The JPMorgan Chase Crackdown On Porn Accounts: A DOJ Campaign, Or A Diversion By Big Banks To Avoid Accountability For Shady Deals?

Most of you have heard now that the financial conglomerate JPMorgan Chase has been sending notices to a significant number of porn performers announcing without prior notice and without reason that their personal banking accounts will be terminated by May 11th...apparently due to violating their "risk assessment" standards.

Teagan Presley was noted as one of the performers whose account was terminated (along with her husband's account), even though she has been retired from active performing for almost two years. She recalled the way she was informed of this through this Vice.com article.

This past Monday, porn star Teagan Presley arrived home in Las Vegas from yet another whirlwind strip club appearance tour and found a letter from her bank.

Chase was closing her account, which was listed under her legal name, as well as the account of her husband.

When Presley went to the bank in person to ask why, she was told it’s because she’s considered “high risk.”

“And then they told me that they canceled my husband’s account too, because our social security numbers are linked,” Presley told VICE News. “They told him that it was because I’m a notorious adult star. Which is funny, because I’m kind of a goody-goody in the business, and I’m not even doing porn anymore.”

The issue of porn accounts being nuked by Chase was originally exposed by, of all people, Hollywood media gossiper Perez Hilton, who posted one of Chase's cancellation letters at his blog. XBiz.com later further elaborated on the issue, with comments from adult attorney Michael Fattorosi on the possiblilty of legal action against such discrimination.

Adult industry attorney Michael Fattorosi told XBIZ that Chase and other banks have “notoriously closed adult accounts or people in the industry’s accounts, but nothing like this.”

“Throughout my practice I’ve had clients that have had their bank accounts closed, once the bank recognizes or determines that they’re in the adult industry. I’ve seen that on numerous occasions,” he said. “What I’ve never seen is a bank taking a position and sending out mass letters.”

Fattorosi noted that it is yet unclear, however, how many people’s accounts were actually shut down.
   
Whether legal recourse for those whose accounts were nixed is plausible — and, if so, which path is optimal — remains unclear, given that the situation is novel and that banks generally have the prerogative to do business with who they choose (yes, that often means flagrant discrimination).

Fattorosi plans to do more case study research before he makes a judgment call, explaining  “Sometimes there are banking laws that are different than we would normally expect.”

And, it's not the first time that JPMorgan Chase has been up to its knees in antiporn censorship, either.  The softcore erotica production company MRG Entertainment recently had their founder Marc Greenburg file suit against JPMC for allegedly violating fair lender laws by denying them a loan for "moral reasons".

Adult performer Chanel Preston has documented her own travails with JPMC offspring City National Bank, when they terminated her account without cause last year.

And then, there is the Lovability Condoms case, where that company (which focuses on selling condoms to women) had their third party merchant account with Chase offspring Chase Paymentech pulled (then reinstated after loud protest).

That particular case first brought light to the government program which some are blaming for the increased censorship: an Department of Justice initiative called "Operation Choke Point", which attempts to target banks and other financial institutions for interactions with predatory and illegal under-the-radar actors.

Progressive blogger David Dayen (formerly with the California-based political blog Caletics, and now a freelance contributor to blogs such as Hullabaloo and firedoglake) first brought up the initial reaction to the DOJ's new initiative in a post he wrote for the blog Naked Capitalism (no, not a porn site, y'all).

The main goal of OCP is to hold banks far more accountable than they previously was for profiting from predatory lending, hyperaggressive telemarketing and spamming, and other shady financial dealings. Most of those deals were being processed through what are known as third party payment processors (TPPP's) which provide a quasi-legal cover for the kind of deals that regular banks would normally not do, such as processing of usurously high-interest online payday loan lending.

In public hearings and seminars throughout the US, the DOJ alerted banks to what they should watch for in order to catch and prevent fraud; including a list of businesses more suspectable to chargebacks or false returns. One seminar listing did list "pornography" as one of the kind of transactions to be watched, but that was done only in passing, and only as a means of red-flagging those with high suspectability of fraud.

The reasoning for targeting the banks rather than the TPPPs directly, according to the DOJ, was because the former could disappear into the ether and reappear under new aliases with frequency, undercutting efforts to reign them in.

Naturally, those banks who get plenty of their money off deals with TPPPs (not to mention the TPPPs themselves) weren't too happy with the tightened scrutiny, and thusly formed a lobbying group, the Third Party Payment Processors Association, to jack up and shake down Congress to slow down the aggressiveness of the DOJ. And, possibly, threaten payback through the "human shield" of denying accounts.

…banks, payment processing firms and a relatively new lobbying group called the Third Party Payment Processors Association have been going wild on Capitol Hill in recent months over a pretty conventional law enforcement effort with a salacious name: Operation Choke Point. The project attempts to curb money laundering by scrutinizing banks and payment processors that facilitate transactions with illegal businesses — petty fraudsters running payday lending scams, sham telemarketing operations and other shady groups.

[...]

Democrats in Congress say the Third Party Payment Processors Association — a lobby group that formed last year in response to Operation Choke Point — has issued similar warnings in private meetings.

“They came in here and said, ‘How would you like it if we started cutting off things liberals like, like birth control?‘” says one House Democratic aide who met with the TPPPA in November.

“They can assign reputation risk based on their moral judgements, but everybody has different moral judgments,” TPPPA President Marsha Jones told HuffPost. “That’s the danger of it. One administration is polarized one way and the other another way. And we must remove morality out of payments because it’s dangerous.”

It was right about that time that Chase Paymentech, their own standalone TPPP, canceled Lovability Condoms' account, citing "reputational risk". Though Lovability's owner, Tiffany Gaines, was able to recover her company's account with a strong public protest, her attempt to get some answers as to why her account was pulled in the first place got quite interesting, to say the least:

The marketing executive for Chase Paymentech, she became aware of my situation through the media. She first said it was a bad judgment call on their part, and they would agree to process our payments. I said what would you do to make sure this doesn’t happen again. They said they would train their representatives to be more sensitive and inquisitive and understand the businesses they were dealing with more thoroughly.

I thought this was a wishy-washy attempt to get me to be quiet. I told her that my representative was very sensitive and inquisitive, but the power was not in her hands, it was in the hands of risk management department, who said my business fell into a prohibited category. I asked her, what are the prohibited categories? She said child pornography, fraud, this and that. I said condoms don’t fall into those categories, and also, isn’t there a gray area? You process payments for hotels, and they make a lot of their money off of adult movies.
So then she put the blame on the government. She said that Chase Bank is a federally regulated bank, and that they have to pay attention to federal regulations. Other pornography companies can use things that aren’t federally regulated.

Let's set aside the distinction between Lovability Condoms and VIVID for a sec; notice how the Chase Paymentech rep, after attempting another round of obfuscation, finally attempts to put the blame on the government for having to suspend payments for "pornography companies". Never mind that the OCP guidelines do not specifically target adult-related companies for added scrutiny solely based on their content, but rather targets potentially illegal transactions in general.

Segue to the current sitch of JP Morgan Chase Bank shuttering down adult performer accounts without warning, and you can see what they might really be up to now. It seems that they are simply overreacting to Operation ChokePoint and using it as a ruse to target porn performers' accounts as kind of a "false flag" in their efforts to defend their other TPPP transactions against the "heavy hand of government". Or...they are just using this as a ruse to go Hobby Lobby and enforce their own conservative morality against porn performers as "moral risks".

AVN's Tom Hymes, in an essay posted this morning, spells it out directly.

If [Dayen's] hypothesis is accurate, it's an interesting conundrum in which the banking sector, through the new TPPPS, is falsely accusing the government of forcing it to be a moral arbiter so that it can get out of performing regulatory duties it is already tasked with, in order to reap handsome returns from unscrupulous players it wants to continue doing business with. The only fly in the ointment is where the porn stars who have had their accounts closed fit into this picture. Though presumably innocent of any wrongdoing with respect to their bank account activity, it's hard to imagine the greater public, or the government for that matter, coming to their defense in significant numbers.
But maybe adult performers were just the lowest hanging fruit that provided Chase with the least resistant path to be able to continue making the argument that it is the government that is forcing its moral stance onto them and the performers, and not the bank using the performers to "lobby-through-threat."

Now, the more libertarian Right side of the porn diaspora has taken a slightly different position in this: they basically have adopted the position that Chase is simply a victim of an outright government campaign against porn commerce, and that TPPPs should be defended and protected in the wake of Operation ChokePoint's "hyperaggeressiveness".

One such activist is Andrew Langer, who writes a blog for a right-wing enterprise called The Institute for Liberty; he is absolutely convinced that Operation ChokePoint is indeed just another evil socialist plot by Barack Obama to destroy the adult industry. (Never mind that it has been far more conservative administrations whom have been more direct about assaulting porn; see former Bush DOJ Obscenity Task Force Chairman Patrick Trueman, now head of the antiporn activist group Porn Harms.) I'll simply repost his press statement on Perez Hilton's seminal article and let you see the hyperbole for yourself.

“Operation Choke Point,” the President’s infamous program which seeks to cut off legal industries and law-abiding businesses from their financial institutions had previously identified adult-entertainment as a target along with gun sellers and short-term lenders.  Banks across the nation have already severed relationships with thousands of customers because of Operation Choke Point:

“In President Obama’s America, it just doesn’t matter whether you’ve done anything illegal.  It doesn’t matter if your industry operates within the confines of the law. You can still be in the crosshairs of the Federal government. This report confirms what we’ve suspected for some time, that Operation Choke Point would expand to destroy the other industries on the President’s infamous hit list.

This abuse of power and these intimidation tactics fly in the face of the free market and free society. Yesterday it was check-cashers and today it’s the adult entertainment industry.  We know where they are going next because they’ve told us -- direct sales businesses, gun and ammunition sellers, the gaming industry and charities. It’s becoming clear that no industry is safe from this administration’s mob-style approach to regulation.”

Gee...all for the right to generate 400% payday loans and other money laundering scams.  Riiight.

One note: many of the performers that did have their Chase accounts pulled were able to sign up with other banks with less corrosive standards; competitor Wells Fargo put out a statement earlier in the week that adult performers would be more than welcome to form accounts there. There is also talk of some legal action against Chase under discrimination statutes; though, as Michael Fattorosi cited earlier, there is scarce legal precedent for such action...and given the low public standing of porn, it probably wouldn't generate much support. Then again, given that financial institutions aren't really so high these days with public regard either, that might be a bit questionable.

As always, as news breaks on this, we'll update.

Sex Wars (The Beltway Edition): AGUS Holder Whacks Out DoJ Obscenity Task Force; Wingnutters In Congress ERUPT: "Not So Fast, Hombres!!!"

In the midst of all the drama over the Condom Mandate, the Great Porn HIV Scare(s) and .XXX, this breaking story may have slipped under the radar....but it could have almost as big an impact as the other issues.

A major political firestorm is beginning to brew in Washington, DC, on Capitol Hill over the degree of priority of whether Federal resources should be used to continue the longstanding "war on pornography" that has been ongoing since the Meese Commission released their cooked-up findings in 1987. Since the Bush era, the US Justice Department has been using its Obscenity Task Force as the main tool for prosecuting and persecuting sexually oriented businesses and performers alike through the court system.

Well....make that was rather than "has been", because current Attorney General Eric Holder just last week decided that it was time to shut down the DoD/OTF for good, both as part of the broader goal of reducing the deficit and shifting resources to more fundamentally pressing issues and concerns.

Quoting from XBiz.com (full article):

The recent move by Attorney General Eric Holder to shut down the Justice Department’s Obscenity Prosecution Task Force set up during the Bush administration is causing conservatives in Congress to come out swinging.

According to reports, right-wing activists and anti-porn supporters in government led by Utah Senator Orrin Hatch are claiming that Holder and the Obama administration are soft on porn and are calling for a new crackdown on hardcore material.

The Obama team stopped any new obscenity prosecutions when it took over but allowed ongoing cases to continue even though the task force was officially but quietly disbanded earlier this year.

The final blow for dissolving the unit likely came after last July’s trial of John Stagliano when he was acquitted on all obscenity charges for lack of evidence. U.S. District Court Judge Richard Leon told the Washington Post at that time, “I hope the government will learn a lesson from its experience.”

Problem is...using the DoD to whack porn out of existence has ample support amongst politicians, especially of the Republican/Tea Party/Religious Right variety...and they aren't taking this news lying back.

But the dissolution of the DOJ's porn police is causing a stir on Capitol Hill.

Hatch's resurrected fight against adult began earlier this month when he and 41 other senators — that included some democrats —  sent a letter to Holder pushing for criminal cases against “all major distributors of adult obscenity.”

Hatch told Politico in a statement, “Rather than initiate a single new case since President Obama took office, however, the only development in this area has been the dismantling of the task force. As the toxic waste of obscenity continues to spread and harm everyone it touches, it appears the Obama administration is giving up without a fight.

“We write to urge the Department of Justice vigorously to enforce federal obscenity laws against major commercial distributors of hardcore adult pornography. We know more than ever how illegal adult obscenity contributes to violence against women, addiction, harm to children, and sex trafficking. This material harms individuals, families and communities and the problems are only getting worse.”

To be sure, the AG office is NOT saying that they won't pursue antiporn cases...they would simply transfer administration of them to a different division:

But despite the knocks against its effectiveness, the government said it is not giving up the fight against porn but instead wants local U.S. attorneys and the Child Exploitation and Obscenity Section of the Criminal Division to handle porn cases.

Justice Department spokeswoman Laura Sweeney said that the decision to discontinue the task force was made by the department’s Criminal Division, which is headed by Assistant Attorney General Lanny Breuer.

 “Re-incorporating the prosecution of obscenity violations into the Child Exploitation and Obscenity Section, as opposed to having a separate task force, provides for increased collaboration among experienced attorneys and agents, and gives our prosecutors the most solid foundation possible for pursuing their mission,” Sweeney said.

And the Justice Department didn't take Hatch’s letter lying down. In a response it said it “has charged violations of the federal obscenity laws over 150 times since October 2008, and has recently secured guilty pleas from defendants in several cases involving adult obscenity.”

The Child Exploitation and Obscenity Section took over obscenity cases in January but has a carryover pending case against producer Ira Isaacs scheduled for May 17 in Los Angeles. But the Feds said the unit's greater priority is now focusing on the exploitation of children, child porn and obscene depictions of child rape.

In other words, get out of the business of prosecuting adults for producing and consuming adult porn, and stick to the business of prosecuting child porn and exploitation. Sounds reasonable to me, though one could question the notion of how hyperaggressive the child porn laws will be enforced.

But again, the Right wouldn't be the Right without the doctrine of getting into the uteruses and penises of everyone else who don't think like them, and defunding and punishing anyone who dares to question their intervention (see Parenthood, Planned)...and former OTF prosecutor/well known Porn Policeman Pat Trueman gives the game away as to the true motives of antiporn activists:

However, Morality in Media’s Patrick Trueman — a former obscenity prosecutor — disputes the DOJ’s claim of 150 recent obscenity prosecutions and said no adult obscenity prosecutions have been initiated under Obama.

“In various administrations — not just this one — DOJ has tried to sell the notion that it has a vigorous enforcement of obscenity laws underway.  A look at the cases, however, reveals that what are counted as ‘obscenity cases’ are in fact child pornography cases where the defendant is allowed to plead down to an obscenity charge. … To suggest that such cases are adult porn cases is just wrong,” Trueman said.

 And yes, Clones, that would be the same Pat Trueman who hosted that classic Pornography Harms seminar last year on Capitol Hill. the one featuring such antiporn lynchpins as The Ex-Slut Ministeress Lubben and Gail Dines.

Also, that's the same Pat Trueman who just last month sent a form letter to Congressmen and Senators urging them to sign up to his latest campaign blasting the Obama Administration for not beefing up antiporn activism and cracking down hard with more prosecutions. Although their media lists "over 100" legislators as signees to the letter, only 42 actual signatures are shown in their petition; mostly the usual Religious Right/GOTP figures and the typical right-wing Democrats like Ben Nelson, Mark Pryor, Joe Lieberman...however, a couple of head-turning Democats did sign as well: Senators Amy Kloubohar (MN) and Diane Feinstein (CA).

Interestingly enough, some of the signees are attempting to crawfish their way back from this attempt at adult speech censorship...particularly DiFi:

One of the signers of Hatch’s letter was [D]emocratic Senator Dianne Feinstein of California whose constituents make up the bulk of adult production in the country.

In response to Feinstein’s surprising support of Hatch, Duke told Politico, “I have a feeling she’s going to be getting a lot of letters from our area. It’s political season and we’re an easy dog to kick, but Dianne Feinstein needs to understand that a good portion of the economy in California comes from our industry, and we pay taxes and we’re voting members of the community.”

When asked about her interest in the obscenity issue, a spokesman for Feinstein pointed to her support for several measures targeting child porn in recent years.

Actually, it's not so surprising to me, since DiFi has been trending more Rightward for years, and her current husband is the founding editor of Newsweek, which is also tacking hard Right as well.

The real issue here, once you cut through the BS, is that what Hatch and the Right are ticked at is that one weapon in their arsenal to regulate adult behavior and wipe out sex they don't like has been liquidated..and they just can't stand that. Oh, and also, one more brick to be launched against the Dems and President Hussein Obama of Kenya/Sharia/Moscow as "anti-Christian" and "anti-American", too. And...a nice way of squeezing folk for funding, too.

Focusing on abuse of children and prosecuting child porn might still allow for more obtuse attempts to silence more legal adult material under current child exploitation and "trafficking" laws (and keep in mind the current case involving Lupe Fuentes allegedly hiring underage girls to shoot vids; as well as the current brohaha involving Reality Kings and the lawsuit against them by the mom of the alleged 16-year old they shot videos with); but it would preclude the kind of hyperactive prosecution of adult that Trueman, Dines, Lubben, and others would prefer.

Either way, this could get pretty nasty soon. As always, we'll keep you informed with updates as needed.