The shy pornographers

The shy pornographers

How a couple of American smut merchants, dodging behind front men and paper companies, tried to add Canada to their empires

Doug Payne May 3 1976
The shy pornographers

The shy pornographers

How a couple of American smut merchants, dodging behind front men and paper companies, tried to add Canada to their empires

Doug Payne May 3 1976

The shy pornographers

How a couple of American smut merchants, dodging behind front men and paper companies, tried to add Canada to their empires

Doug Payne

Whatever else it is, pornography is controversial. Few of us are apathetic to smut. Lately, it’s become the rage among sociologists, psychologists and academics of all persuasions to tell us why we love or hate it. It’s a form of suppressed violence, an escape hatch for violent tendencies, education, exploitation of the female sex, voyeurism or pleasure. To some it’s art, to others trash; an indicator of the decline of Western civilization, or the way toward a healthier, more liberated twentieth century. But pornography is more than a subject for academic discussion. As writer Doug Payne points out, it’s a big business that’s challenging much more than our morals. On behalf of the CBC, Payne has been investigating pornography and organized crime in Canada for the past two years and has come up with a detailed examination of how the business of pornography really operates. Here is his report.

Harry Virgil Mohney is a pornographer. Beginning in March, 1974, he spent more than $500,000 trying to add Canada to an empire that already spanned Michigan, Illinois, Tennessee, Kentucky, Indiana, Wisconsin, Iowa and Ohio. He began in Ontario, using the same operational plan he had used in the United States, where, from his headquarters in Durand, Mich., he set up such companies as American News, Variety Books, American Amusement, Cinema X, Auto City News and Sceen News Distributors.

Reuben Sturman is also a pornographer, and he, too, is an American. Sturman works his empire out of a fortress-like warehouse in a run-down light industrial area of Cleveland. From there he controls almost a dozen enterprises,including Sovereign News and a couple of mysterious holding companies in Ohio and Nevada. During the early 1970s, Sturman took over Canada’s first homegrown pornographic empire. Mohney and Sturman have something else in common: they each have business ties with organized crime.

Pornography is legal in many areas of the United States. As moral barriers were toppled in the courts in the late 1960s and early 1970s, it became big business. A natural spin-off from that other form of sexfor-profit, prostitution, it was taken over by the people who already controlled the U.S. sex business: the Mafia. The major distributors of pornographic materials in the eastern and mid-western United States

are located in New York City. Star Distributors, at 150 Lafayette Street, is the biggest, along with its subsidiaries, Star Reliable, Star Media and Model Distributors. They are all operated by the Colombo family, one of New York’s so-called “five mob families.” They share a part of the trade with the DeCavalcantes of New Jersey, but through their chief lieutenant, Robert Di-

Bernardo, the Colombos handle most of the pornography sold by men such as Mohney and Sturman. Organized crime is heavily involved in every aspect of the business: financing, publishing, printing, distribution and exhibition. Much of it they run like any other conglomerate, but occasionally the Mob lapses into older ways of doing things, including murder.

And theft. The new thing in the porno business is first-run “hard-core” films. Where the Mafia cannot get the rights to a film legitimately, they will often pirate it, making and distributing their own prints. The pirating of porno films is handled by, among others, Michael Zaffarano, a captain in the Joe Bonanno family, and by Joseph Gentile and Joseph and Anthony Peraino, who have ties with the Colombos.

According to the U.S. Presidential Report of the Commission on Obscenity and Pornography, the merchandising of smut grosses about $200 million a year in the United States. That’s hard-core. The figure would be closer to $600 million, taking soft-core pornography into consideration as well. (Soft-core pornography is material in which sexual acts are simulated—in books, in which there are graphic descriptions but no pictures; and in magazines, in which the pictures do not show the genitals. Hard-core pornography starts where soft-core stops—and goes on from there.) Since hard-core pornography isn’t legal in Canada, sales figures here cannot be estimated with any degree of accuracy. Estimates vary from source to source, even among the police. Some put the figure as low as two million dollars a year, others put it as high as $ 10 million. Soft-core pornographic material is available in most Canadian cities: cellophane-wrapped magazines with titles such as Big And Bouncy, Black And Beautiful or Intima, which sell for about eight dollars; pocketbooks such as The Inner Depths or Skin Games, which sell for about two dollars. Publications such as these are handled by most major Canadian periodical distributors. Hardcore material is only available under the counter, but it is available in every major city and in many of the smaller ones across the country. Vancouver is a big market because of geography: it is close to the other major U.S. smut centre, California. Montreal is another major market, partly because of its long association with organized crime. Toronto is another, and it was to Toronto that Harry Mohney came.

Mohney is the boy wonder of American pornography. Newspapers in the United States call him the “Porn King.” He’s also known as Harry Klein and Harry Mahoney. Pornography made him a millionaire before he was 34. He flies his own plane, a brown-and-white Aerostar (he has also flown a blue-and-white Piper Cherokee and a Cessna). He changes cars frequently, one day driving a company Audi, the next a white-and-violet Cadillac. He regards himself as something of a ladies’ man (he left his wife in Durand, Mich., to live with a woman in Lansing). He is gregarious and an outspoken foe of censorship laws. He runs a network of adult bookstores, mini-theatres, drive-in movies, body-rub parlors and movie houses. He has a topless billiard parlor in Lansing. He has been charged on numerous occasions with obscenity-related matters, but he has rarely been convicted. He employs a battery of lawyers, including Robert Eugene Smith, a constitutional expert with offices on Peachtree Street in Atlanta, Georgia, who attempt to keep police and reporters at arm’s length. As Smith told a reporter recently: “Until such time as Mr. Mohney is completely vindicated, he chooses not to have any discussions with members of the press either on or off the record. Anything he says might be misinterpreted by our zealous law enforcement officers against him.” Smith claims Mohney has been trying to extricate himself from the “adult” movie and book businesses in the United States, and it is true that his name rarely, if ever, appears now on official documents in connection with any of his companies—but he still derives financial benefit from them, and indirectly he still runs them.

THE POLICE WOULD CLOSE THE SHOW, AND WITHIN HOURS IT WAS BUSINESS AS USUAL

During the early part of 1974, Mohney was looking for new markets for his bookstores, which feature sexually explicit magazines, such as Piece Meal or Hotel Orgy, depicting sexual intercourse, masturbation, fellatio and cunnilingus between or among various people and, occasionally, various animals. Mohney’s films are the same. His operations people convinced him that Canada was the place to go. He agreed, and had locations cased in Toronto. He also hired a Toronto legal firm, Kennedy & Kennedy, to assist him. They were to set up a number of companies, to help get Mohney people into Canada, and to keep Mohney’s involve-

ment concealed. Kennedy & Kennedy worked out of a converted manse at 621 Sherboume Street, next door to Trinity Evangelical Lutheran Church. Peter Grant Kennedy, born in Amherst, Nova Scotia, was called to the Ontario Bar on March 22, 1974, and articled for a short time with a noted Toronto lawyer, Aubrey Golden, who then handled most of the province’s obscenity cases. Golden, however, was getting out of the field, and Peter Kennedy, then 26 years old, took quite a few of his clients with him when he went into practice. His partner was his wife, Tanya Kennedy, a year older and born in Yugoslavia.

The Kennedys began by setting up a number of companies, starting with 288524 Ontario Limited, which was a store called American Discount Books at 400 Bloor Street West. It featured “adult” books and, in a back room, a number of mini-cinema movie booths—phonebooth sized cubicles with a small screen on the back of the door, in which the customer watches a soft-core movie in two-minute, 25-cent installments. The Kennedys also incorporated 286880 Ontario Limited, a store called Shop d’Amour at 361 Yonge Street in the heart of Toronto’s “Yonge Street Strip.” Shop d’Amour sold a skimpy line of sexy lingerie, although its real purpose was to hold what the Kennedys regarded as a prime location on the Strip. It was so inadequately stocked that when the owner of the next-door body-rub parlor inquired, he was told the shop couldn’t outfit his girls. A third company, 286977 Ontario Limited, was incorporated to hold the Bayview Playhouse Theatre, which Harry -, Mohney bought for $300,000. One of the best small theatres in Toronto (it has 520 seats), it is located in an upwardly mobile, middle-class district called Leaside. On the surface, the three businesses were unrelated. Peter Kennedy told police investigators he didn’t know who owned them. He said the principal was a firm named Imperial Films, whose director was Reuben Katzman. It was Katzman, in any case, who signed the company’s cheques.

And so it began: early in July, 1974, Kennedy fe Kennedy wrote to the Department of Manpower and Immigration, seeking work permits for Charles Abrams, his “fiancée” Theresa Stewart, and his “cousin” George Kihnley of Dayton, Ohio. Abrams, who was described as the general manager of a proposed bookstore operation, was a former furniture salesman who faced charges in Hamilton County, Ohio, relating to that state’s organized crime statutes, and for promoting prostitution at the National Health Club in Cincinnati. Theresa Stewart, also known as Patricia Lyn Stewart and Terry Durham, was named in that indictment as well, although charges against her were subsequently dropped. In July, 1974, she was 24 years old. Abrams was 41.

Under police pressure, sparked by neighborhood complaints, American Discount Books closed shortly after it opened. At about the same time, Shop d’Amour disappeared, literally overnight, and in its place sprang up “Cinema Blue,” soon to become the showplace mini-theatre for dirty movies on the Yonge Street Strip. It was run by Abrams and Kihnley. There wasn’t much to it: two 8mm projectors and a stereo cartridge system mounted on an old dining room sideboard, the films projected through holes knocked through a Sheetrock partition onto a one-fifth-sized movie screen. There were 60-odd seats, some taken from an old theater, others just folding chairs. Cinema Blue began by showing a film entitled Sex A nd Marriage, which featured scenes of explicit sex, and Kihnley and Abrams were charged with showing an obscene film under Section 159 of the Criminal Code. After a month of Sex And Marriage, they started showing Deep Throat. Within five or 10 minutes of the start of each showing, Toronto morality squad officers seized the print and the projector and laid charges against Abrams and Kihnley. Each print cost about $50, each projector about $145. Within a month, some 40 charges had been laid.

During the Deep Throat period, a new member of the Mohney team arrived. His name was Sherman Stephens, Jr., and, again, Kennedy & Kennedy assisted his entry into Canada on a work permit. He, too, had worked at the National Health Club in Cincinnati. Within a month of his arrival, a “by-invitation-only” audience

gathered at the Playhouse Theatre to attend a 16mm color and sound showing of Deep Throat. Abrams, Stephens and Stewart were all on hand to officiate at the opening. Again the police closed the show. Abrams returned to Cinema Blue, but when several more charges were laid against him he quietly returned to the United States—out of the reach of Canadian law enforcement agencies. Morality squad officers found a sign on the door of Cinema Blue: “Morality, you won. We’re broke.” The theatre reopened under new management within a week, the new management being Sherman Stephens, Jr. “Stevie,” as he was called on the Strip, was

a Southern boy with a weight problem. He loved to tell everyone that he was just running the place for his friend, the “owner.” Stephens started off showing borderline soft-core films at Cinema Blue, slipping in the occasional explicit scene. The police laid charges, as they had against Abrams, and continued seizing films and projectors, but invariably a new show with a new film and a new projector would be underway within an hour or two. Occasionally Stephens showed a hard-core film: one featured a woman and a dog.

In February, 1975, the police went to the Playhouse Theatre, found a locked room in the basement, and seized the contents, more than 2,000 articles of pornography: magazines, 8mm films, editing equipment, even some explicit eight-track stereo cartridges. The room had been stocked and locked, they were told, by Peter Kennedy. The material, which had been brought into Canada illegally, had a street value of more than $40,000. Kennedy disclaimed all knowledge of the material, but was charged along with Sherman Stephens, Jr. with conspiracy to exhibit obscene material. The stock the police found in the room came from Harry Mohney’s warehouse at 311'/2 Oak Street, Durand, Mich.

It was at this point that the Kennedys complied with an order to file new corporate information with the Ontario Companies Branch. (The directors of each of the three companies had resigned soon after they were incorporated, and new directors had not been named, despite provisions under Ontario corporate law requiring such information within 15 days.) Stephens was shown to be the sole director of both Cinema Blue and the Playhouse Theater. Shortly afterward, he returned to the United States, and his brother Paul took over. He was in Canada on a work permit. The Kennedys had told immigration officials he was the “construction expert” for Imperial Films. In fact, he was a handyman. He left Canada as quickly as he came, and within a week or so Cinema Blue was no more. On Thursday, March 20, 1975, it was closed by bailiffs for what the owner of the building claimed was a default on the rental. The Playhouse Theater remained in darkness. Mohney is trying to sell it now.

The Ontario government was aware of the Mohney operation almost from the start, and, in an effort to clean up the Yonge Street Strip, was busy behind the scenes. The Companies Branch held hearings and cancelled the Mohney companies’ articles of incorporation. Tanya Kennedy, claiming no longer to represent two of the companies, told the hearings that Stephens had been named a director of the third by mistake. A fourth company, 21st Century Love Cinemas, owned by “adult” entertainment entrepreneur Joe Martin Sr., was also examined during the hearings. At the high point of the Cinema Blue operation, Martin returned to Toronto from an overseas business trip to find new locks on the doors of his cinemas and the Mohney people running them. Peter Kennedy, Martin’s lawyer at the time, had filed new articles of incorporation for the business, in which Kennedy was named as the sole director. Martin hired a new lawyer and got his business back.

Throughout all of this Harry Mohney was never charged. He’d visited the operation several times, including a trip in September, 1974, when he flew Abrams and Stewart into Toronto on his aircraft. He told a reporter that he was “in Toronto helping some friends to set up a little business venture.” He insisted he had nothing to do with Imperial Films—or Imperial Cinemas, the name varied. In fact, Imperial Films, as it was known in Canada, had been set up by Mohney and one of his U.S. theatre operators, Dennis Inman, to front for the Canadian operation, and was funded in part by money skimmed from the Mohney body-rub operation in Michigan. The money was brought into Canada and deposited in a Toronto bank, on some occasions by Inman himself. Neither Mohney’s name nor Inman’s appears on any official documents. There are no corporation records in this country for Imperial Films.

STURMAN SAW THAT CANADA WASN’T RIPE FOR HARD-CORE YET, BUT HE COULD WAIT..

Mohney moved his headquarters from Durand, Mich., to Lansing after an FBI raid on his Oak Street warehouse and offices during the summer of 1974. He is still rich. In late summer, 1975, Peter and Tanya Kennedy posted a note on the door of their Toronto office saying they were going away for a short holiday. They skipped the country. Canada-wide police warrants are outstanding for both of them. They are also wanted in connection with an alleged fraud of the Unemployment Insurance Commission. Peter is being sought, as well, in connection with the alleged theft of law books during his articling days. The Kennedys are now traveling in Europe.

Reuben Sturman’s operation in Canada has been more successful—he is still here—and very different from Harry Mohney’s. Sturman, at 52, is more businesslike, more low-key, more secretive. He operates in many of the same American states that Harry Mohney does, buying his pornography from the Colombos and redistributing it through his conglomerate of book-

stores and movie houses. He even markets his own line of sexual rubber goods—dildoes, etc.—under the brand name of “Doc Johnson.” R. S., as some of his hundreds of employees call him, has two holding companies: Wilson and Co., operating out of Ohio, and the Bahamian Company of Nevada. His American holdings include Sovereign News, Imperial News, Noble News, Majestic News, Royal News, Worldwide News, Discount News and Global Press. He allegedly has business ties, as well, with a European sex film company and with the Eros Publishing Company in Los Angeles. A number of Canadians are employed as corporate officers of Sturman’s U.S. businesses because, being Canadian, they are out of the reach of U.S. authorities. Canadians living in Canada cannot be compelled to appear in an American court.

Reuben Sturman found a better way to move into Canada than Harry Mohney did. He simply took over the country’s first indigenous pornographic empire when its founder, facing obscenity charges, fled the country and left the business abandoned. In the late 1950s, a Toronto prostitute put up the money for Gordon McAuslane to start a mail-order and retail book business. Located on Gerrard Street East in Toronto, the store also featured a line of cheaply produced sex booklets and magazines. The business prospered, and McAuslane soon walked out on his partner, taking the profits with him. During the 1960s, he established Reid’s Book Store, Time Square Books and Cinemas, Bookazine, Nimbus News, North American News, Gormac Books, Cinematic Vending, Elk Films and Olympia Books. McAuslane did business with companies as far afield as Winnipeg, Calgary, Edmonton and beyond. In 1970, a public debate raged in Toronto about censorship. McAuslane got involved by starting a write-in campaign to the newspapers on why Torontonians didn’t need a morality squad, which had the predictable result of increasing police surveillance of his businesses. They kept after him until 1971 when, charged with obscenity, he took off to the Bahamas, where at last report he resided on a falling-down, two-story houseboat called “Eleuthros.” (He is also said to have a home in Miami.)

McAuslane had been dealing with Reuben Sturman, and when he left the country Sturman moved in and took over. North American News, which is located at 31 Britain Street in downtown Toronto, was purchased by a former McAuslane employee, Ross Wise. Reid’s Book Store, Time Square Books and Olympia Books, all on Yonge Street, and Bookazine Enterprizes (1965) Ltd., also on Yonge Street, have been placed under the direction of Theodore Pettepiece, Sturman’s chief agent in Canada and a senior corporate officer in some of Sturman’s U.S. companies. Elk Films, at 10 Elm Street, just off the Yonge Street Strip, is really “Peeparama,” a movie machine operation featuring 25cent soft-core pornographic films. The machines are supplied by another company in the Sturman fold, Cinematic Vending, which has licensed about 300 of them in Toronto and Ottawa alone. The director of Cinematic Vending is Rick Zolkower. Previously, the directors were shown as Kevin McIntyre of Lakewood, Ohio; Morton A. Goss of Toronto; Ray Sloan of East Sixtyfifth Street in Cleveland; and Charles Willson, also of Cleveland. Willson had also served as a corporate officer for Time Square Books. Goss and Frank Steele, of Toronto, also appear as corporate officers for a number of Sturman’s companies in the United States. All are longtime associates of Reuben Sturman. Sturman runs these companies from a warehouse on East Sixty-fifth Street in Cleveland. All the windows facing the street have been covered with a decorative wood shielding, but a number of viewing ports were built at the same time, allowing the people inside to look out onto the street. The doors are always locked and work on a mirror, intercom and buzzer system.

At the time of Sturman’s takeover of the McAuslane empire, hard-core pornography was still being sold under the counter. Sturman, realizing that the Canadian market wasn’t yet ripe for hard-core porn, has been trying to put a stop to the practice and has been quietly reestablishing his companies’ good standing with the police and customs officials. Although two

of the companies, Olympia and Bookazine (operating Reid’s and Time Square), have just declared bankruptcy, he can afford to bide his time. But should a court decision or legislation change what is now deemed to be obscene, the Sturman organization would be ready to take advantage. The Supreme Court of Nova Scotia held recently that the province did not have the authority to censor books, magazines or films. If that decision is upheld by the Supreme Court of Canada, where it will be appealed, the only law covering pornography will be the Criminal Code. Each of the relevant sections, however, requires a definition of what is obscene, and because stand-

ards vary from province to province and city to city, applying the law is difficult. It is in just such an atmosphere of uncertainty that Mohney and Sturman built their empires in the United States.

There are five U.S. federal laws prohibiting the distribution of “obscene” material, and the government spends at least five million dollars a year enforcing them. But in none of those five laws is “obscenity” defined. The prevailing view in the Supreme Court, the lower federal courts and the courts of the states is that three criteria must be met: the dominant theme of the material in question, taken as a whole, must appeal to a “prurient” interest in sex; the material must be “patently offensive” because it affronts contemporary “community standards”; and the material must lack “redeeming social value.” Unfortunately, the Supreme Court has never settled the question of what is meant by the contemporary community: is it national, state or local? Nor has the court defined what it deems to be socially redeeming values. As a result, the working rule among pornographers in the United States has become: publish (or sell) it first, and let the courts rule on it later. Not surprisingly, hard-core pornography is now available in almost every state, while challenges to the law are choking the courts. Canada would soon be in a similar situation if the Nova Scotia decision, or one like it, breaks down the barriers. In some Canadian jurisdictions court calendars are jammed with obscenity cases already. In Toronto, for example, hundreds of charges are pending in connection with porno operations along the Yonge Street Strip.

IF HE WANTS TO, THE MAN CHARGED WITH OBSCENITY CAN TIE UP THE COURTS FOR YEARS

The Mohney operation illustrates how difficult it is to deal with pornographers in the courts. Despite hundreds of man-hours

of work by police at the city, provincial and federal levels, less than a handful of the, 100-odd charges laid against the Mohney group has ever been dealt with successfully. In the summer of 1974, when Sherman Stephens, Jr. was first charged with exhibiting obscene material, he was represented by Peter Kennedy. Mohney paid all the legal fees and fines for his employees, so they had no reason to be concerned about minor charges. Stephens appeared in court about a week after the charges were laid. On that occasion, it was determined that the charge should be proceeded with as the Crown wished to deal with it, and when the accused could get counsel. Stephens appeared in court on several other occasions, sometimes on the original charge, sometimes on subsequent charges. Kennedy was absent for one such appearance, and a new date had to be set, about two weeks later. When Kennedy was present, Stephens himself would be absent—as a result of illness—and the case would be put over again. Stephens was reporting daily to police headquarters, signing himself as present in the city on each visit. He would then go to Cinema Blue, open for another day of business, and, as likely as not, be charged again. Finally, after three months, a date would be set—a date to set a date for trial, which would take another three months. If Stephens had stayed in the country, and then changed lawyers just before the trial date, another stay would have

been granted to allow the new lawyer to familiarize himself with the case. Another three or four months would have elapsed before the trial could begin. Fully a year could go by before the trial started, the trial itself could go on for days or weeks, and appeals could take another two years after that. One case in Toronto, dealing with another of the adult movie house operators, started with a single charge five years ago. With an appeal pending, the case has yet to be disposed of, and further avenues of appeal are still open. In the meantime, the man has expanded his business fourfold.

The Toronto police did not close Harry Mohney’s Canadian operation. If he had chosen to fight, he could have reincorporated his companies, lined up new Canadian corporate officers, hired a new legal firm, and remained in business. As Inspector Robert Stirling, head of the Toronto morality squad, noted at the time, the police seized more than 200 films and 100 projectors. “It adds up to a tremendous cost factor, but they just get new equipment and keep going. With that kind of money laid out, it’s certainly not the average guy running an upstairs store . . . We don’t think that’s the end of it.” Stirling believes that further attempts will be made by American pornographers to break into Canada: as the U.S. courts begin to fight back, the smut peddlers will be looking for new markets. Canada is the closest and the richest.O