NEW YORK — Billionaire investor Bill Ackman teamed up with religiously motivated anti-porn crusader Laila Mickelwait on CNBC today, to target Visa for processing payments for MindGeek and Pornhub.
Ackman, CEO of Pershing Square Capital Management, told CNBC’s Andrew Ross Sorkin that Visa is “culpable” for continuing to provide payment services to Pornhub, which he alleges hosts CSAM.
Ackman and Mickelwait — the former mouthpiece of controversial ministry Exodus Cry, led by Benjamin Nolot — were invited by Sorkin to appear on his show, “Squawk Box,” to discuss the recent decision by a California judge to try Visa as an alleged “co-conspirator” with MindGeek in a civil lawsuit.
As XBIZ reported, Judge Cormac J. Carney of the U.S. District Court of central California ruled on Friday against Visa’s request to be dismissed from the lawsuit, which alleges it “conspired” with MindGeek to profit from CSAM.
Carney, a George W. Bush appointee who had to step down from his previous post as as Chief Judge for making a racially insensitive comment about one of his law clerks, wrote in his opinion that “if Visa was aware that there was a substantial amount of child porn on MindGeek’s sites, which the Court must accept as true at this stage of the proceedings, then it was aware that it was processing the monetization of child porn, moving money from advertisers to MindGeek for advertisements playing alongside child porn like Plaintiff’s videos.”
The lawsuit, filed on behalf of a woman who claims underage images uploaded by third parties were “monetized” by Pornhub, is part of an ongoing campaign of legal actions by religiously motivated groups like NCOSE and activists like Mickelwait, aiming to shut down MindGeek and all “online pornography.”
A spokesman for Visa told The New York Times that the company condemns “sex trafficking, sexual exploitation and child sexual abuse materials as repugnant to our values and purpose as a company.”
Visa, the Times noted, “does not tolerate the use of its network for illegal activity and continues to believe it is an improper defendant.”
A MindGeek rep pointed out to Variety that “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, the rep continued, has “zero tolerance for the posting of illegal content on its platforms, and has instituted the most comprehensive safeguards in user-generated platform history. 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 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 MindGeek rep stressed.
Bill Ackman’s Twitter Tirade in Full
Over the weekend, Ackman went on a lengthy Twitter tirade against Visa and its leadership, surprising observers of finance with his relentless obsession with Visa — and only in passing, MasterCard. Ackman’s tweets were published on July 30 and are currently pinned to the top of his page. Edited for clarity, Ackman’s tweets read as follows:
Yesterday, a Federal judge rendered a decision that no one has likely read. You should. The lawsuit is against MindGeek, the largest internet porn company in the world, and Visa. Both are culpable. Visa’s conduct here is inexcusable, likely to cause the company incalculable financial and reputational damage and create serious Caremark personal liability and potential criminal liability for the board. The decision summarizes the life destruction of a 13-year-old girl due to a sex video. She was pressured to make by her then-boyfriend, which in turn was uploaded to one of MindGeek’s sites.
I learned about the story originally from [the New York Times Dec. 2020 article “The Children of Pornhub” by Nicholas Kristof] which I shared on Twitter. In real time I attempted to contact Visa and Mastercard CEOs. I was successful in reaching the CEO of MC who took my concern seriously. Within five days, MC had shut down the site. Five days later, Visa followed suit. Within a day or so, MindGeek removed 10m illegal videos, 80% of its content.”
Without Visa/MC, MindGeek was toast as PayPal had shut them down a year earlier and AmEx does not do porn. Quietly, however, a few weeks later, both Visa and MC reauthorized MindGeek, but no longer allowed BTC payments on the free “tube” sites where anyone can upload content. Instead, they continued to allow their cards to be used for B2B business; that is, the purchase of ads on these same tube sites and for subscriptions to “premium” content, together about 90% of the business. Hours later, MindGeek began restoring its illegal content library.”
The only age verification MindGeek now uses before accepting a video is checking the ID and age of the uploader, often the perpetrator of the crime.
In its defense, Visa claims it has no liability, protested that the payments industry would collapse if it did, and attempted to dismiss the suit, taking comfort in its statement, “Maintaining a neutral stance under the law is vital for the free flow of commerce.”
The judge, in a carefully reasoned decision, disagrees: “Visa is being kept in this case because it is alleged to have continued to recognize as a merchant an immense, well known, and highly visible business that it knew used its websites to host and monetize child porn.”
Moreover, Visa allegedly had considerable sway over that business’s decision-making, a conclusion amply supported by allegation that MindGeek removed 80% of its content when Visa suspended its business with MindGeek.
Visa is not being asked to police “the billions of individual transactions it processes each year. It is simply being asked to refrain from offering the tool with which a known alleged criminal entity performs its crimes. That is not a tall order and does not spell out an existential threat to the financial industry.
“At this early stage of the proceedings, before Plaintiff has had any discovery from which to derive Visa’s state of mind, the Court can comfortably infer that Visa intended to help MindGeek monetize child porn from the very fact that Visa continued to provide MindGeek the means to do so and knew MindGeek was indeed doing so. Put yet another way, Visa is not alleged to have simply created an incentive to commit a crime, it is alleged to have knowingly provided the tool used to complete the crime.”
Visa is a Delaware Corp. and Caremark liability applies. In short, directors can be held personally liable if the company’s product or service causes harm and the board has provided inadequate oversight to monitor the potential for harm. The harm here is enormous.
Think 10 million-plus videos of child porn and the destruction to the untold number of lives this has caused.
The TVPRA Federal criminal child sex trafficking statute applies to: ‘Whoever knowingly benefits, financially or by receiving anything of value, from participation in a venture which has engaged in [child sex trafficking]’ or anyone who conspires with any such person.
Alfred Kelly, Visa’s CEO, waxes eloquent in his annual letter about Visa’s ‘noble’ purpose, commitment to an ‘inclusive economy’ and ‘economic opportunity for all.’ He then trumpets the hiring of a Chief Diversity Officer in May 2021 reporting directly to him.
Mr. 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.
They might also review Visa’s ESG policies.
Et tu, Mastercard?
“Has anyone asked Ackman if he’s short Visa?” a puzzled source who is familiar with the investing world wondered when consulted by XBIZ. “He’s talking about criminal liability for the board of directors — it could mean he’s probably short. It’s just speculation at this point — but the whole thread is odd and self-important.”
Ackman then tweeted, “For the record, neither I nor my firm have any economic interest, long or short, in
@Visa @Mastercard @PayPal Amex or any other any payments company, processing company, bank or other financial institution.”
The billionaire told CNBC during the interview that his primary motivation for speaking out comes from being the father of four daughters, and said today that he has “offered to ‘philanthropically’ help finance the litigation against Visa and MindGeek” and he will become a “fierce, well-financed advocate that will not be forced to settle the case,” Bloomberg reported.
