TRIBUTES on the Web site of Richard J. Gordon‘s company strike all of the uplifting chords one would expect of a digital maverick. He is described as a “trailblazing businessman” who is “operating in the front ranks of those transforming the Internet into the global marketplace of the future.”
There is an echo of truth in all of this. Though most Internet buffs have probably never heard of him , Mr. Gordon, 62, played a significant role in the birth of electronic commerce. While Amazon.com and eBay were still fledgling enterprises, the companies that Mr. Gordon founded in the early 1990s were already laying the groundwork for electronic transactions conducted with credit cards — a development that opened the doors to the first generation of e-commerce start-ups.
And if the Internet is for porn, as the hit Broadway show “Avenue Q” asserts, perhaps it was only natural that many of Mr. Gordon’s early clients were purveyors of X-rated entertainment.
While riches were being minted and squandered in the dot-com ’90s, Mr. Gordon made a fortune by taking a commission for processing sales on a range of sites from small, mainstream retailers to others like ClubLove, which published the Pamela Anderson-Tommy Lee sex tape. Today, his payment processing company continues to have roots in the world of sexual entertainment. One of the several companies he owns or operates, Processing Solutions, facilitates credit card transactions for the Web sites of DTI, or Dial Talk International, according to current and former employees familiar with the arrangements.
DTI is based on the Caribbean island of Curaçao and runs, from Los Angeles, a vast and profitable network of explicit Web sites for the Japanese market.
As the Web has evolved since the early days of e-commerce, so has Mr. Gordon. Although he fashioned his early career around credit card transactions and helping Internet pornographers, he has more recently adopted an ecumenical approach to business as the shepherd for an altogether different endeavor: a Christian charity.
Until last week, Bold New World, his Los Angeles-based Web design firm, had a lucrative contract to design sites for the American Bible Society — the 192-year-old philanthropy based in Manhattan whose mission is to make a Bible available to every person in the world.
Bold New World has also created the Web site for a charity called SPCA International, which fights animal abuse; it helps members of the armed forces bring dogs home from Iraq. That charity has been stirring controversy in the animal-rights world because it owns no animal shelter and is unaffiliated with older and more established societies for the prevention of cruelty to animals.
Although Mr. Gordon has yoked together disparate endeavors that support pornography, the Bible, and prevention of animal abuse — all by marrying the universal purchasing power of credit cards to the respectability conveyed by slick Web sites — those familiar with his operations say his relationship with DTI remains the nexus of his enterprise.
There are no official numbers on the pornography industry. But those who have studied its operations view DTI as a pivotal player in the world of pornography. “DTI appears to rank in the top 1 percent of adult entertainment companies in the world,” said M. J. McMahon, publisher of AVN Online, an Internet news site covering the industry.
Mr. Gordon’s lawyer, Miles Woodlief, said that “neither Mr. Gordon nor his companies have involvement in” the pornography business. For his part, Mr. Gordon, in a brief e-mail message, describes his career in more elevated terms.
“I have been an inventor, creative genius and pioneer,” he asserted in a statement sent by a spokesman. “I have worked with thousands of people around the world in the last 30 years, countless of whom, including legislators, governors, United States presidents, C.E.O.’s and self-made billionaires, all of whom I personally made aware of earlier mistakes, and would be happy to sing my praises.”
MORE than a dozen current and former employees and business partners of Mr. Gordon say that whatever operations his business now encompasses, processing transactions for pornography sites has long been a central component. Some of them requested anonymity, worried that Mr. Gordon might sue them for speaking publicly about his operations.
These people characterized DTI, which is owned and operated by Wataru Takahashi, a Japanese billionaire who has worked with Mr. Gordon on various enterprises for at least a decade, as one of the most lucrative and enduring clients for Mr. Gordon’s credit card processing business.
DTI is an amalgam of dozens of Web sites, offering paying customers everything from live video sessions with pornographic performers to sexually explicit manga cartoons. The sites bring in revenue of about $15 million a month, according to several current and former DTI employees who have knowledge of its finances. DTI produces the content for many of these sites in Los Angeles, then pipes the material to computer screens in Japan, which has strict laws on explicit performances.
Central to the sales and billing portion of DTI’s business are services provided by Mr. Gordon’s company.
“Gordon processes credit cards for every single Web site owned by Mr. Takahashi,” said Alex Becker, a contractor who was a senior executive of Stickam, a social network based in Los Angeles. “Mr. Takahashi depends on Richard, and they always work together.”
Stickam, a live video chat Web site aimed at teenagers, is financed and operated by DTI, according to Mr. Becker. Scott Flacks, a former senior executive of Stickam who left the company this spring, said that Mr. Gordon and Mr. Takahashi appeared to have a close relationship.
“There’s a loyalty between the two that transcends business,” he said.
One other employee who worked directly for DTI for several years said that Mr. Gordon had helped to set up accounts for DTI with at least two banks in America and one in Germany. The employee says that Mr. Gordon’s company receives regular monthly payments from DTI for facilitating these relationships. He requested anonymity because he signed a confidentiality agreement with DTI.
“Richard is the smoother,” this person said. “He is the relationship between the banks and Takahashi for sure, although you are not going to find it anywhere on paper.”
Mr. Takahashi and Mr. Gordon also appear to help one another hire employees and court business and political contacts. In February 2007, Mr. Takahashi held a lavish weekend birthday party for his wife on Grand Cayman, where he spends part of each year in a condominium at the Ritz-Carlton hotel.
According to accounts from four people who were there, about 100 guests, including Mr. Gordon and several of his colleagues, were flown in from all over the world in private jets. Among the attendees was a representative of a major casino company in Las Vegas — Mr. Takahashi is an avid gambler and a frequent visitor to the city — and Stanton D. Anderson, a longtime Republican activist and a consultant to the American Bible Society. Mr. Anderson did not respond to interview requests.
Guests were treated to a Caribbean cruise and a resplendent dinner on the beach with an orchestra and electric fans that blew multihued sheets into the air. As guests feasted on grilled lobster tail and filet mignon, Mr. Takahashi and the casino representative lavished expensive gifts, like a Tiffany diamond tennis bracelet, on Mr. Takahashi’s wife.
IN 1979, six years after being honorably discharged from the Navy, Mr. Gordon found himself on the bad end of a bust. Federal Bureau of Investigation agents arrested him after finding him hiding in a closet of a friend’s apartment in Washington, D.C. On a living room table were four round-trip Concorde tickets to Paris.
According to a 1981 review of the case by a federal appeals court, New York State authorities had been investigating accusations that Mr. Gordon, who then lived outside Albany and ran insurance and financial planning companies, had dipped into customer funds. When he learned of the investigation, according to the court documents, Mr. Gordon closed his businesses and fled Albany, planning to go to Europe.
He was ultimately convicted in 1980 of mail fraud, interstate transportation of a stolen check and making a false statement to a bank. He served more than two years of a seven-year sentence in federal prison in Danbury, Conn., and Lompoc, Calif.
“Nearly 30 years ago, as a zealous, eager young entrepreneur, I made a mistake. I was convicted and served a sentence,” Mr. Gordon says of this period in his life. “I have diligently and honorably been an entrepreneur, inventor and businessman for almost three decades. I created jobs and career opportunities for thousands of people.”
After moving to Los Angeles in 1983, he worked as a business consultant throughout the ’80s, according to reports in Los Angeles business publications at the time. Mr. Gordon then engineered yet another act in his business career: facilitating credit card transactions over the phone.
According to reports in trade journals at the time, he appears to have started by processing credit cards for 1-900 and other telephone services, mail orders and television infomercials. He also became among the first to process transactions on the Web.
At the time, the credit card industry was aghast at Web transactions since they were not face-to-face dealings. In addition, many of the early Web commerce operators were so-called high-risk merchants, like pornographers and online gambling companies. Banks charge higher rates for these transactions because people tend to contest those items on their bill, perhaps to mollify an angry spouse.
While other payment processors avoided the stigma and high rates, Mr. Gordon saw opportunity. His companies in the ’90s, including Electronic Card Systems, devised ways to mitigate the risk. One method involved creating databases of unreliable customers and then refusing troublesome users when they returned to the Web to make purchases.
Mr. Gordon “was a pioneer,” said Jeffrey D. De Petro, who worked as a risk manager for Electronic Card Systems from 1995 to 1998. “We came up with different ways to monitor e-commerce transactions, and I think it defined the pros and cons of the industry.”
Mr. De Petro and five other former employees from this time say that CryptoLogic, an early Canadian online gambling network, was one large client. They also say that Mr. Gordon processed credit card transactions for ClubLove and other sites owned by the Internet Entertainment Group, now defunct, which offered pornographic photographs and videos for a monthly membership fee.
“He was the house for Internet porn in the early days,” said Steven Peisner, a veteran of the card processing industry who worked for Electronic Card Systems in 1997. “At that time, if you had anything to do with Internet porn, you called Electronic Card Systems.”
Mr. Gordon’s employees from the time remember extravagantly decorated offices on the fifth, sixth and seventh floors of the Luckman Building on Sunset Boulevard in West Hollywood. There was fine art on the walls and a constant supply of fresh flowers in the lobby. Mr. Gordon held sumptuous parties for employees at his home in the Hollywood Hills and drove a Bentley.
He appears to have created and run many companies in the ’90s, though they were all related and shared office space, according to Mr. Peisner and other former employees. In addition to Electronic Card Systems and a related entity, Electronic Authorization Systems, Mr. Gordon was involved with magazine publishing, long-distance telephone service and an interior decorating company, among other pursuits.
In 1999, to take advantage of the dot-com gold rush, Mr. Gordon combined many of these companies into a single entity, CreditCards.com, according to a company press release at the time. But the company was having financial problems. Former employees say they remember paychecks occasionally bouncing and leased furniture being repossessed.
According to documents filed with the bankruptcy appellate panel of the United States Court of Appeals for the Ninth Circuit, Mr. Gordon brought in new partners from Nashville in 1999 and borrowed several million dollars from them, using his stock as collateral.
The documents, filed as part of litigation relating to business disputes at the company, say that when Mr. Gordon could not pay his partners back, they removed him. The company is now called iPayment and is based in Nashville.
“He played so many games that eventually he got played himself,” says Masih Madani, the former chief technology officer of CreditCards.com, referring to Mr. Gordon.
But Mr. Gordon didn’t walk away from the enterprise empty-handed. The new owners paid him $2 million to settle his lawsuit against them, according to court documents. Mr. Gordon also ultimately rescued one other prized asset from this first Internet foray: his relationship with Wataru Takahashi and DTI.
RICHARD GORDON has one other man to thank for helping him land on his feet after the CreditCards.com debacle: Paul Irwin, the head of the American Bible Society, who from 1996 to 2004 was chief executive of the Humane Society of the United States.
In his two decades preaching animal rights, Dr. Irwin, an ordained minister of the United Methodist Church, turned the Humane Society into the largest animal welfare charity in the world. But his tenure was also pockmarked by scandal.
USA Today reported in 1987 that the society spent $85,000 renovating Dr. Irwin’s vacation cabin in Maine. A decade later, a judge ordered the organization to pay $1 million to the Humane Society of Canada for soliciting donations in Canada and then transferring funds to the United States.
It was toward the end of his tenure, in April 2003, that Dr. Irwin first hired Mr. Gordon. Tax returns for the Humane Society show that the organization paid $881,000 to Mr. Gordon’s new venture, Exciting New Technologies.
In May 2003, according to a press release at the time, Mr. Gordon also hired Dr. Irwin’s son, Christopher, as director of business development at Exciting New Technologies. The younger Mr. Irwin could not be reached for comment, and it is not clear how long he worked there.
Dr. Irwin said in an interview that Exciting New Technologies built a “technology platform” that allowed the Humane Society to become the top publicly supported animal charity offering help after Hurricane Katrina in 2005. A spokesman for the Humane Society says that Dr. Irwin canceled the software project in 2004 and that the organization bought the technology from another company.
Nevertheless, when Dr. Irwin left the Humane Society and took the reins of the American Bible Society, he hired Mr. Gordon again. Dr. Irwin said the organization had multiple Web sites — “everyone and his brother had one” — that needed to be streamlined.
BETWEEN July 2005 and June 2007, tax documents indicate, the Christian charity paid Exciting New Technologies more than $5 million. A spokesman for the philanthropy said that the $5 million in payments involved projects other than Web design, including e-mail marketing and digitizing the Bible, that were performed by subcontractors.
Dr. Irwin said those charges were expensive, but that the organization needed to catch up quickly on the Web. “It was so far behind the curve on Internet development that we simply were in the process of rapidly ramping up,” he said. “The tax form will show next year that we spent a lot less, and the year after that will show we will continue to spend a lot less.”
But questions have been raised inside the Bible society about the payments to Mr. Gordon. One employee — who requested anonymity to avoid Dr. Irwin’s ire — said the tax documents disclose what is “fairly widely known within the walls of A.B.S., and yes, the exorbitant costs have been questioned from the start.”
This person also said that “there have been attempts made to determine where the money is going.”
Dr. Irwin said he was unaware of Mr. Gordon’s ties to the pornography industry. “I have absolutely no knowledge of Richard Gordon’s involvement in pornography,” he said. “If anyone can provide me evidence that he is involved in pornography, then I want you to know he will be out of the American Bible Society today.”
On Friday, after being questioned about its dealings with Mr. Gordon, the society said “the American Bible Society and Richard Gordon have mutually agreed to terminate all existing business relationships.” The society added that it was continuing to investigate Mr. Gordon and his business with the organization.
Dr. Irwin and Mr. Gordon have also apparently intersected on other business transactions as well.
In March 2007, the two men considered redeveloping valuable property that the American Bible Society owns at 1865 Broadway, near Columbus Circle in Manhattan, according to two people familiar with the discussions. Dr. Irwin and Mr. Gordon met with executives at Sonnenblick Goldman, the real estate investment banking firm, about the project, according to a person at the bank who was privy to the discussions but didn’t want to be named disclosing details about a confidential business matter.
The discussions ultimately fell through, in part because Mr. Gordon made an unusual request, this person said: he asked the investment bank to pay him a $20 million commission on the deal out of the firm’s own fee. Asked about these talks, Dr. Irwin said only that “there was no agreement whatsoever.”
Mr. Gordon “would be the last person I would have anything to do with on real estate development in New York City,” Dr. Irwin said. “The American Bible Society has access to world-class developers, and he isn’t one of them.”
Twice this past March, more than a hundred activists gathered on Jean-Talon Road in Montreal to protest what they saw as improprieties at the city’s Society for the Prevention of Cruelty to Animals.
The protests came after Canadian press reports of possible financial abuses by the Montreal S.P.C.A.’s executive director, Pierre Barnoti. Among other things, Mr. Barnoti was said to have used S.P.C.A. funds for personal travel while engaging in improper fundraising activities and euthanizing an unnecessarily high number of animals.
In April, the protesters prevailed: Mr. Barnoti stepped down and was placed on “indefinite sick leave,” according to the organization. The Canada Revenue Agency, the country’s counterpart of the Internal Revenue Service, began an investigation, and a majority of the charity’s board of directors resigned.
A new board is now combing through the Montreal S.P.C.A.’s financials, trying to reconstruct how the organization wound up more than $4 million in debt. The board is also trying to solve a little Internet mystery: what happened to the organization’s prized Web address, SPCA.com.
Two years ago, a new United States organization called SPCA International took over the SPCA.com Internet domain and started using it to solicit money for animal rights.
According to public records and a report last November in Animal People, an animal care industry newspaper, Mr. Barnoti registered a company called SPCA International in May 2006 in Delaware. Registering an animal rights organization in the United States allowed Mr. Barnoti to raise money here, and he hired a New York City direct mail company to solicit donations.
In an effort to beef up the group’s Web presence, Mr. Barnoti consulted Paul Irwin. In an interview, Dr. Irwin said that he introduced Mr. Barnoti to Richard Gordon.
Mr. Gordon’s company designed the SPCA.com site, and James D. Winston, a longtime business associate of Mr. Gordon, is listed on tax documents as the organization’s executive director. SPCA International declined to make Mr. Winston available for an interview.
It’s not clear how much Mr. Gordon profits from his work on SPCA International. But the chief executives of petsupplies.com, an e-commerce partner listed on the SPCA.com site, and Pet-Togethers, an advertiser on the site, both say their company’s financial relationship is not with SPCA International but with a separate entity, the SPCA Foundation.
According to California corporate records, the foundation was registered as a for-profit company last August by Mr. Gordon’s lawyer, Mr. Woodlief.
As for SPCA International, Mr. Gordon appears to have no operational role there. Even so, the group is involved in a range of initiatives. Every few weeks, the SPCA International selects a “shelter of the week” from around the world and then asks for money for that shelter.
Four of five shelters that were awarded this distinction over the past two months say that they received a $1,000 check and a plaque for the honor — but not a percentage of any donations. The fifth shelter, Welfare of Our Furry Friends, in West Sacramento, Calif., says it received $48.
SPCA International has also undertaken one other significant project. Last year, it created a program called Operation Baghdad Pups that tries to rescue stray dogs in Iraq on behalf of the American soldiers who have befriended them.
The program is run by Terri Crisp, who is primarily known in animal-care circles as the founder of Noah’s Wish, an animal-rescue charity. Last October, Noah’s Wish settled an investigation with the attorney general of California, agreeing to pay $4 million over allegations that it misappropriated donations it received after Hurricane Katrina.
In an interview, Ms. Crisp declined to discuss the Noah’s Wish troubles. But she said SPCA International was “in its infancy” and was trying to “find something unique to make a difference for animals.”
She said she has traveled to Iraq five times to bring 14 dogs back to the United States for soldiers. The program is now prominently promoted on SPCA.com, alongside an ABC News story about it. Donations are solicited to support Baghdad Pups as well as “to further the mission of the SPCA International to stop euthanizing adoptable and healthy animals.”
SPCA International’s fund-raising is hard to assess. Last week, the group filed for an extension on its tax returns. It has yet to reveal how much money it has raised or earned from sponsorships — a requirement for charitable organizations.
Still, the site comes up first on any Google or Yahoo search for the term “SPCA” — ahead of even the 142-year-old American Society for the Prevention of Cruelty to Animals, which has 420 employees and runs a shelter in New York City.
The A.S.P.C.A. declined to comment on SPCA International. But the SPCA.com Web site has angered other animal rights activists who contend that the new organization is exploiting the goodwill of similarly named, more established charities.
Ms. Crisp acknowledged that the organization’s name might mislead people.
“We have people who are trying to reach us that call the A.S.P.C.A. in New York, and we have people who think they are calling the A.S.P.C.A. or contacting their local S.P.C.A. but who call us. We get a lot of that,” she said. “Nobody owns the name, so yeah there’s confusion.”
Back in Canada, meanwhile, the new board members at the Montreal S.P.C.A. are looking at how to get their domain name back.
“If Pierre Barnoti transferred this domain name to another company, that was not in the best interest of the Montreal S.P.C.A.,” said Wendy Adams, a board member and a law professor at McGill University. “It appears he has used this asset to his own benefit. It’s self-dealing, and it’s a breach of fiduciary duty.”
LAST month, Stickam, the live video social network operated by Mr. Takahashi’s DTI, sent out a press release proclaiming a new partnership: the social network had been selected, the release said, as the exclusive provider of live Web video for the SPCA International’s Operation Baghdad Pups and would broadcast regular updates on the program’s progress.
The announcement was ordinary and easy to overlook: two seemingly disparate organizations unveiling a partnership.
But to people who knew the men behind the two companies and their long and fruitful collaboration, it was clear that Richard Gordon and Wataru Takahashi were still looking for new ways to work together.
[Via - NYTimes.Com]
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