let me ask you guys this.
isn't there some sort of state or federal agency that is in charge of investigating this whole situation?
it seems fuct that individuals have to sue ibill. this is the enron of the adult world. :(
here's a link i found on a google search:
http://www.forbes.com/2004/09/27/cz_...kly_newsletter
LOS ANGELES - South Jordan, Utah, just south of Salt Lake City, is an otherwise forgettable suburb. Other than the fact that it's the home of the Jordan River Utah Temple, which boasts the largest capacity of any Mormon church in the world, there isn't much else going on.
South Jordan has another claim to fame the Chamber of Commerce is probably less eager to boast about
: It's the hometown of what has likely become the largest U.S. processor of credit cards used to purchase Internet porn.
That dubious distinction comes courtesy of a little-noticed lawsuit filed Sept. 17 by Internet Billing against First Data (nyse: FDC - news - people ). IBill acts as a middleman between 4,000 small, mostly porn, sites and the banks that are critical to any credit card transaction. In iBill's case, the bank was an obscure unit of First Data, a financial services giant that expects 2004 sales of $10 billion. But apparently fed up with the connection to the controversial business, First Data finally got out of porn on Sept. 15 when its contract with iBill expired, leaving iBill in the lurch (but still holding $14.5 million of iBill's deposits).
For now, at least. iBill has another bank lined up to process its $300 million or so in annual credit card purchases. But the name of the bank may raise eyebrows amongst the tee totaling, clean-cut Mormons of South Jordan, as well as the heathens on Wall Street: Merrick Bank, a $500 million-asset bank whose parent company, credit card-servicer CardWorks, is partly owned by a fund controlled by Lewis Ranieri, the bond trading legend immortalized by Michael Lewis' Liar's Poker who is now chairman of Computer Associates (nyse: CA - news - people ).
It turns out Merrick, which says it "believes in bettering the community in which it operates," knows a thing or two about porn. The company is already processing credit cards for CCBill, a big aggregator like iBill of credit card purchases for Internet porn. CCBill handles sites that include Soundpunishment.com, GothicSluts.com, and Threepillows.com.
Not surprisingly, the bankers who handle porn don't advertise the fact. First Data, for instance, managed to avoid any connection with porn until it was revealed in public filings as the company that owned the bank that handled iBill's porn processing. Merrick's name popped up for the first time in iBill's lawsuit against First Data, in which iBill blamed First Data for reneging on a deal to process its credit card accounts until it gets set up at Merrick in November. The court denied iBill's request for a preliminary injunction on Wednesday, Sept. 22.
"We have determined that processing payments of the adult entertainment marketplace is inconsistent with our core values," sniffs a First Data spokesman. He adds that the company warned iBill with "multiple notices" that its contract would not be extended after its expiration.
In a written statement, Merrick would not comment on whether it also processes credit cards for CCBill, and claims it is "not now processing credit card transactions for iBill," and "has no signed agreement to process credit card transactions for iBill." But in iBill's lawsuit against First Data, iBill claims Merrick sent a "commitment letter" to First Data on Sept. 15 in which Merrick states that its board of directors has "approved" iBill as a "merchant" account.
Christopher Steele, the attorney for Ranieri & Co., would only say that Merrick's affairs are "handled much more from CardWorks perspective. I can't give you a comment on that."
iBill still managed to find other ways to handle its accounts in the interim. But news of the lawsuit, and the apocalyptic language of "catastrophic consequences" iBill used to argue for a temporary restraining order, has set the gossipy porn industry into a full lather.
"Industry Watching iBill, Hoping For The Best," trumpeted industry trade Adult Video News. "This would be devastating," wailed a poster on a porn business bulletin board.
Adding insult to injury, the closing of a deal for iBill to be sold to Care Concepts I (amex: IBD - news - people ) in exchange for 20% of Care's stock was rescinded Friday. The company said the American Stock Exchange threatened to delist its stock, in part because the acquisition of iBill "raises public interest concerns." The statement is a cryptic reference to a section of the exchange's policies that allows it to delist a company if it does anything that is "contrary to the public interest."
Care said it will work with the Amex to resolve the exchange's issues and acquire iBill after that. But perhaps proving that the temptations of the flesh are hard to resist, Care said it will go ahead with the deal even if the Amex disapproves, and take its stock elsewhere.
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