FTC Serves Signup4Cash Operators at Internext

Jeff Berg
LAS VEGAS — Agents from the Federal Trade Commission descended on Internext last week and served subpoenas to several individuals associated with Global Net Solutions and its affiliate program, Signup4Cash.com, as well as freezing the company’s assets, according to information obtained by XBiz.

U.S. District Court papers unsealed this morning reveal that six corporations and five people have been named in the civil complaint that alleges numerous violations of the Can-Spam act. The FTC alleges that the defendants allegedly rained hundreds of thousands of emails on consumers who did not request them.

A temporary restraining order in the matter has also been issued, prohibiting the defendants from engaging in deceptive practices.

“It’s a pretty elaborate case,” attorney Gregory Piccionelli, who represents one of the defendants in the case, told XBiz. “There are multiple defendants. The allegation is that there are millions of dollars in fines at issue that have been accrued for violations of the Can-Spam act.”

The unsealed court documents name as defendants Las Vegas-based companies Global Net Solutions, Open Space Enterprises, Reflected Networks and Southlake Group, as well as London-based Global Net Ventures and Latvia-based corporation Wedlake. Also named in the suit were Dustin Hamilton, an officer of GNS, director of GNV and officer of Reflected Networks; Tobin Banks, a director of Open Space; Gregory Hamilton, an officer and director of Southlake; Philip Doroff, an officer of Reflected Networks; and Paul Rose, an independent operator who allegedly sent several email messages promoting the GNS defendants’ websites.

Global Net Solutions also runs LiveNetFriends.com and LiveWebFriends.com.

The complaint alleges that the defendants were part of a network of corporations that violated the FTC’s Adult Labeling Rule by often failing to include the required “SEXUALLY-EXPLICIT:” email subject heading and violating the opt-out provisions that require all email to include links that allow receivers to unsubscribe.

According to Piccionelli, the presence of federal agents at Internext highlights a trend he expects to see grow over the next several years as government prosecution of the adult industry increases.

“There really was not an elaborate internationally known set of shows that the adult business gathers at back in the ‘70s and early ‘80s,” Piccionelli said. “At different times, when there are justice department sweeps, don’t be surprised if this becomes a mode of operation for the government in the future. They like getting everybody in one place and serving them.”

Piccionelli also said the use of the Can-Spam Act, which contains both civil and criminal penalties, to prosecute adult businesses is a new tactic.

Under both the Clinton and Carter administrations, Piccionelli said, there had only been civil liability attacks on the adult industry, but within the current administration the possibility for potential criminal prosecutions has drastically increased.

“We are now correct in our estimations that we’re going to have a two-pronged attack,” said Piccionelli.

Piccionelli said attorneys for his client will be meeting with an FTC lawyer today and he expects to have his client severed from the case.

The case is Federal Trade Commission vs. Global Net Solutions Inc., et al., CV-S-05-0002-PMP-LRL.