search engine listings was a small marketing price to pay to get leads on more sheep to slaughter.
Sorry still don't believe these numbers
Not saying they didn't make that amount of money but not just with online porn.
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Old 04-13-2004, 11:02 AM   #39
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They probably were getting anything they wanted out of AltaVista for that $100k/day .

Could you imagine what you might be able to get these days over at google for such a commitment? 3 mil a month...
hehe, google would love you!
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Old 04-13-2004, 11:04 AM   #40
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Old 04-13-2004, 11:10 AM   #41
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And you have to wonder how many people in our business knew what was going on and kept quiet about it: despite the damage it would do to the industry.

I guess it's possible this operation was totally isolated, but whenever a scam (whether of customers or webmasters) is exposed, there always seems to be a crop of people popping up and claiming to have known about it.

I get more p*ssed at people who turn a blind eye to the cr*p that goes on, than at those who dish it out. Because if legitimate webmasters can't be bothered to protect the industry and each other, we might as well hang out a sign saying "shysters welcome".
There are plenty of people who knew about it and kept their mouth shut for obvious reasons. Talking too much about certain people is bad for your health.

Some of the people involved with this are still very active in this business. Some of them run webmaster boards, for example. Damned if I'm naming anyhahahaha though
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Old 04-13-2004, 11:11 AM   #42
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Lots of webmasters sold traffic to Crescent back then so I am sure enough people had an idea of what was going on.
Yeah much of it went via Serge and cotac.com
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Old 04-13-2004, 11:11 AM   #43
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Old 04-13-2004, 11:11 AM   #44
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They probably were getting anything they wanted out of AltaVista for that $100k/day .

Could you imagine what you might be able to get these days over at google for such a commitment? 3 mil a month...
the more money we put into Google, the more we lost. If anyone has figured out how to make a good ROI with Adwords hit me up on ICQ and sell me your knowledge.
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Old 04-13-2004, 11:12 AM   #45
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you people act like there isnt mafia in porn.

trust me.

socal is ran by crooked porn mafia.

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Old 04-13-2004, 11:24 AM   #46
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I wonder if snow was involved http://www.mafiabucks.com ? LOL
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Old 04-13-2004, 11:30 AM   #47
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Nigga please.

You know damn well that 90% of affiliate programs fuck surfers over in some way (be it a shitty members area or free trials/cross-sales bullshit)
Yeah, I fuckin' agree!!

And I will not name some of them...
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Old 04-13-2004, 11:35 AM   #48
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I wonder if snow was involved http://www.mafiabucks.com ? LOL
no this isn't a wannabe mafia
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Old 04-13-2004, 11:43 AM   #49
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Sorry still don't believe these numbers
Not saying they didn't make that amount of money but not just with online porn.
In all honesty, neither do I. The attorney in me just loves to get on the other side of an argument, even when the other side is tenuous at best. I do think that the Crescent scam was of epic proportions but the numbers being pushed by the Feds do indeed raise eyebrows.

The main reason I distrust numbers from law enforcement is their historical preference of inflating dollar amounts to give their busts more credibility. My favorite is when they take a drug bust (for example 100 kilos of coke) and they then give a dollar amount to the bust based on what that coke would sell for cut up 4 times and sold per gram on the street. When I use to work doing criminal defense we once had a case where a defendant had 4 pot plants in his trunk and the police originally charged him based on the weight of the plants including the dirt in the pail. It was ridiculous and the state attorney on the case plead the case down dramatically with very little prodding. Meanwhile the newspaper report had the police confiscating "55 lbs of marijuana" from our clients car . High-larious it was (except for the poor sap charged).
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Old 04-13-2004, 11:52 AM   #50
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i agree these numbers are probably being inflated for the reason of scaring off customers and bringing more attention to porn
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