Visa ‘intended to help’ Pornhub and its parent company monetize child pornography, judge finds, allowing case to go forward

In a setback for Visa in a case alleging the payment processor is responsible for distributing child pornography on Pornhub and other sites operated by its parent company MindGeek, a federal judge ruled it was reasonable to infer that Visa knowingly facilitated criminal activity.

On Friday, July 29, U.S. District Judge Cormac Carney of the U.S. District Court for the Central District of California issued a ruling in Fleites v. MindGeek, denying Visa’s motion to dismiss the claim that it violated California’s Unfair Competition Law — which prohibits illegal, unfair or deceptive business acts and practices — by processing payments for child pornography. (A copy of the decision is available at this link.)

In the ruling, Carney ruled that the plaintiff “sufficiently pleaded” that Visa was involved in a criminal conspiracy with MindGeek to monetize child pornography. Specifically, he wrote: “Visa knew that MindGeek’s websites were filled with child pornography for money.” that there was a “criminal agreement for financial gain from child pornography that can be inferred [Visa’s] decision to continue to recognize MindGeek as a marketer despite allegedly knowing that MindGeek monetized a significant amount of child pornography.” and that “the court can easily conclude that Visa intended to help MindGeek monetize child pornography” by “knowingly[ing] the instrument used to complete the crime’.

“When MindGeek decides to monetize child pornography and Visa decides to continue to allow its payment network to be used for this purpose despite knowledge of MindGeek’s monetization of child pornography, it is entirely foreseeable that victims of child pornography such as the plaintiff will suffer the damages claimed by the plaintiff,” Carney wrote.

In a statement, a Visa spokesperson said: “Visa condemns sex trafficking, sexual exploitation and child sexual abuse material as repugnant to our values ​​and purpose as a company. This preliminary ruling is disappointing and mischaracterizes Visa’s role and its policies and practices. Visa will not tolerate the use of our network for illegal activity. We continue to believe that Visa is an improper defendant in this case.”

A spokesperson for MindGeek provided the following statement: “At this point in the case, the court has yet to rule on the accuracy of the allegations and must consider all of the plaintiff’s allegations to be true and accurate. When the court actually gets to look at the facts, we are confident that the plaintiff’s claims will be dismissed for lack of merit. MindGeek has zero tolerance for the posting of illegal content on its platforms and has instituted the most comprehensive safeguards on the platform’s user-generated history.”

The company’s statement continues: “We’ve banned uploads by anyone who hasn’t submitted a government-issued ID that goes through third-party verification, we’ve removed the ability to download free content, we’ve integrated many leading technology platforms and content control tools, we’ve implemented digital fingerprinting of everyone videos found to violate non-consensual content and CSAM [child sexual abuse material] Policies to help protect against the reposting of removed videos, expanded its workforce and moderation processes, and partnered with dozens of nonprofits around the world. Any suggestion that MindGeek does not take the removal of illegal material seriously is categorically false.”

In June, MindGeek CEO Feras Antoon and COO David Tassillo resigned. The Montreal, Quebec-based company also laid off an undisclosed number of workers. This comes after a June 20 New Yorker report found that Pornhub hosted sexually explicit non-consensual videos, including those with children.

The plaintiff in the case against MindGeek and Visa is Serena Fleites, who, when she was 13, was pressured by her then-boyfriend into making a sex video — which she allegedly uploaded to Pornhub (titled “13-Year Old Brunette Shows Off For the Camera”) without her knowledge or consent. Fleites’ lawyers say the video, which is estimated to have been viewed millions of times on MindGeek websites, ruined her life: “While MindGeek profited from plaintiff’s child pornography, plaintiff was intermittently homeless or living in her car, addicted to heroin. depressed and suicidal and without the support of her family,” states her lawsuit, filed in June 2021. Fleites’ story was featured by New York Times columnist Nicholas Kristof in December 2020, who outlined how the MindGeek ‘makes money off child rape’.

In his July 29 decision, Carney ruled in favor of Visa in part. He wrote in the opinion that Fleites “simply has no basis to allege that Visa was directly involved in the sex-trafficking operations that harmed her.” In addition, it ordered Fleites to provide “a clearer statement of the common law civil conspiracy cause of action against Visa.”

In a second ruling (available at this link), Carney ordered MindGeek to submit to jurisdictional discovery, which Fleites’ attorneys say will expose MindGeek’s “shady operations and those who control it” by revealing its financial relationships accused. “Where the money flows into MindGeek’s web, which may be related to the ownership of the revenue-generating porn sites, is relevant to the court’s jurisdictional analysis,” the judge said in the opinion. “As the court sees it, financial gain from the sexual exploitation of minors is at the heart of this case.”

On Saturday, activist investor Bill Ackman of Pershing Square Holdings, who has previously highlighted the role of Visa and Mastercard in MindGeek’s ability to monetize child pornography, released a Twitter thread about the decision in the case.

“Visa’s conduct here is inexcusable, is likely to cause the company incalculable financial and reputational harm” as well as “create serious … personal liability and possible criminal liability for the board,” Ackman wrote in part. According to Ackman, neither he nor Pershing Square has any financial interest, long or small, in Visa, Mastercard or any other payment company, bank or financial institution.

According to Ackman, after reading the Times story about Fleites and Pornub, he contacted the CEOs of Visa and Mastercard to express concerns about their role in enabling MindGeek’s business. Shortly thereafter, both companies stopped processing payments from consumers on MindGeek’s sites. “Within a day or so, MindGeek removed more than 10 million illegal videos, 80% of its content,” the hedge fund manager said. But both soon reactivated business-to-business payments to buy ads on MindGeek sites and for subscriptions to “premium” content, which account for about 90% of the company’s revenue, according to Ackman.

Ackman wrote that Visa CEO Alfred Kelly “must be aware that the majority of child trafficking victims are from lower-income families, including Black and Brown families. I would recommend that Visa’s board of directors, and Mr. Kelly individually, hire independent white collar and criminal defense attorneys.” Finish the thread with “Et tu, @Mastercard?”

Michael Bowe, a partner at Brown Rudnick and lead attorney representing Fleites in the lawsuit, said: “The court’s finding that our detailed complaint sufficiently alleges that Visa was engaged in a criminal conspiracy to monetize child pornography means that Visa and other credit card companies are finally going to face the civil and perhaps criminal consequences of this unconscionable and illegal activity.”

The case of Serena Fleites v. MindGeek SARL et al., is Docket No. 2:21-cv-04920-CJC-ADS in the U.S. District Court for the Central District of California.

Fleites is one of 34 individual plaintiffs who last year sued Pornhub and MindGeek, alleging exploitation and monetization of child pornography, rape videos, trafficked content, stolen content and other non-consensual content. The lawsuit is the first filing to date by the racketeering and corrupt organizations (RICO), child pornography and human trafficking laws that seek to hold financial institutions accountable for illegal conduct by and through the systems companies whose payments they process.

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