The Federal Bureau of Investigation (FBI) has conducted a criminal investigation into the Montreal-based adult entertainment company MindGeek, revealing evidence of its alleged involvement in illegal financial transactions related to human trafficking for sexual exploitation, according to recently filed court documents in the U.S.

According to documents submitted to the U.S. court, negotiations are underway between the Canadian company (which rebranded as Aylo in August) and U.S. federal prosecutors to potentially avoid a criminal trial. The proposed course of action is a deferred prosecution agreement (DPA), allowing the company to admit wrongdoing, disclose facts, pay a penalty, and sidestep a criminal conviction.

For the initiation of this procedure, the FBI must be satisfied with the evidence supporting potential charges. Additionally, the company must demonstrate a genuine commitment to reforming its practices.

“We are not going to comment on the status of this case at this time,” said Sarah Bain, vice-president responsible for public engagement at Ethical Capital Partners, the Canadian investment fund that acquired MindGeek in March.

The existence of the criminal investigation came to light through a civil lawsuit filed in the U.S. against MindGeek/Aylo, the owner of adult sites Pornhub, YouPorn, and RedTube. Kristy Althaus, a former beauty contest participant, initiated the lawsuit, alleging that she was drugged and sexually assaulted in front of a camera by a pornographic production company named GirlsDoPorn when she responded to a model contract ad at the age of 18.

The consequences of the video’s online broadcast, linked to her real name, led to the loss of her beauty queen title, job losses, harassment at college, and recognition by strangers, causing a significant disruption in her life.

The civil lawsuit further exposes MindGeek/Aylo and its owners to legal action, holding them responsible for Althaus’s alleged misfortunes.

Michael James Pratt, the founder of GirlsDoPorn, who is believed to be behind the assault and victimization captured in the video, was arrested in Spain last year after an extended manhunt. The U.S. is seeking his extradition to face charges related to crimes against women.

The FBI’s criminal investigation goes beyond the actions of GirlsDoPorn. New court documents filed by Althaus’s lawyers as part of the civil lawsuit reveal that MindGeek was also under scrutiny by American investigators.

An email presented as evidence indicates that the U.S. Department of Justice contacted Althaus as a victim in connection with a criminal investigation into MindGeek/Aylo. The investigation focuses on the company’s alleged “voluntary” and “knowing” involvement in financial transactions related to human trafficking for sexual exploitation by GirlsDoPorn operators.

Althaus’s legal representatives confirmed their communication with the FBI on this matter. Authorities informed Althaus that negotiations were ongoing with the company for a potential deferred prosecution agreement. She was encouraged to reach out to an FBI victim assistance agent if she believed the case’s resolution could impact her.

The negotiations are currently in progress, according to the latest judicial documents.

MindGeek’s problematic past

In April 2022, MindGeek faced a class-action lawsuit over failing to adequately screen sexual content before it is uploaded to its pornography website.

MindGeek was embroiled in scandal three years ago after reports that young women’s movies emerged on its platforms, prompting Visa and Mastercard to cut relations, Canada’s parliament to open an investigation, and the firm to seek a buyer. In response, Prime Minister Justin Trudeau’s government approved a proposal to crack down on damaging online content, but the proposals were condemned as being overly draconian, and the project has now dropped farther down the legislative schedule.

Ethical Capital Partners, a newly formed Canadian private equity firm, acquired MindGeek in March 2023. The adult content firm then rebranded itself to Aylo in August.

Information for this briefing was found via La Presse and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.