More than a year after 34 alleged victims of Pornhub filed a federal racketeering lawsuit against the company’s secretive Canadian parent, MindGeek; its owners and executives; and Visa, which processes payments for the porn site, the women had their first victory.
On Friday Judge Cormac Carney of the U.S. District Court of Central California, denied Visa’s request to be excluded from the case, which was recently refiled with a single plaintiff, Serena Fleites. Fleites’ life “spiralled out of control” after a sexually explicit video of her at the age of 13 was uploaded on Pornhub.com several times, according to the complaint.
Visa had been included as a participant in the scheme because it engineered and facilitated “credit card and financial transactions to siphon off illicit profits and avoid credit card red flags,” according to the original lawsuit.
In his ruling, Judge Carney said there was enough evidence that Visa was engaged in the conspiracy. “Visa is not alleged to have simply created an incentive to commit a crime, it is alleged to have knowingly provided the tool used to complete a crime,” he wrote in his ruling.
Judge Carney was explicit in chastising Visa’s behavior.
“When MindGeek decides to monetize child porn, and Visa decides to continue to allow its payment network to be used for that goal despite knowledge of MindGeek’s monetization of child porn, it is entirely foreseeable that victims of child porn like Plaintiff will suffer the harms that Plaintiff alleges,” he wrote.
Institutional Investor previously reported the credit card companies’ role in the Pornhub enterprise, and the lengthy efforts of anti-trafficking activists to convince them to cut ties with the porn empire. As detailed in that story, their efforts went unheeded until an explosive exposé of Pornhub in the New York Times in December, which featured Fleites’ story and was followed by prodding from hedge fund manager Bill Ackman, CEO of Pershing Square Capital Management.
“Visa took temporary action, suspending business with MindGeek pending ‘investigations’ into the New York Times allegations,” according to the ruling on Friday. “Ultimately, however, Visa “restored services for MindGeek’s paid premium sites and for advertising on all its sites.”
Visa claimed it had no liability, saying that “maintaining a neutral stance under the law is vital for the free flow of commerce.”
In response to Visa’s motion to be removed from the case, Judge Carney wrote that “Visa is not being asked to police the billions of individual transactions it processes each year. It is simply being asked to refrain from offering the tool with which a known alleged criminal entity performs its crimes. That is not a tall order and does not spell out an existential threat to the financial industry.”
Ackman took to Twitter over the weekend in a detailed thread about the ruling, which he linked from his Pershing Square Foundation website. Although Ackman said he has no position in Visa (or any other financial institution) and is not involved in the case, his foundation has supported organizations that work to stop human trafficking.
He also took aim at Alfred Kelly, Visa’s CEO.
Kelly “waxes eloquent in his annual letter about Visa’s ‘noble’ purpose, commitment to an ‘inclusive economy’ and ‘economic opportunity for all,’” Ackman tweeted. “He then trumpets the hiring of a Chief Diversity Officer in May 2021 reporting directly to him. Mr. Kelly should know that the majority of child trafficking victims are from lower-income families including Black and Brown families.”
Michael Bowe, a litigation partner at Brown Rudnick who is representing Fientes, told CNBC that criminal charges could be filed against the board and the CEO because they knew that their merchants were “engaged in crime and they continued to do that business.”
As Ackman explained on Twitter, a “federal criminal child sex trafficking statute applies to ‘Whoever knowingly benefits, financially or by receiving anything of value, from participation in a venture which has engaged in [child sex trafficking]’ or anyone who conspires with any such person.’” He went on to recommend that Visa’s board and Kelly hire criminal counsel.
Visa did not return an II request for comment. But in a statement to CNBC, it called the ruling “disappointing” and said it “mischaracterizes Visa’s role and its policies and practices. Visa will not tolerate the use of our network for illegal activity.”