Man Pleads Guilty to False Billing on the Web

A Malibu businessman pleaded guilty Monday to bilking credit card holders around the world of more than $37 million by falsely billing them for access to pornographic Web sites he operated.

Kenneth Taves, 49, faces a sentence of six to seven years in prison under a plea agreement with federal prosecutors.

Taves purchased access to lists of more than 3 million valid Mastercard and Visa credit cards from Charter Pacific Bank in Agoura Hills.

Instead of using that information for credit checks on his customers, he was accused of charging about 900,000 people for services they never ordered.

Under terms of his plea agreement, Taves must make full restitution to the credit card holders he cheated.

Federal authorities have located about $20 million of Taves’ assets, including about $10 million in the Cayman Islands, $7.5 million in the South Pacific island of Vanuatu and a hilltop mansion in Malibu valued at $3 million. Eight million dollars has been recovered by the Federal Trade Commission, which won a $37.5-million civil judgment against Taves and his wife last year.

In 1995, Taves bought a Nevada corporation known as React Records and changed its name to J.K. Publications, which did business on the Internet under the name of Netfill. Subscribers paid up to $29.95 a month for access to Netfill’s X-rated Web site.

Even as consumer demands for refunds were skyrocketing, Charter Pacific continued to process the bogus card transactions, an FTC receiver found.

Taves, who is being held without bail, will be sentenced April 9 on charges of possessing and using credit card numbers without permission and making a false statement to the FTC.