U.S. Attorney Mary Beth Buchanan announced the charges in September, saying that Fletcher violated federal obscenity laws despite the fact that no pictures of children were displayed on the site.
Attorney Warner Mariani will serve as local counsel for Fletcher’s pro bono defense team, which includes Lawrence Walters, John Weston, Jerry Mooney and Derek Brett, as well as several other prominent 1st Amendment attorneys.
While the case raises the issue of whether text can be considered obscene, Walters told XBIZ he was also troubled by how Fletcher came to the attention of authorities.
“This case apparently started as a result of a Suspicious Activity Report (SAR) by Paypal,” he said. “This is significant because it's the first time I can recall Paypal making a value judgment on erotic content, and contacting the authorities as a result.”
Walters said banking institutions are required to file SARs under the Bank Secrecy Act when they believe clients are using their services to further criminal activity. But, he said, SARs are typically filed in reference to tax evasion and money laundering cases.
“The SAR specifically stated that ‘suspect Karen Fletcher… Donora, PA, is receiving payments from a child sex/rape test, audio, chat rooms and drawing erotica from Red-Rose-Stories.com,’” FBI agent Christopher Cantrell said in his affidavit in support of a search warrant. “Stories involved strong sexual content involving minors and adults.”
While Walters could not be certain, he said that in this case, it appears Paypal may have reviewed the content of Fletcher’s site prior to filing its SAR with authorities.
A spokeswoman from Paypal declined comment to XBIZ on the specifics of the Red Rose case.
"Like all financial institutions, PayPal is subject to the Bank Secrecy Act," she said. "Therefore, we are required to file SARs in cases where we know or suspect that criminal activity has taken place or is being attempted. Those reports are filed with the Financial Crimes Enforcement Network, which is a division of the U.S. Treasury. Unfortunately, since those reports are confidential, we can’t comment on any of our customers or any suspicious activity reports that we file."
The warrant also authorized authorities to seize Fletcher’s computer, journals, documents and books — items Walters called “expressive material.”
“We view this mass seizure of all the business equipment as a prior restraint, as it effectively put her out of business,” he said.
Federal agents executed a search warrant at Fletcher’s home in August 2005, seizing her computer. At the time she told authorities that she writes the bulk of the site’s stories, with about 40 other people contributing to the site as well.
According to the FBI search warrant affidavit, Fletcher told authorities that about 29 people had paid $10 per month in membership fees. She also described her work to law enforcement officers as a “fantasy site.”
Pretrial motions are expected to be finalized in the middle of next month. Walters said the case should go to trial early in 2007.
If convicted, Fletcher faces a statutory maximum of 30 years in prison and a $1.5 million fine, but the actual sentence would be dictated by federal sentencing guidelines.
Officials from Paypal were not available for comment at time of post.