Porn Stars

How the mob sent a scary, shocking message to a British press lord

Last week, federal prosecutors in Brooklyn asked a judge to lock up one of five men due to go on trial later this month in a massive pornography racketeering case. The prosecutors said Richard Martino, 45, an alleged soldier in the Gambino crime family, needed to be behind bars right away because he was harassing potential witnesses in the case, specifically one Philip Bailey, a British national who is expected to provide damaging testimony.

In an affidavit, an FBI agent reported that Bailey had called her from England on January 28, saying that a private investigator was prowling London looking for him. The news of the mysterious private eye's arrival had so frightened Bailey's business partner that the partner had been "terrified" and "left work in fear." The agent called the partner, who hadn't actually seen or spoken to the investigator himself, but had learned about the search from a journalist writing about the case. The journalist had described the investigator as "sinister."

"In the course of the conversation," the FBI agent wrote, the business partner "began to cry and stated that he felt very threatened and intended to hold his children 'extra tight' until the situation was resolved."

Lawyers for Martino and the other defendants said they knew nothing about it. One attorney suggested it was a case of "delicate British sensibilities." Judge Carol Amon declined to remand Martino, but she did, as a precaution, order him to wear an electronic monitoring bracelet.

But if the British businessman's account sounds a little melodramatic, maybe that's because he has heard Philip Bailey's own story right from the horse's mouth. The tale of how Bailey was allegedly abducted and assaulted by unknown thugs during a 1992 trip to New York circulated for years as a rumor around London before surfacing in a Times of London story in December 2000. This fall, after one of Martino's co-defendants became a government cooperating witness, prosecutors filed court papers stating that they would seek to introduce it as evidence in the pornography case. They also filed a separate indictment against Martino in December, charging him with new racketeering and extortion charges.

Defense lawyers have scoffed at the story. Martino's attorney, Gus Newman, said there is no evidence to connect his client to the attack. The real reason prosecutors are emphasizing it, Newman and the other lawyers said, is to bolster claims that Martino and his cohorts used the threat of mob violence to help them earn hundreds of millions of dollars in dial-a-porn and Internet schemes. In fact, there was neither violence nor threats, just clever men who understood how to cater to the private whims of the general public, the lawyers insist. Minus the mob hype, they say, the porn case would amount to merely "garden-variety consumer fraud charges."

That may be true. But what's also true is that the Bailey episode is a riveting tale, one that includes the biggest pornography publishers on both sides of the Atlantic, even Penthouse founder Bob Guccione. The story, as gleaned from sources and records, goes something like this:

It began in an unlikely place, for a mob tale anyway, at the posh Four Seasons Hotel in London, overlooking Hyde Park. The hotel is famous for its high teas. Diners sit on silk sofas; tea and scones are served on silver trays. In late September 1992, three men sat in the tea room conversing. One was a wealthy British press baron named Richard Desmond, whose holdings included several sex magazines, including the British edition of Penthouse magazine. He has since become the owner of the Daily Express and the Sunday Express, two of Britain's biggest tabloids. Across from him were a couple of Yanks: Norman Chanes, dapper and elegant, was the proprietor of a New York firm that placed ads in Desmond's publications; Richard Martino, a little rougher around the edges, owned companies that earned millions every month from dial-a-porn and other products.

Two years earlier, Martino had reportedly walked down a flight of stairs to the basement of a Top Tomato outlet in Manhattan and had his finger pricked by an old-timer, while another mumbled in Italian, making him a member of the Gambino crime family. He was "a monster earner," according to a government informant, so good at making money that he may have been one of the few admitted to the mob without having to commit the initiation rite of murder. "I want guys that done more than killing," John Gotti was heard saying on an FBI bug when Martino was signed up.

If Desmond knew his tea companion's background, he was apparently not impressed. Despite their genteel surroundings, the conversation got heated. Martino accused Desmond of cheating him and Chanes. They'd been charged high rates for ads in magazines that sold no copies, he said. The scam had cost them $1 million and Martino demanded his money back. "You're fucking us," Martino said. Desmond, in a pompous tone, called Martino "stupid" and "a commoner." He didn't need their business, Desmond said. Martino snarled back that Desmond had better not bring his magazines to the U.S. "This is not over," he added as Desmond walked out.

According to Chanes, who was indicted along with Martino in 2003, and later agreed to cooperate with prosecutors, his friend, usually the suave businessman, reverted back to his "other personality, acting like 'Richie from the Bronx,' " which is what the wiseguys called Martino before he became a millionaire. "He's a fucking asshole," Martino said as they left the hotel. "If he thinks he'll publish magazines in the States, he's wrong."

Two weeks later, back in New York, Chanes and Martino learned that Philip Bailey, Desmond's top aide, was coming to town in a few days in search of publishing opportunities. Martino allegedly told Chanes to find out where Bailey would be staying, who he'd be meeting with, and when he was departing. When Chanes relayed the information, his partner allegedly told him: "I'm gonna send a car to get him. . . . I'm gonna give him a message for his boss . . . "

Bailey, who had warned Desmond before the trip that the American customers weren't getting their money's worth for their ads, spent most of a week in the city, meeting with publishers. The day before his departure, he received a call from a woman who said she was with one of the publishing firms he'd met with, and that they would like to send a limousine in the morning to take him to Kennedy for his flight home. It was a gesture of "American hospitality," the woman said.

At 7:15 a.m. on October 24, Bailey met the limo in front of the hotel. A smartly dressed driver loaded his luggage in the trunk and Bailey got in the backseat. Two blocks from the hotel, the limo stopped at a light. Looking to his left, Bailey saw a swarthy, heavyset man in a brown bomber jacket leaning against a wall. "That guy looks strange," Bailey told the driver. "That guy's moving toward us. . . . He's got a gun." The driver said nothing. Behind the man with the gun was another heavyset individual, this one holding a device that resembled an electric shaver. Bailey tried to flee but couldn't because the doors were locked. But when the men grabbed the handles, the locks popped open, and they piled in beside him. The gunman pistol-whipped Bailey, who screamed in pain. "Shut the fuck up, you British bastard," the driver told him. Bailey was struck several times more with the gun, the blows landing on his neck, head, and shoulders. He was trying to break free when the man with the shaver-type device applied it to Bailey's testicles. An electric shock made Bailey hit the roof of the car.

The limo hurtled east toward the river. "Do you know why we're here, you British bastard?" one of the men said. Bailey tried to keep his dignity. "If you know I'm British [you know] this approach won't get you anywhere," he said. In response, the gunman produced a box cutter and slashed Bailey several times on the face.

"We're here because of your fucking boss, Desmond," the gunman shouted. "We want our money back. You tell your fucking boss, it's a small pond. . . . If your boss sets foot here, he's a dead man. A fucking dead man." He punctuated the threat with another zap to Bailey's groin from the stun gun. The beating and curses continued. The driver then told him, "We're gonna let you go; do you know how fucking lucky you are? Tell your boss, you're the message." The two men in the back proceeded to grab Bailey's wallet, taking $70 and his Visa card. With the car still moving, they pushed the businessman out the door. Bailey went flying into the street.

As Bailey was lying there, the car screeched to a stop and then backed up toward him. Bailey thought he was about to be run over. Instead, the car stopped and the gunman got out, tossing Bailey's suitcase on top of him. He walked over to where Bailey lay sprawled and then stomped on his face. "Tell your boss he's a dead man," he said.

Bleeding and with his suitcase spilling open beside him, Bailey tried to flag down passing cars. No one stopped. He limped down East 61st Street to a nearby animal hospital, where a veterinarian cleaned him up. He called two top executives at Penthouse in New York. Bailey was "crying" and "hysterical," the executives said later. They called one of Penthouse owner Guccione's bodyguards to pick him up at the animal hospital and take him to JFK. But Bailey was so injured that British Airways refused to let him board the plane, and the bodyguard brought him back to Guccione's huge East Side townhouse.

There, he was tended to by Guccione's late wife, Kathy Keeton, an ex-dancer who helped manage the porn king's affairs. A former Guccione aide named John Evans visited Bailey at the townhouse later that day, where he found him "pretty bad." Bailey had sustained facial injuries and appeared to be in shock.

Bailey convalesced at Guccione's townhouse for several days. He called Desmond in England, telling his boss about the beating and the threats, that the attackers had said Desmond was "a dead man." He also filed a police report, but while he thought he knew who was behind the beating, he never mentioned his suspicions. Guccione asked him about it, however, and Bailey told him how the dial-a-porn ads had been placed in "bogus" publications. Guccione reportedly responded that he was sorry, and that he hadn't been aware of the problem.

Upon his return to London, Bailey was met at the airport by three newly hired Desmond bodyguards. They drove him straight to Desmond's home, which Bailey said was guarded "like Ft. Knox." The bodyguards quizzed Bailey about the assault, but Desmond expressed little concern for his aide. The press lord told him: "You don't look so bad. Bailey, you look all right." An outraged Bailey leaped at Desmond, pinning him against a refrigerator before being hauled off by the bodyguards. "Don't be naughty," they told him.

"Don't worry, Bailey," Desmond allegedly said. "We got a legit business here. I'm not paying [Chanes's company] a penny back. He can whistle for it. Stop crying, Bailey."

That was the last time Desmond ever spoke to him, according to Bailey, who quit the company a few weeks later. Bailey never spoke publicly about the incident, but the story leaked out, and over the years, every time Desmond has made news—such as when he purchased the Express in 2000—the press has hounded Bailey to talk, though he has always declined. For his part, Desmond has always dismissed the episode as "pure fantasy." Spokesmen for the press baron have also denied that he ever met Martino, and maintain that he has "never directly, or knowingly, engaged in any business with people associated with organized crime."

John Evans, a Penthouse executive, later visited Desmond in London and asked him about it. "I think he made it up, John," Desmond told him. Evans thought that was a strange opinion, since he'd seen the injured Bailey with his own eyes. "If he made it up," he told the publisher, "he was brilliant."

Guccione, now ailing and broke, lives largely in seclusion in a portion of his 45-room townhouse which has since been sold. His wife, Kathy Keeton, died in 1997. When the FBI asked Guccione about Bailey recently he said he only vaguely remembered an incident in which one of Desmond's people, possibly Bailey, had been "beaten up." A lot of people came and went in the house in 1992, he said, and he wasn't sure if Bailey had stayed there. It "was possible," he said.

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