May 19, 2008

A Pioneer of Internet Commerce Sows New Seeds

By Brad Stone

Tributes on the Web site of Richard 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, Gordon, 62, played a significant role in the birth of electronic commerce. While and eBay were still fledgling enterprises, the companies that Gordon founded in the early 1990s were already laying the groundwork for electronic transactions conducted with credit cards.

And if the Internet is for porn, perhaps it was only natural that many of Gordon's early clients were purveyors of X-rated entertainment. While riches were being minted and squandered in the dot-com '90s, 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 Curacao 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 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 Web design firm based in Los Angeles, had a lucrative contract to design sites for the American Bible Society - the 192-year-old philanthropy based in New York 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 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.

Gordon's lawyer, Miles Woodlief, said that "neither Mr. Gordon nor his companies have involvement in" the pornography business. For his part, 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, CEOs 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 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 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 Gordon on various enterprises for at least a decade, as one of the most lucrative and enduring clients for Gordon's 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 Gordon's company.

"Gordon processes credit cards for every single Web site owned by Mr. Takahashi," said Alex Becker, a contractor who was an 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 Becker. Scott Flacks, a former senior executive of Stickam who left the company this spring, said that Gordon and 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 Gordon had helped to set up accounts for DTI with at least two banks in the United States and one in Germany. The employee said Gordon's company received regular monthly payments from DTI for facilitating these relationships. He requested anonymity because he signed a DTI confidentiality agreement.

"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."

Originally published by The New York Times Media Group.

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