Lloyd Cleans Up
The last thing Goldman Sachs needs right now is a 'sex' scandal........
The New York Times reports that the biggest forum for sex trafficking of under-age girls in the United States appears to be a Web site called Backpage.com.
This emporium for girls and women - some allegedly under age or forced into prostitution - is in turn owned by an opaque private company called Village Voice Media. Until now it has been unclear who the ultimate owners are.
That mystery is solved though. The owners turned out to include private equity financiers, including (until last week) Goldman Sachs with a 16% stake.
GS Capital Partners III is said to have invested $30m in Village Voice Media, a group of alternative weekly newspapers, in 2000 and is said to have decided it wanted out in 2010 after becoming uncomfortable with the direction the business was taking.
Management had full control of the company, and the Goldman fund relinquished its a seat on the board in early 2010 due to its inability to influence its operations. The fund had been looking to exit its investment since that time, and managed to do so last week, losing most of the $30m in the process.
Reuters reports that Village Voice Media owns the alternative newspaper The Village Voice, which was founded in 1955. Over the years, the newspaper has published groundbreaking investigations and received three Pulitzer Prices. Its back pages, in contrast, have for decades been the bastion of escort service advertising.
The Wall Street firm has fallen foul of Goldmansex before. A few years back, the website goldmansex.com lost its battle to retain its domain name. The US National Arbitration Forum ruled that the domain name must be given over to Goldman, even though the services it offered (the site claimed to be the largest global directory for adult entertainment) were not in any way in competition with those undertaken by the investment bank. Goldman was apparently concerned that clients might in some way believe that it had branched out into adult entertainment!
Rob Muller, the owner of the site, was furious. He claimed at the time that 'Goldman' was his nickname, and that he hadn't even heard of the Wall Street banking giant before all the fuss started over the name of his business.
Muller then tried to rename the website Goldmensex.com, but was stopped from doing that too.