Operation Avalanche (child Pornography Investigation) - Landslide Productions, Inc.

Landslide Productions, Inc.

Thomas Reedy was a self-taught computer programmer and entrepreneur located in the Fort Worth, Texas, area. He trained and worked as a nurse, but, understanding the financial possibilities of the Internet, he set up an adult pornography website which provided a comfortable income. He soon developed a better strategy to provide middleman services for the adult pornography industry. In 1997 he set up Landslide Productions, Inc., which he ran with his wife Janice, who handled bookkeeping for the company. Landslide quickly became an adult pornography empire stretching across three continents, including some 300,000 subscribers in 60 countries. Within two years, the company made $10 million dollars, and provided the owners a luxurious lifestyle.

Landslide provided payment systems for adult webmasters from different countries. The systems were automated; webmasters could sign up to the system online, and users accessing the websites would go through the payment or login system before being granted access. The principal systems were AVS for Adult Verification System and Keyz because it operated via the keyz.com domain name owned by Landslide.

The AVS system was meant to legally protect the companies from laws against disseminating pornography to minors, as the credit card was used to verify that the user attempting to access a particular website was of legal age to view the website's content. Users could sign up with their credit cards to access affiliated sites, which received 65% of the sign-up fee, while Landslide took the remainder and handled the transactions with the credit card companies.

In 1998 Thomas Reedy recognized systematic fraud in streams of different credit cards being signed up in batches from the same internet address to the same website. In the use of stolen card information, Landslide had to bear the loss if there was a chargeback from the card issuer, often including a penalty fee; plus, the credit card industry imposed a one percent maximum for chargebacks. To preserve his business, Reedy traced the source of the traffic and set up a new web service called Badcard.com to capture card numbers coming from the same internet address, and drew up lists of addresses and card numbers that appeared to be suspiciously used. However, his efforts failed to stop the fraudulent charges.

Landslide went out of business in August 1999, as the fraudulent charges passed the one percent ceiling, leading to Superior Credit withdrawing their merchant services on August 10. Without this merchant account, Landslide could not charge credit cards and could no longer fulfill the primary function of the business. Reportedly, the biggest source of fraud at that time was coming through websites run by US law enforcement as part of a sting operation.