In a setback for Visa in a case alleging the payment processor is liable for the distribution of child pornography on Pornhub and other sites operated by parent company MindGeek, a federal judge ruled that it was reasonable to conclude that Visa knowingly facilitated the criminal activity.
On Friday, July 29, U.S. District Judge Cormac Carney of the U.S. District Court of the Central District of California issued a decision in the Fleites v. MindGeek case, denying Visa’s motion to dismiss the claim it violated California’s Unfair Competition Law — which prohibits unlawful, unfair or fraudulent business acts and practices — by processing payments for child porn. (A copy of the decision is available at this link.)
In the ruling, Carney held that the plaintiff “adequately alleged” that Visa engaged in a criminal conspiracy with MindGeek to monetize child pornography. Specifically, he wrote, “Visa knew that MindGeek’s websites were teeming with monetized child porn”; that there was a “criminal agreement to financially benefit from child porn that can be inferred from [Visa’s] decision to continue to recognize MindGeek as a merchant despite allegedly knowing that MindGeek monetized a substantial amount of child porn”; and that “the court can comfortably infer that Visa intended to help MindGeek monetize child porn” by “knowingly provid[ing] the tool used to complete the crime.”
“When MindGeek decides to monetize child porn, and Visa decides to continue to allow its payment network to be used for that goal despite knowledge of MindGeek’s monetization of child porn, it is entirely foreseeable that victims of child porn like plaintiff will suffer the harms that plaintiff alleges,” Carney wrote.
In a statement, a Visa spokesperson said: “Visa condemns sex trafficking, sexual exploitation and child sexual abuse materials as repugnant to our values and purpose as a company. This pre-trial ruling is disappointing and mischaracterizes Visa’s role and its policies and practices. Visa will not tolerate the use of our network for illegal activity. We continue to believe that Visa is an improper defendant in this case.”
A rep for MindGeek provided this statement: “At this point in the case, the court has not yet ruled on the veracity of the allegations, and is required to assume all of the plaintiff’s allegations are true and accurate. When the court can actually consider the facts, we are confident the plaintiff’s claims will be dismissed for lack of merit. MindGeek has zero tolerance for the posting of illegal content on its platforms, and has instituted the most comprehensive safeguards in user-generated platform history.”
The company’s statement continued, “We have banned uploads from anyone who has not submitted government-issued ID that passes third-party verification, eliminated the ability to download free content, integrated several leading technological platform and content moderation tools, instituted digital fingerprinting of all videos found to be in violation of our Non-Consensual Content and CSAM [child sexual abuse material] Policies to help protect against removed videos being reposted, expanded our moderation workforce and processes, and partnered with dozens of non-profit organizations around the world. Any insinuation that MindGeek does not take the elimination of illegal material seriously is categorically false.”
The plaintiff in the case against MindGeek and Visa is Serena Fleites, who, when she was 13, was pressured by her then-boyfriend into making a sexually explicit video — which he allegedly uploaded to Pornhub (with the title “13-Year Old Brunette Shows Off For the Camera”) without her knowledge or consent. Fleites’ attorneys say the video, which was alleged to have been viewed millions of times on MindGeek sites, destroyed her life: “While MindGeek profited from the child porn featuring plaintiff, plaintiff was intermittently homeless or living in her car, addicted to heroin, depressed and suicidal, and without the support of her family,” her lawsuit, filed in June 2021, states. Fleites’ story was featured by New York Times columnist Nicholas Kristof in December 2020, who detailed how MindGeek “monetizes child rapes.”
In his July 29 decision, Carney ruled partly in Visa’s favor. He wrote in the opinion that Fleites “simply has no basis for claiming Visa directly participated in the sex trafficking ventures that harmed her.” In addition, he ordered Fleites to provide “a more definite statement with respect to her common law civil conspiracy cause of action against Visa.”
In a second, related ruling (available at this link), Carney compelled MindGeek to undergo jurisdictional discovery, which attorneys for Fleites said will reveal MindGeek’s “shadowy operations and those controlling it” by exposing the defendant’s financial relationships. “Where the money flows in the MindGeek web, which may relate to ownership of the porn sites that generate revenue, matters to the court’s jurisdictional analysis,” the judge said in the opinion. “As the court sees it, financially benefitting from the sexual exploitation of minors is the core of this case.”
On Saturday, activist investor Bill Ackman of hedge fund Pershing Square Holdings, who has previously called out the role of Visa and Mastercard in enabling MindGeek’s ability to make money from child pornography, posted a thread on Twitter about the ruling in the case.
“Visa’s conduct here is inexcusable, likely to cause the company incalculable financial and reputational damage” as well as “create serious… personal liability and potential criminal liability for the board,” Ackman wrote in part. According to Ackman, neither he nor Pershing Square have any economic interest, long or short, in Visa, Mastercard or any other payments company, bank or financial institution.
According to Ackman, after he read the Times’ story about Fleites and Pornub, he reached out to the CEOs of Visa and Mastercard to express concerns about their part in enabling MindGeek’s business. Shortly afterward, both companies cut off consumer payment processing to MindGeek’s sites; within “a day or so, MindGeek removed >10m illegal videos, 80% of its content,” the hedge fund manager said. However, they both soon reactivated business-to-business payments for the purchase of ads on MindGeek sites and for subscriptions to “premium” content, representing about 90% of the company’s revenue, per Ackman.
Ackman wrote that Visa CEO Alfred Kelly “should know that the majority of child trafficking victims are from lower-income families including Black and Brown families. I would recommend that Visa’s board, and separately Mr. Kelly, should hire independent white collar and criminal counsel.” He concluded the thread with, “Et tu, @Mastercard?”
Michael Bowe, partner at Brown Rudnick and lead attorney representing Fleites in the lawsuit, said in a statement, “The court’s holding that our detailed complaint adequately pleads Visa was engaged in a criminal conspiracy to monetize child porn means Visa and other credit card companies are finally going to face the civil and perhaps criminal consequences of this unconscionable and illegal activity.”
The case, Serena Fleites v. MindGeek S.A.R.L. et al., is Docket No. 2:21-cv-04920-CJC-ADS in the U.S. District Court for the Central District of California.
Fleites is one of 34 individual plaintiffs who last year sued Pornhub and MindGeek, alleging exploitation and monetization of child pornography, rape videos, trafficked content, stolen content and other nonconsensual content. The litigation is the first application to date of Racketeer Influenced and Corrupt Organizations (RICO), child pornography and trafficking laws seeking to hold financial institutions accountable for illegal conduct monetized by and through the systems of companies whose payments they process.
