The Bill Gates of Porn
How Reuben Sturman shaped the sex industry
Quietly and without fanfare, Sturman set up companies to supply films for his booths and to produce hard-core features. He opened more stores and warehouses in the United States. He formed porn companies iEngland, France, Switzerland, Germany, and the Netherlands. He opened factories in Asia to manufacture sexual devices.
As early as 1974, Sturman recognized that the future of the business lay in videotape. He put his films on video, opened retail video stores, and started distributing hard-core videos in the United States and Western Europe. His companies sold porn to outlets in 50 states and more than 40 foreign countries. Independent producers of adult material had to deal with Sturman to gain widespread distribution, while independent adult-bookstore owners relied upon him for access to new products. Few Americans in this century, with the possible exception of Bill Gates, have wielded so much influence over an industry. The greatest threat to Sturman's empire came not from competitors but from the government.
Sturman's war with the federal government began in 1964, when FBI agents raided his Cleveland warehouse and seized 590 copies of a paperback called Sex Life of a Cop. He was indicted on federal obscenity charges. He responded by suing J. Edgar Hoover, and the charges were later dismissed. For the next two decades, Sturman's warehouses were constantly raided by state, local, and federal officials. Sturman was indicted on federal obescenity charges four more times during those years, avoiding conviction on every count and never spending a day in prison.
Lawyers became as important to his business as the men and women who appeared in his films. Throughout these legal battles, Sturman defended his belief that people should have the freedom to read or view whatever they wanted, in the privacy of their won homes--and that he should have the freedom to sell it. Each new victory over the federal government raised his stature in the sex industry. And yet just as his empire reached its peak, a young federal agent figured out how to bring Sturman down.
On a mission. Richard N. Rosfelder Jr. was a 27-year-old Internal Revenue Service agent in Cleveland who began to investigate Sturman in 1975--and spent the next 19 years on the case. Rosfelder was not an antipornography zealot. He suspected that Sturman's elaborate corporate structure was being used to avoid paying taxes. And he was right. Sturman was indeed evading taxes on a monumental scale, skimming millions of dollars from his peep machines each year and hiding the money in offshore accounts. Paying taxes, in Sturman's view, was like subsidizing the enemy. After years of patient detective work, Rosfelder tracked down Sturman's Swiss bank accounts--and the Swiss government, in an unprecedented move, gave the IRS access to those accounts. The Justice Department had submitted secret documents to the Swiss, alleging that Sturman had links to the "upper echelons" of organized crime. Similar allegations had long been made by antipornography activists, who claimed that Sturman took orders from--or at least paid kickbacks to--leaders of the Gambino crime family.