Webmaster Suit Could Point to iBill Legal Strategy

Rhett Pardon
LOS ANGELES — The parent company of iBill may be banking on a central legal strategy as an unknown number of adult webmasters pursue litigation against it for nonpayment of an untold number of processing reserves.

In a recent complaint brought on by Mana Internet Solutions Inc., which operates IwantU.com, the former third-party processor claims that it can’t be held liable for an alleged breach of an agreement when it never entered into one.

Mana, in a complaint filed in U.S. District Court in Miami, claims it is owed $83,000 plus attorneys fees and interest.

“What it looks like is that iBill is saying, we don’t have the assets but we’re not going to be forced into bankruptcy,” Los Angeles attorney David Steiner, who represents Mana, told XBIZ. “They’re saying that when [Interactive Brand Development] purchased iBill, they only purchased the assets, not the liability.”

IBD claims that since its “not a party to the [Mana] agreement and thus not obligated thereunder, the accounting claim against IBD must be dismissed without prejudice,” said IBD in a motion to dismiss a complaint brought on by Costa Rica-based Mana over a "diversity" between the parties over amount owed.

Miami attorney Joshua E. Young, who represents IBD, did not respond to repeated XBIZ calls for comment on the Mana case. Neither did company executives Gary Spaniak and Steve Markley, who were both unreachable at post time.

iBill’s tangled mess can be pinpointed at its corporate acquisition and woes it incurred with a partnering credit card company.

iBill’s troubles date back from its notification by First Data Merchant Services that it was dropping iBill from its merchant account. iBill tried to secure another merchant account holder and, according to some, failed to tell its clients.

Webmasters were frustrated in their attempts to contact the processor, which until two years ago, was one of the top third-party processors along with CCBill and Paycom.

IBD, formerly known as Care Concepts, purchased iBill and Media Billing LLC from a consortium of companies, including Penthouse, in 2004 for $55 million in an all-stock deal.

Nearly a year earlier, Norcross, Ga.-based InterCept Inc. through its Media Billing LLC division sold iBill to Penthouse for $700,000 in cash, $800,000 in a short-term loan and the assumption of $22 million in debt.

At one point IBD housed nearly 200 employees in a 50,000-square-foot headquarters and data center in Deerfield Beach, Fla. Currently, the company operates in an office-building suite at another location in Deerfield Beach.

“It really is sad and disappointing; many webmasters probably wish that iBill was still doing business,” Steiner said. “But its troubles with First Data were overwhelming.”