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We provide legal representation in the areas of civil rights, criminal law, family law, divorce, & child custody disputes in New Jersey & New York and Federal courts.
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March
31 Monday
2008

The money trail from Regpay to the U.S.

Regpay worked with several U.S. companies, processing over $3.6 million in credit card transactions in one 10-month period alone. These companies received at least $432,000 — possibly close to $1 million — in fees during that period, according to court documents.

1. Regpay operates out of Belarus, a former Soviet bloc country, selling child pornography on behalf of hundreds of Web sites, including several of its own. It receives 88 percent of subscription fees.

2. Connections USA, a Florida e-commerce company headed by Arthur P. Levinson, is Regpay’s key contact in the United States. Levinson’s fee is not clear, but court records indicate it was at least $130,000 and more likely as high as $654,220.

3. PSW, of Rhode Island, hired by Levinson, provided Regpay a merchant identification number. PSW received 2 percent of transactions it processed, netting the firm about $68,000.

4. First Data Merchants Services, Colorado, hired by Levinson to process Regpay credit card transactions, received 7 percent of any money it handled, bringing First Data about $240,000.

5. Money processed by First Data was transferred to Levinson’s Morgan Stanley-Dean Witter account in Washington, D.C., then went to a U.S. branch of Deutsche Bank before being transferred to an account at Aizkraukles Bank in Latvia controlled by Regpay president Yahor Zalatarou. Latvia is adjacent to Belarus, where Regpay was headquartered.

6. LB Systems, Encino, Calif., hired by Regpay in June 2003, processed credit card transactions after the government froze Connections’ bank accounts. LB Systems earnings could not be determined.

7. Internet servers hired by Regpay hosted business records or child pornography Web pages. Court records show RackSpace of San Antonio received a $5,300 payment. Other server companies hired by Regpay: • Verio Inc., Englewood, Col. • Genesis 2 Networks, LLC, Charlotte, N.C. • CalPOP.com Inc., Los Angeles. • SAGO Networks, Tampa, Fla.

8. Levinson, arrested in the money scheme, received probation. In court papers, he claimed being unaware Regpay sold child pornography. He declined comment.

First Data was not charged. The company claims Connections misrepresented Regpay’s business activities and that any earnings were offset by costs incurred in complying with the government investigation.

PSW was not charged. The company no longer operates. Alexander Pesin, a California man who helped form LB Systems, pleaded guilty for his role setting up the shell company. Host companies were not charged. Those reached by The Buffalo News said they weren’t aware Regpay posted child pornography.