Francis Koenig's Lawyer Threatened To Sue Me If I Didn't Remove a Three Year Old Post About AdultVest
pic via SFW Porn
Well well. I've been writing this lovely little piece of Internet real estate called Jr Deputy Accountant for four years and for all the shit I've talked about many a well-meaning asshole over the years, I can't believe it took this long to get threatened by a real lawyer. But it's happened. Francis Koenig's lawyer is coming after me. Somehow I always thought it would be a Federal Reserve lawyer I heard from first, which just goes to prove my friends at the Fed understand I'm harmless and kinda like them at the end of the day, despite my big mouth that might say otherwise.
A bit of background. In April of 2009, I wrote about Francis Koenig's AdultVest hedge fund, which was at that time accused of fraud. I wrote that post based on this FINAlternatives post which is still up today:
Is last year’s most provocative hedge fund launch just another fraud?
Sources close to AdultVest Inc., which manages the Priapus Investment Fund, an adult entertainment hedge and private equity fund, say that it is spending investor money on more than just investments, and that what investments there are don’t account for the returns it claims.
A former investor says that founder Francis Koenig is looting the fund to pay for fine art, expensive wines, cars, personal trips and alimony. Meanwhile, a former employee tells FINalternatives “there was no capital being generated” during his time at the firm. “There is almost no money left in the fund,” the investor, who said he was privy to some of AdultVest’s financials via a court order, alleges. “Koenig has an American Express black card through the company that he uses on partying, girls and high living. Most money is missing and iPorn.com is not worth what he says it is.”
“It just seems to me the whole time I was there that there was no capital being generated,” says the former employee, who left the firm last year because he felt uncomfortable working in an office shrouded with mystery. “And it seemed like money was being spent for things that didn’t need to be bought like cars, clothes and trips,” he adds.
I cannot include the original post I wrote because I have been harassed into taking it down by a Chris Jones, ESQ out of Beverly Hills. Coincidentally, Chris' address as listed at the end of his emails is the same as that of Francis Koenig Construction.
Anyhoo. I wasn't the only one writing about AdultVest at the time and did so only because it involved porn, really, not because I had anything against Francis Koenig. I'm sure he's a nice, smart guy who knows how to make money. No hating there!
Business Insider covered it in April of 2009 as well (link is still live):
Back in January, The Atlantic ran a story about AdultVest -- a hedge fund that claimed an improbable 50% return last year by investing in adult businesses.BI later ran an update:
We say improbable, because although there's the notion that sin sells in any economy, that storyline has been decidedly busted this time around. Gambling is down. Liquor is down. Porn is even down. Even online porn. So, we wondered, how did AdultVest manage a 50% return?
Here's what we said at the time:
We asked Koenig what, exactly, he's been investing in that's bucked the trend, but he was unwilling to go into much detail. He noted AdultVest bought some porn domain names, which have been appraised at higher values, but which haven't been sold. He also mentioned AdultVest's stake in iPorn -- a startup doing porn for the iPhone. But iPorn hasn't launched yet so any value is going to be difficult to determine.
Until proven otherwise, we're taking this claim of 50% gains with a grain of salt. We've been trained by the last year to be deeply skeptical of notional, mark-to-model values, and when you're talking about valuing assets like iPhone porn startups and unsold domain names, our skepticism ticks up another notch.
But perhaps our skepticism didn't go far enough.
UPDATE: The SEC was invited into Mr. Koenig's company to fully review all accounting and the result was that all funds were correctly accounted for. The SEC in turn closed the case in April 2010, exonerating Mr. Koenig from the said accusations in an official letter.
The January of 2009 Atlantic story, entitled Dirty Sexy Money, was very complimentary of Koenig's venture:
Enter Koenig and AdultVest. He sees the porn downturn as temporary and believes that technological improvements will trigger a turnaround. One example: iPorn, a start-up in AdultVest’s portfolio that is developing an application to deliver porn to the Apple iPod. “The industry’s not going anywhere,” Koenig says. “You’ve got 6 billion people on the planet,” he laughs, “and they’re all horny.”
However, the kind words didn't stop one Atlantic commenter from writing: