The Bill Gates of Porn
How Reuben Sturman shaped the sex industry
Although Hugh Hefner and Larry Flynt are household names, the man who played a far more pivotal role in developing the American sex industry has remained largely unknown to the public. Until a few years ago, a secretive Cleveland businessman named Reuben Sturman dominated the production and distribution of porn not only in the United States but also throughout most of the world. A business rival once complained that Sturman did not simply control the adult-entertainment industry; he was the industry. While other porn magnates courted publicity, Sturman fiercely guarded his privacy, employing at least 20 different aliases, rarely speaking to reporters, and frequently hiding his face behind a mask during courtroom appearances.
To his defenders in the sex industry, Sturman was a marketing genius and a champion of free speech, an entrepreneur whose toughness, intelligence, and boundless self-confidence were responsible for his success. But to antipornography activists and Justice Department officials, Sturman was the head of a vast criminal organization whose companies enjoyed an unfair competitive advantage: protection and support from the highest levels of the Cosa Nostra.
Reuben Sturman was born in 1924 and raised in Cleveland's East Side, where his parents ran a small grocery. After serving in the Army Air Corps during World War II, he attended Western Reserve University, got married, and started his own business. Using the garage at his home as a warehouse, Sturman drove through the neighborhoods of Cleveland, visiting local candy stores and selling bundles of comic books from the trunk of his old Dodge. By the late 1950s, the business had grown into a wholesale magazine company with warehouses in eight major cities.
Yes, sex sells. At the suggestion of an employee, the company began to sell a few sex magazines. Once Sturman realized that they produced at least 20 times the revenue of comic books, he wanted to stock every sex publication ever printed. He began publishing his own sex magazines and opening retail stores. He wasn't obsessed with sex; it just seemed like a good business. By the end of the 1960s, Sturman was one of the largest publishers, and perhaps the largest distributor, of sex magazines.
Sturman is credited with inventing a simple contraption that proved extraordinarily lucrative: the peep booth. By enclosing coin-operated projectors in a small booth with a screen and a door that could be locked, Sturman gave his customers the opportunity to view sex films in private. The invention was an immediate success. Sturman put peep booths into all of his stores. He supplied the booths to other adult-bookstore owners, free of charge, in return for half of the receipts. He started a company to manufacture peep booths and another company to service them. The huge demand for sex films to show in these booths helped establish the nation's adult-film industry. During the 1970s, the public exhibition of hard-core films, such as Deep Throat, attracted a great deal of attention in the media. But the annual revenues of the nation's peep booths were much larger--four times larger, by some estimates--than those of adult theaters.
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.
Sturman was indicted for tax evasion in 1985 but managed to delay his trial for four years. He challenged the legality of the Justice Department's actions, demanded to see the secret documents given to the Swiss, and vehemently denied having any ties to the Cosa Nostra. The courts upheld the government's position and kept the documents secret. In 1989, Sturman was found guilty in the tax case and subsequently pleaded guilty in a Las Vegas obscenity case. Three years later, he was finally sent to prison. On the night of Dec. 7, 1992, he escaped from prison, vanishing into the Mojave Desert. Federal officials assumed that Sturman had fled the country and would never be seen again. Instead, he was discovered in a modest apartment, not far from Disneyland, after eight weeks on the run. His capture sparked a series of wild revelations. Sturman had not only tampered with the jury in his tax case; he had also attempted to bribe the judge. And he had hired thugs to destroy adult bookstores owned by former associates who had seemed disloyal to him. The IRS says Sturman owes it $29 million in back taxes and has seized all his available assets. At his last court appearance, he was represented by a public defender and claimed to be dead broke.
Sturman is now serving a 19-year sentence at a federal prison in Manchester, Ky. He is 72 years old, but looks younger. He has a strong air of authority, like a proud, recently deposed head of state. His hatred of the U.S. government is palpable and intense. "They really were, and still are, a terrible bunch of people," he says. "But bad as they were, I was going to beat them every time." He claims never to have paid the Gambino family any money, at any time. He laments the recent changes in the porn trade, the flood of cheap product, the "junk" being sold these days. "You wanted to know how the industry started," Sturman says, toward the end of an interview. "Well, you're looking at the person who started it."
This story appears in the February 10, 1997 print edition of U.S. News & World Report.