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Porn stars denied bank accounts

An actress says hers was closed suddenly, and an executive has filed suit, alleging that fair lending laws have been violated.

By MSN Money Partner May 17, 2013 2:17PM
This post comes from Chris Morris at MSN Money partner CNBC.com.

cnbc logoChanel Preston knows not everyone approves of her chosen profession. That's one of the risks that go with being one of the biggest stars in porn. But she never thought it would affect her ability to open a bank account.


Directors Chair © Chloe Johnson, AlamyPreston recently opened a business account with City National Bank in Los Angeles. When she went to deposit checks into the account days later, however, she was told it had been shut down because of "compliance issues."


She found the manager she had worked with originally and asked what had happened. The bank, she was told, was worried about the Webcam shows she had on her site and had revoked the account.


City National declined to comment on Preston's accusations and on whether it had any policy regarding accounts tied to the porn industry.


Preston is not the only porn star who has had trouble with banks. Several performers and porn insiders (who were afraid to go on the record because of possible repercussions from their banks) said they have been denied accounts from a variety of financial institutions.


Learning to keep quiet

"The people within my (local) bank have urged me to downplay the nature of my business because corporate frowns on it," one industry veteran said.


The issue seems to be reaching a boiling point, though. Earlier this week, Marc Greenberg, the founder of the soft-porn studio MRG Entertainment, filed suit against JP Morgan Chase in Los Angeles Superior Court, alleging the bank violated fair lending laws and its own policy for refusing to underwrite a loan for "moral reasons."


Greenberg says he was approached by a representative of the bank about refinancing an existing loan. But once he started the process, he says he saw repeated delays for four months. That's when he said he reached out to a JPMorgan vice president for an explanation.


The vice president "was evasive in his response to plaintiff's application status requests and finally informed plaintiff during a telephone conversation that plaintiff's loan application was refused due to 'moral reasons,' because of JPMorgan's disapproval of plaintiff's former source of income and occupation as an owner of a television production company that produced television programs that dealt with the subject of human sexuality," the complaint reads.


'Reputational risk'

Greenberg's attorneys claim they were told by the vice president that the application was denied because of the potential "reputational risk" to the firm. 


The rejection, noted the suit, was confounding since Chase had long held the original deed of trust on the home, without any comment on Greenberg's career.


"JPMorgan purports to be so ashamed of nudity and human sexuality that it cannot process a refinance of a home loan of plaintiff, secured by plaintiff's house, because plaintiff's source of income six years ago included production of television programs that contained nudity and human sexuality," the suit reads.


JPMorgan Chase declined to comment on the accusations due to the pending litigation.

Preston noted she, too, has been denied a loan because of her profession -- though at a different bank.


The loan officer "asked me, 'Are you affiliated with the adult entertainment industry?' When I said yes, she said, 'We will not give you a loan,'" she said.


Whether the decision to deny Preston's business account or Greenberg's refinance application is discriminatory lending is a matter of debate -- and, in Greenberg's case, something the courts will have to decide.



Some latitude for businesses

David Barr, a spokesman for the FDIC, however, said institutions are permitted to make their own calls on who they work with to a certain degree. 


"The decision to open or maintain an account is up to the individual institution," he said. "The rules are not prescriptive, which means that the bank must make its own assessment to determine the risks associated with an account and whether that account should be terminated or not opened in the first place."


And it is not uncommon for many businesses to take a moral stand about who they do business with. Indeed, some investment firms make it a point to avoid getting involved with tobacco producers or gun manufacturers because of the social issues tied to those industries.

Porn stars and adult entertainment industry insiders do note that the troubles they've experienced are tied to business -- not personal -- accounts. That may be because personal accounts are opened under their real names, which typically don't raise an eyebrow, while business is done under more well-known pseudonyms, which is when people take notice.


"It's kind of obvious about what I do when a young girl goes into a Valley bank with a different female name than the one on (their) driver's license," Preston said.


But such friction between people involved in the adult entertainment industry and banking institutions are likely to become more common. With the advent of the Internet, the $14 billion adult entertainment industry is undergoing a transformation. Film and video distribution is giving way to Internet sites and Web cams. As a result, barriers to entry in the industry are being lowered and more of the industry is being based out of homes and being run through small business arrangements and partnerships, necessitating banking services.


More from CNBC.com



16Comments
May 17, 2013 3:49PM
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Is the penalty for early withdrawal too high? :)
May 17, 2013 3:21PM
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The pornsters need to get into drug trafficking. These banks live to launder cartel money.

 

May 17, 2013 4:35PM
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Banks worrying about their reputations, that's hilarious. At least the porn actors and actresses are following the laws unlike the banks
May 17, 2013 5:04PM
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Pretty interesting... both Wachovia and HSBC are okay with laundering huge amounts of drug cartel money but not the Porn Industry? Why don't they just start their own Credit Union? Hey Chanel, give Tia Carrere a call and see if she'll put the shell together for you guys. Her MENSA genius could do it easily. NCUA cannot restrict or prohibit based on your industry.
May 17, 2013 3:04PM
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This is a far bigger story than the so-called public service, tax exempt frauds called 501(c)s. If banks are allowed to say legit folks can't hold a banking account but can steal trillions in taxpayers dollars via the Global Feds, that's a threat to everyone's going forward.
May 17, 2013 4:31PM
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Hmmm - what about all the pimps and prostitutes that 'everyone' knows - they have bank accounts as well.  My advice to Chanel and others in this industry is to advertise the name of the bank that refused to provide them an account and ask their viewers to join with them to boycott this bank.  I wonder what would happen if suddenly thousands of accounts were closed by objectional viewers - definitely a premature withdrawal...
May 17, 2013 5:12PM
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Take 'em to the cleaners honey. So many violations, so little time to list 'em all.

 

Do this right and you may be able to get into another or different profession.

May 17, 2013 8:06PM
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Try HSBC - they take money from drug dealers and murderers.  
May 17, 2013 7:06PM
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Porn stars are no different than politicians. They take pay for screwing you......Same to me
May 17, 2013 5:17PM
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Never seen anything quite like this............market up, but not the stocks..........lol
May 19, 2013 1:07PM
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Fact: No matter what your occupation, ethnicity, or age, no entity on the planet OWES you a loan. No one is OBLIGATED to lend you money.
May 17, 2013 4:08PM
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I don't blame the banks.  That's all STICKY money.
May 18, 2013 1:13AM
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You have to expect that when you choose to become employed in an industry that is known for drug and alcohol abuse and is widely considered to be at the very bottom of the respectability ratings you will have trouble doing certain things.  Most banks will not loan money to anyone in the "adult entertainment industry"(by anyone I mean individuals) because they are predominantly at very high risk for default.  Even when you find a dancer or adult actress/actor that has good credit and has lived a responsible life up to that point you know that there is a much higher than normal chance of the individual wrecking their life due to the people that she/he has surrounded his self/her self with.  Banks don't have to loan money if they can show statistically that a certain industry's employees have a record of very high default rates.
May 17, 2013 4:10PM
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I thought these porn actors dealt in cash.  What do they need a bank for?
May 17, 2013 4:06PM
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My heart bleeds for the scumbags. 
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