Mansef said in a court filing that its negotiations with the government in the past three and a half months "have proven fruitless" and that they are unable to continue without the protective order.
The Montreal company said it is seeking the protective order only so it can answer the government's questions without disclosing vital information regarding how Mansef structures and runs its business, including profit margins, supplier and customer rates and investment decisions.
The government's interrogatories also probe into Mansef's relations with business partners, including involvement with affiliates, and the types of content on its websites, as well as credit card processor statements.
But Mansef said that without the protective order, the answers would then be used by other adult entertainment companies to exploit their own interests.
"Disclosure of the rates that claimants charge to their clients and money generated by their websites as well as the financial agents they choose would be incredibly valuable information to competitors in ascertaining the methods that afford Mansef such success," Mansef attorneys said.
"If competitors had access to the business strategies of a major market player such as Mansef, they could easily imitate Mansef's structuring, marketing tactics and pricing, thereby maximizing their own business profits and efficiency, and thus considerably undercutting Mansef's competitive advantage."
Just as important, Mansef attorneys argue, the disclosure of customer data may expose it to liability under European privacy laws, specifically the European Data Privacy Directive.
Mansef attorneys propose that they provide documentation on European users by substituting a moniker for each user.
"So long as the identity of the website from which the revenue was generated can be determined, the government should be able to decide whether or not the seized funds were derived from legitimate business enterprises, without having to invade the privacy of claimants' users, regardless of their geographic location or the local privacy laws which apply."
Mansef's fight for seized funds began late last year after it set up Atlanta-based Premium Services to facilitate payments from its third-party credit card processors into the accounts and to allow the company to remit funds out of two checking accounts to its U.S. vendors.
The Secret Service claims in court documents that Premium Services was not registered with the federal Treasury Department nor with the Georgia Department of Banking and Finance as a money-transmitting business.
Federal authorities noted in court documents that for three months last year Premium Services received $9.4 million in wire transfers from various sources and that much of the funds originated overseas in countries such as Israel, considered by law enforcement to be at high risk for money-laundering activity.
U.S. authorities claim that the funds in two accounts are forfeitable under 18 U.S.C. § 981 (a)(1)(A) as property involved in or traceable to a transaction in violation of 18 U.S.C. § 1960, which prohibit’s unlicensed money-transmitting businesses. Mansef and Premium Services deny they are in that line of business.
A federal judge has not yet decided on Mansef's and Premium Service's joint motion for a protective order.
