The pornography industry supplies customers with a remarkable range of goods and services, which range from hard-core books, magazines, films, and videotapes, to various devices designed to be used in conjunction with sexual activity, to live and interactive encounters in "rap booths" and "live peep shows." The actual size of the industry is difficult, if not impossible, to measure. FBI estimates place the annual profits of the hard-core pornography industry at $2.4 billion (Satchell, 1979) while the California Department of Justice places that number at closer to $4 billion (California Department of Justice, 1976: 21). Still other sources, including individuals active in the industry, insist that the actual number is closer is $6 billion (Kirk, et al., 1983a).
What we do know with some certainty is that the pornography industry engages in extensive business activities throughout the country. For example, the industry employs about 100,000 people in its legal, above-ground activities (Kirk, et al. 1983a). An estimated 15,000 and 20,000 retail adult bookstores operate in the U.S. (Kirk, et. al., 1983a) which realize, on average, about $200,000 a year in gross sales. In addition, according to the Adult Film Association, approximately 800 adult theaters nationwide draw three million customers a week and generate about $500 million in annual gross receipts (Kirk, et al. 1983a).
On the surface it would appear that any business offering such a large flow of hard cash, little competition from "respectable" businesses, and a clandestine environment would inevitably attract organized crime. Just exactly what form organized crime's interests take in the pornography industry is the source of considerable controversy. For example, investigative journalist Jack Anderson has reported that, "... the pornography industry is controlled by organized crime. Phony names and dummy corporations are used, but behind them are the crime bosses" (Anderson, 1979). Convicted child pornographer, Guy Strait, told interviewers that the pornography industry is controlled by "the syndicate," a nationwide cartel which specializes in pornography and narcotics (Linedecker, 1981).
The fact is that any cash business is susceptible to organized crime influences. Pornographic bookstores offer the opportunity to skim money off the top, thereby increasing profits and decreasing tax liability. . In Pennsylvania, research showed that some pornography outlets instructed their managers to turn off their electronic cash registers during certain times of the day, so that their records would not reflect their real sales income (Potter, 1986). In other cases where retail establishments were owned by individuals with interests in other illicit enterprises, such as gambling or loansharking, the retail sales figures were artificially inflated so that profits from these illegal activities could be laundered through the store (Potter, 1986). In some major cities, motorcycle gangs have made a major move into the commercial sex industry. In Philadelphia, for example, the Pagans motorcycle club have been involved in retail pornography, the production of pornographic films, and the provision of other sexual services, including prostitution services connected to live peep shows and rap booth operations in porn stores (Potter and Jenkins, 1985; Pennsylvania Crime Commission, 1980). A confidential 1978 FBI report on pornography said that:
Organized crime involvement in pornography, as evidenced by this survey, is indeed significant and there is an obvious national control directly and indirectly by organized crime figures of that industry in the United States. Few pornographers can operate independently without some involvement with organized crime (Potter, 1986: 24).
The FBI report went on to detail a series of extortionate tactics prevalent in the illegal porn industry:
A "requirement"that film producers distribute through organized crime controlled companies under threat of piracy;
Burglaries of independent retail outlets;
Strong-arm tactics against theater owners screening pirated version of organized crime controlled films (Potter, 1986: 24-25).
The shadowy outlines of a syndicate in the pornography industry similar to the one described by Guy Strait was uncovered in the FBI's 1980 MIPORN operation. MIPORN ("Miami Pornography") was an undercover investigation of the pornography industry, which resulted in the indictments of 55 people in 10 states (Kirk, et. al. 1983a). Among the key actors indicted in MIPORN were the following (Kirk et al. 1983; Potter, 1986): Theodore Rothstein and Robert DiBernardo, both of Star Distributors, Ltd. of New York, one of the largest hard core film, videotape, book, and magazine distributors in the country; Kenneth Guarino of Providence, Rhode Island, the operator of Superior News, Inc. and the largest pornography distributor in New England; Mickey Zaffarano of New York, considered to be a major distributor of adult motion pictures, with interests in retail pornography operations in Washington, D.C., Boston, and San Francisco; Reuben Sturman of Cleveland, Ohio, owner of Sovereign News Company, who was known as the "King of Porn." Sturman was the largest pornography distributor in the United States and owned or controlled hundreds of retail and wholesale outlets across the country. He also had an extensive production and distribution operation in Europe.
Of the individuals indicted by the federal government in the MIPORN operation, Reuben Sturman was clearly the most important. Sturman presided over his business enterprises from his Sovereign News Company, headquartered in Cleveland. Sovereign News was housed in a three-story, red-brick building, surrounded by chain-link fences and barbed wire and protected by the most modern and sophisticated electronic surveillance devices money can buy (Potter, 1986; Satchell, 1979). Sturman controlled pornography distribution warehouses in Baltimore, Chicago, Pittsburgh, Denver, Milwaukee, Buffalo, Toronto, Los Angeles, and Detroit. In addition, he was the principle owner of between 300 and 800 retail pornography stores around the country (May and Hosenball, 1981). Sturman's Sovereign News Empire dominated the pornography industry and created an environment in which smaller operators and their distributors were dependent upon Sovereign News for their survival. A confidential FBI memorandum on the pornography industry said that [Sturman's business practices] have included the strong-arm shakedowns of other dealers, distributors, and suppliers throughout the United States, particularly on the West Coast. Sturman accomplished a total takeover with the assistance of Robert DiBernardo (Potter, 1986: 136).