July 31, 2003
by KEITH EASTHOUSE
At the height of its involvement with the Internet pornography industry, Humboldt Bank processed from $100 million to $200 million in credit card charges a year for online dealers of adult-oriented entertainment.
In an interview this week, Pat Rusnak, chief financial officer for the bank's holding company, Humboldt Bancorp, emphasized that the amounts represented only about 5 percent of the bank's lucrative merchant card business, which in the late 1990s and early 2000s handled as much as $4 billion in processing fees annually.
Nonetheless, he acknowledged that the bank's involvement with so-called "porn merchants" was much more extensive than that of National Bank of the Redwoods, a Santa Rosa-based bank that in the 1990s processed less than $20 million a year in charges for adult entertainment companies.
Humboldt Bank recently sold its merchant bankcard division to First National Bank of Arizona, in part because it wanted to reduce its ties to the porn business. That division, which is based in Eureka, still processes about $36 million a year in charges for the online porn industry.
John Dalby, former president of Humboldt Bank, which recently moved its headquarters from Eureka to Roseville, near Sacramento, said that while he knew the merchant card division did business with the online porn industry, he didn't know the scope of it. "I'm as shocked as anybody," Dalby said last week.
He said that his decision to leave the bank last year had nothing to do with the bank's porn dealings. He said instead that he was concerned that the bank was losing its community focus.
Diane Harincar, a Eureka resident who alerted the local press to Humboldt Bank's porn connection, said that she was horrified when she learned of it after reading an article that appeared in Forbes magazine in June.
"Our church had just finished a 40-day prayer and fasting and one of the things we were praying for was an end to pornography," said Harincar, who described herself as a Christian. "And then I hear about this with our local bank..." Her voiced trailed off. Then she said, "I think it's just sickening."
Rev. Bud Tillinghast, retired from the United Methodist Church, said that while he didn't consider himself a prude, he too is offended at Humboldt Bank's connection to the porn industry. "Internet pornography is a horrible thing, the scope of it and its availability," Tillinghast said. "It preys on people's weaknesses."
The Forbes magazine article said that until it sold the merchant card division this past March, Humboldt Bank was one of only three banks in the country that processed credit card charges for the online porn industry. Seth Lubove, West Coast bureau chief of Forbes magazine and the author of the report, said that if banks were to stop processing the charges, the online porn industry "would disappear overnight."
Ken Musante, who managed the bankcard division while it was with Humboldt Bank, said the claim that Humboldt Bank was one of only three banks that did business with the porn merchants was false. He said a number of financial institutions in the country do so.
Last year, Humboldt Bank stopped accepting new adult entertainment merchants into its merchant card program. That program included both the bank's proprietary portfolio -- accounts owned by the bank -- and its contracts with Independent Service Organizations (ISOs), companies that act as intermediaries between merchants and credit card companies.
"We're not going to debate the moral aspect," said Rusnak. He said that when the bank first entered into a business relationship with ISOs that included porn merchants in the 1990s, "we did so for sound financial reasons."
While acknowledging that the porn connection "to some could be distasteful," he said the bank decided that online pornography "was not part of our core community values."
Nonetheless, Humboldt Bank is still processing transactions for an ISO with porn merchants as clients, Rusnak said.
Rusnak estimated that about 16 accounts out of 27,000 are with the purveyors of adult entertainment. He said those would disappear by the end of September because that's when the contract with the ISO expires.
As for the merchant bankcard division that was sold, it is still based in Eureka. Called Humboldt Merchant Services, it had about 100 adult accounts out of about 12,000 -- less than 1 percent -- at the time of the sale in March of this year. According to company official Ann Condon, the proportion has grown smaller since then, to about 90 accounts out of 13,500 presently. She estimated that of the $77 million in charges that the company processes monthly, about $3 million a month are for the porn business.
Musante, who heads up Humboldt Merchant Services, said the accounts are open-ended and do not have expiration dates. Nonetheless, he said the company's "adult" clients would continue to dwindle because no new porn merchants are being taken on.
by BILL KELVIN
HOW MANY OCCUPATIONS REQUIRE ONE TO TAKE verbal abuse? OK, maybe quite a few. However, baseball umpiring allows abuse to be spread among a crowd and delivered in unison.
Dealing with an angry customer is never easy. Hearing hundreds of them calling you names must be dreadful.
"Are you an idiot? Get some glasses! How much are they paying you?" The list of insults goes on.
I tried umpiring Little League baseball, but "retired" after a handful of games.
My first experience as an ump -- calling girls' softball league games -- was more satisfying. The action was interesting, the players and coaches friendly, the crowd bearable. At $15 a game, which took less than an hour and a half, the pay wasn't bad either. I must have been OK, because I was invited to umpire Little League boys' games.
The pay was usually similar, but could be a lot worse. The softball games had mandatory time limits, which the Little League games did not. With extra innings, a game could go on indefinitely.
Like the players, I would wear cleats. But unlike them, I would do two games in a row, and I rarely got chances to sit down. My feet would ache at work's end.
As home plate umpire, I crouched behind the catcher repeatedly, wreaking havoc on my back. It was hot underneath the facemask and chest-plate, causing Arcata's humidity to be very apparent. Once home I was sweaty, dirty and sore.
However, many jobs leave employees in a sorry state physically. What burned me out was the emotional strain.
Obviously, some people enjoy the job, or there wouldn't be umpires. Max Lippman, a 19-year-old from Arcata, umpired Little League for three years in Arcata.
"The Little League around here doesn't pay enough, it comes out to about $5 or $6 an hour," he said.
Still, Lippman likes the job.
"It's a nice profession because you don't have to work nights, you have total control, and if you do your job well, you know, because you get a lot of feedback," Lippman said.
Yes, you do get feedback. The fans, so supportive of the players, seemed sure my calls could be more accurate, and they didn't hesitate to communicate this to me. After being harangued for hours, I had quite a chip on my shoulder.
To macho types I probably sound whiney, but how fun is it to have every decision you make questioned? Not much, let me tell you. Besides the heckling, my nerves were frazzled from stressful interactions with coaches and players who seemed shocked at my incompetence.
"I've been called every name in the book 10 times over," John O'Leary said. A 10-year-veteran, O'Leary umpired for five years on the North Coast, including Humboldt Crabs games.
Luckily, I didn't stick with the profession long enough to get called every name, but a few were enough.
There were bright spots. Sometimes the batter and I would share a joke and a smile, "mentor" umpires would give me tips between innings about strike-zone consistency, and I had great views of the game.
A former baseball player, Andy Miner, a 29-year-old who lives in Eureka, has been umpiring for three years. He calls high school and American Legion games now. "I love the action," Miner said, "I love double plays, pitching duels, plays at the plate."
Ah, the play at the plate, that's one of the most fun to call. The runner charging towards home, catcher waiting with ball in mitt, then BOOM!
When I felt sure my calls were accurate, it was easy to laugh off criticism. When unsure, I felt like the emperor in a parade, repeatedly being brought new invisible suits. There's only so much humiliation one can take.
Eventually I called things back and forth to keep both sides reasonably satisfied. A close call would go Team A's way; the next inning, Team B would get the same kindness. When I kept the game close no one would complain much.
I wonder if that's how Major League Baseball umpires deal with the bloated egos of stars. It seems like it would be good for ratings and competition.
"My goal in life was to be a MLB ump," O'Leary said, "but it's very hard to get to that level."
I imagine it's a stressful journey as well. Harassed by Little League parents, booed by high schoolers, insulted by frat boys, then on to The Show. No, thanks!
Bill Kelvin is a freelance writer living in Arcata. His articles have appeared in a number of publications including The Lumberjack; Osprey, put out by the HSU journalism department; and Indian Country Today.
The Sustainable Communities Biodiesel Roadshow is an awfully long name for a bus, but then this is a special vehicle. Originally used to transport school kids, it now ferries local activists to protests as far afield as San Francisco and Sacramento. In line with its new identity -- by law only school buses can be yellow -- the bus recently got a new look: the colorful, hip-hop, graffiti style design you see in the photo.
So what, you say? Well, so nothing -- except it makes for a striking image. Which is really the point of the paint job. Mary Ann Lyons, a local activist, figures that high visibility will translate into more attention for protesters. She also hopes it will spur interest in biodiesel technology.
That's the other thing about the bus -- it consumes vegetable oil. That means that what comes out of its tailpipe is a heckuva lot cleaner than what comes out of the tailpipes of most other buses -- or cars and trucks, for that matter.
So far only one side of the bus, presently parked outside Lyons' Arcata home, has been painted. The muralist, Forest Stearns, founder of Empire Squared, a local artists' collective, expects to do the other side in coming weeks.
The paint, in case you're interested, cost several hundred dollars and came at a discount from Montana Paints, a high-quality spray paint company based in -- you guessed it -- Montana. The buyer was the Redwood Peace & Justice Center.
An attorney for Pacific Lumber Co. argued in court Monday that District Attorney Paul Gallegos' fraud case against the company should be thrown out because Gallegos missed the deadline for filing the case.
Edgar Washburn, a San Francisco attorney representing PL, told Humboldt County Superior Court Judge Christopher Wilson that the four-year statute of limitations clock for unfair business practices -- the charge leveled by Gallegos -- started ticking on Nov. 18, 1998.
Gallegos filed his suit in February of this year -- three months too late by Washburn's reckoning.
Washburn argued that the four-year time period should stem from the date PL submitted to government agencies the allegedly fraudulent data on landslides in the Jordan Creek area near Humboldt Redwoods State Park.
Assistant District Attorney Tim Stoen told the judge the timeline should be traced to when "appreciable damage" started occurring from the landslides.
In a second motion, Washburn repeated the company's claim that Gallegos' suit is based on false information and that sanctions should be levied against the DA's office for bringing the case.
Judge Wilson, who presided over a packed hearing in Eureka, made no decision on the deadline issue or the sanctions motion. He has 60 days to issue a ruling on those matters.
Washburn also argued that, based on a doctrine called Noerr-Pennington (after two U.S. Supreme Court decisions), the suit should be thrown out because "whoever petitions the government is immune from liability." In other words, Pacific Lumber can't be held liable for its communications with state and federal agencies regarding the 1999 Headwaters agreement. (The fraud charge hinges on data that PL supplied to the California Department of Forestry.)
Stoen said Washburn was essentially arguing that PL "had the right to lie to CDF." Such protection is available only for activity classified as lobbying or petitioning the government, not seeking a permit in a regulatory scheme, he added.
The fraud case accuses Pacific Lumber of lying in government documents it filed as a part of the Headwaters agreement, the deal in which the federal and state governments paid $480 million for 7,500 acres of timber land. The fraudulent data resulted in major landslides that destroyed ancient redwoods and caused great harm to streams, bridges and roads, the suit alleges.
In a victory for environmentalists, visiting Judge John Golden last week ruled that a key document undergirding the 1999 Headwaters agreement was flawed and would have to be redone.
However, Golden was scheduled to hold a hearing this Wednesday, July 30, to consider the impact of the ruling on the Pacific Lumber Co. versus the continued harm to endangered species should its logging continue.
Last December, Golden essentially reversed a similar order he had issued a few months before out of concern that it would curtail logging to the point that PL would suffer undue economic harm.
In the latest ruling, Golden wrote that the state Forestry Department had not ensured that Pacific Lumber's 100-year logging plan, devised as a part of the Headwaters agreement, would do enough to protect endangered species and watersheds.
He also ruled that the Sustained Yield Plan was not in a form in which it could be reviewed by regulators or the public.
The suit was brought by the Garberville-based Environmental Protection Information Center, the Sierra Club and a steelworkers' union.
The implication of Golden's decision should it stand isn't entirely clear.
"The judge ruled in our favor on virtually everything," said Paul Mason, state forestry lobbyist for the Sierra Club. "What that actually means on the ground, we don't know until we have this final hearing."
Pacific Lumber spokesman Jim Branham declined to comment on the ruling.
The man who murdered two people in Orick, burying one of them under a dairy barn, was sentenced to life without the possibility of parole (see "Degree of Guilt," July 3).
Rafael Alejandro Noguez, 22, was convicted in June of killing Crystal Ann Brantley, 18, and Jarliz "Raul" Amador Rivera, 26, in mid-2001.
During his July 25 sentencing, Noguez apologized to the families of his victims, and said he "condemned" the first day he ever used drugs. Judge Christopher Wilson told him that he should not blame his actions on methamphetamine, but rather accept that he made a choice to kill.
Backers of the effort to recall Humboldt County District Attorney Paul Gallegos said that as of last week they had 75 to 80 percent of the signatures they need to force an election.
Over the weekend signature gatherers were busy at the Fortuna Autorama, and they plan to have a booth at the Humboldt County Fair in Ferndale Aug. 7-17.
"Those two events should put us over the top," predicted Tim Crowley, owner of North Coast Fabricators, one of several businesses serving as distribution points for petitions.
Crowley and others are volunteers. However, some anti-Gallegos signature gatherers are paid a standard $1 per signature.
Unlike the Gov. Gray Davis recall effort, which easily qualified for the ballot last week and is scheduled for an Oct. 7 vote, all Gallegos recall signatures must be turned in at the same time.
The county elections division then has one month to verify signatures and report to the Board of Supervisors. If the backers have 11,138 valid signatures, the board must schedule a special election within three to four months.
Tribal leaders, including Yurok Tribal Chairwoman Sue Masten, said in a press release Friday that they are angry with Gov. Gray Davis for not signing tribal-state gaming agreements identical to those approved in 1999 by the governor and state legislators.
A Davis aide said Tuesday the governor believes the 1999 compacts are flawed. "It's not that he won't sign them. He won't sign them `as is.'"
The compacts, which allow 61 tribes to operate casinos, contain a provision to reopen negotiations. Davis wants changes in the environmental section to allow participation of neighboring cities and the counties where the casinos operate.
SBC construction crews resumed work earlier this week, laying a new fiber optic cable to bring additional bandwidth and new advanced telecommunications services to Humboldt County.
The crews will be placing the final 21 miles of cable underground from the company's central office in Rio Dell north toward Eureka along the Highway 101 right-of-way.
Resumption of construction ended a 19-month project suspension. Caltrans had refused to issue construction permits without a multimillion-dollar payment from SBC.
Following litigation, both parties agreed to SBC placing the disputed permit fees into an escrow account pending final resolution of the dispute.
The cable installation is expected to be completed by fall.
In the fourth traffic fatality in one week, a motorcyclist died Sunday after he was hit head-on by a truck that had drifted into oncoming traffic on Old Arcata Road near the Bayside cutoff.
The driver of the truck, Bayside resident Cende Tanen, 43, sideswiped a car driven by Grace Marton, 56, of Arcata, about 2 p.m. before slamming into a motorcycle driven by Richard Lee Williams, 51, also of Arcata.
Marten was unhurt. Williams received CPR at the scene, but later died at St. Joseph Hospital. Williams, a father of five, worked at the hospital as a surgical nurse.
Tanen and her passengers received minor injuries. The cause of the accident is under investigation.
In Ferndale last Friday afternoon, residents Daniel Nunes, 75, and his wife Shirley Nunes, 66, were killed after their truck collided with a truck driven by 21-year-old Kalib Manzi, also of Ferndale. The accident took place at the intersection of Fulmore and Goble streets. Manzi suffered minor injuries.
Ronda Marshall, 40, a Hoopa Elementary School teacher, died on Wednesday of last week after the car driven by her daughter, Cassandra Chavez, 19, ran into a truck pulling a tractor-trailer. The collision took place on Highway 299 near the Lord Ellis Summit.
Five men entered a Fortuna home on the 600 block of 15th Street Monday night and robbed two residents at gunpoint, police said.
One of the residents was roughed up during the break-in. He was taken to Redwood Memorial Hospital and released about an hour later.
The suspects -- described as black males in their 20s -- made off with some of the victims' property.
The victims said they knew one of the suspects, who remain at large, police said.
The previous Thursday in Eureka, two white men in their mid-20s robbed an elderly man in the 1400 block of Union Street.
The men reportedly knocked on the door of the elderly man's home and asked if "John Little" was there. After he responded that no one by that name lived at the house, the men made casual conversation with the victim before snatching his wallet and fleeing the scene.
The victim was not able to offer a detailed description of the robbers due to poor eyesight, police said. There are no suspects at this time.
© Copyright 2003, North Coast Journal, Inc.