IT WAS SUPPOSED to be the year his company went public, issuing stock to raise $50 million for his reputedly thriving wired-sex empire. But for Seattle online-porn purveyor Seth Warshavsky, records show, 1999 was the year of the lawsuit, his IPO apparently stalled by a rash of legal claims over unpaid debts and employee and customer disputes.
And so far, 2000 is no banner year either. Besides several costly legal judgments and a threatened eviction from his live-sex broadcast studio on Capitol Hill, the man sometimes hailed as porn's version of Bill Gates has been threatened with arrest for bouncing a $5,000 rent check.
Of course, legal battles are nothing new for Warshavsky, the 27-year-old creator of Internet Entertainment Group, headquartered on First Avenue. To grab headlines, IEG has gone to court against such celebs as Pamela Anderson Lee and Kelsey Grammer over their home sex videos, and once even took on the Pope (and lost) after IEG's Clublove.com sex site was linked to a papal Web site (see "Porn Geek," SW, 2/11/99).
Less publicized by Warshavsky are a dozen lawsuits involving creditors, suppliers, and ex-employees over debts and bounced checks. Part of the problem, IEG's leader said this week, is due to a change in credit card vendors. As a result, IEG was "unable to process its credit stream for a prolonged period of time [creating] a short-term cash flow problem," he said. (One of his competitors, Mark Tiarra, CEO of a New Jersey sex Web site, tells us credit card companies are cracking down on "less than honest" sex sites; IEG has been peppered with complaints from customers claiming they were overcharged, which IEG blamed on technology glitches).
In contrast to the business lawsuits, however, three of the newer disputes involve rental and equipment payments for IEG's office and studio. Unico Properties of Seattle says IEG's November office rent check for $5,000 not only bounced, but that Warshavsky would not respond to a demand to make it good. In December, Unico was awarded a default judgment of $6,177 in Superior Court.
After Warshavsky failed to respond again, Unico obtained a bench warrant, signed last month by Superior Court Judge Anthony Wartnik. It orders the sheriff to bring Warshavsky to court and face contempt charges.
Apparently that got his attention. "IEG ultimately satisfied judgment," says Matt Green, Unico's attorney. "The bench warrant was never issued." Warshavsky says, "the case was dismissed and the warrant quashed."
Warshavsky was also hit with a $6,600 judgment for failing to pay for camera and recording equipment at his Capitol Hill studio where live sex acts are Netcast, and a $5,540 judgment for failure to pay rent there.
Warshavsky says the "misunderstanding" with Belmont LLC, the landlord of his Capitol Hill studios, has been resolved. Belmont LLC's attorney Jose Vera last week said the lawsuit eventually will be formally dropped.