The Grand Vizier Reports: Will The John Cornetta-Frank Koretsky Fallout Wind Up Being a “Lynch Mob”?

The Grand Vizier writes me: Month’s ago when you did a Tarot reading for the industry you talked about the business being “caught in a Perfect Storm.”

I now understand what you meant by that. I suspected the obvious, that Fabian’s arrest the other week would have something to do with it, now I’ve come across those other storm clouds that threaten to put the porn industry in the middle of some pretty rocky waves.

It involves Frank Koretsky, otherwise known on Adult FYI as porn’s Big Lebowski.

Koretsky, one of the adult games biggest players, owns IVD which is the industry’s largest distributor. Everyone in the business I’m sure has got a Koretsky story, and, if you’ve done business with him, it’s probably not one with a happy ending. The stories up till now have been subjects of “shop talk” over lunch, but that’s about to change and go public.

Koretsky and former business partner John Cornetta are locked in a legal battle. Koretsky has sued Cornetta. Cornetta is counter-suing Koretsky and Koretsky’s brother Michael, and the issue is scheduled to be dragged into court by early next summer.

Put it this way, if it goes to trial, Cornetta will subpoena a who’s who of the business. Koretsky has until January 13th to answer the lawsuit with months of discovery to follow.

Unless Koretsky makes a deal. And he should because Cornetta has dirt on Koretsky that extends to shenanigans in Central America. I’m sure all of this is going to be brought out.

On the other hand, Fabian, in one interview, mentioned that he’s got something like a business line of credit that extends into the hundreds of millions. Where does a 34 year-kid who lives with his parents have that kind of leverage?

Koretsky, from Levittown, Pa., meanwhile, has been in the industry since the VHS age, having started out in the electronics business in New Jersey. He’s worth in the neighborhood of $400 million.

Cornetta and Koretsky have a relationship that goes back over nines years, and Cornetta, a bulldog and a scrapper, has often remarked that Koretsky was his best friend. A best friend who stabbed him in the back, apparently.

The story is Cornetta possesses a thousand dollar bill from decades ago in which Koretsky writes on it about Cornetta being the best friend ever, adding “I love you more than my own brothers.”

Cornetta was a pretty big player in the adult store arena, particularly The Love Shack which he owned. Cornetta’s out of Georgia where, in Gwinnett County, local officials made his life miserable with charges of distributing obscenity.

Those charges were subsequently dropped. Cornetta, like Greg Sakas, who you’ve also written about, doesn’t take crap from these local yokel politicians. All things considered, Koretsky’s picked the wrong guy to tangle with.

Koretsky is also being sued by his former No. 2 over at IVD, Mike Savage, and I hope to have more on that action. In the meantime, I’ll give you the Cliff Notes on what’s going on in the Cornetta matter.

Interestingly, Cornetta and Koretsky met over a contentious situation. Koretsky, as a distributor, cut off Cornetta’s line of credit. They met in Atlanta to resolve the situation and by the time Koretsky left, he and Cornetta had become best friends.

By the end of 2009, Koretsky had taken some financial beatings. Koretsky, who’s also involved in real estate development, had a project on the boards that involved 150 homes in Douglasville, Georgia.

Koretsky wanted Cornetta to go in on it with him. Koretsky allegedly, has taken some losses as well in that strip club in Arizona which used to be owned by Jenna Jameson and her former husband Jay Grdina. Koretsky is partners in that venture with Steve Hirsch.

Koretsky and Cornetta were 50-50 partners in the Peek-a-boo chain. They were also partners in XCitement magazine. Cornetta and Koretsky wound up owning three buildings and one store together. Frank wanted to expand and Cornetta was set to open a Love Shack store in Johns Creek, Georgia.

Cornetta wound up losing at least $1.5M there because the locals wouldn’t allow him to put up a sign. Because of that, the 10,000 square foot store closed two years after it was opened. Koretsky, a silent partner, never wanted his name associated in those dealings, and Cornetta was threatened with contempt of court for never revealing that information.

Cornetta, meanwhile, was going through a nasty divorce and was having his own problems. He asked Koretsky if he could help him out. In other words, he wanted a buy out. Koretsky had the books audited ostensibly to find Cornetta a buyer.

All told Cornetta’s stores were doing something like $12M a year. One of Koretsky’s friends made a $1M offer for the Johns Creek store with $10,000 down. Cornetta got some decent money at closing, but noticed that Koretsky was ready to bang him over a $60,000 loan. [Cornetta’s wife was keeping the books.]

This part gets complicated, but, basically, Koretsky began telling Cornetta there was $60,000 he owed Koretsky. Koretsky took $60,000 off the closing. Cornetta’s argument was even if there was a mistake about the money he should only owe Koretsky $30,000 because they were partners.

Cornetta made his point, then later moved to Florida. Koretsky, who used to talk to Cornetta ever day, was no longer speaking to him. When Cornetta’s father died, John called Koretsky and left messages. No call backs.

When Cornetta’s son was born, he invited Koretsky to the baptism. Koretsky never bothered to contact him and conveyed through Cornetta’s lawyer that he never wanted to speak to him again.

More bullshit over that Johns Creek store sale brings the Sunbelt adult stores chain into it. Sunbelt which is also partnered up with Koretsky winds up suing Cornetta over “phantom’ money Cornetta claims didn’t exist.

Savage, who was fired by Koretsky, allegedly told Cornetta, “That’s what these guys do. They buy your stores and buy your businesses.” There’s another part to that statement which is why Cornetta’s suing Koretsky.

The irony of this situation is that Michael Koretsky is probably unaware of some of the side deals and store interests his brother had.

There’s so much bad blood now, that Cornetta has threatened to drag in conspiracy, interstate trafficking and RICO charges. When Koretsky finally got served two weeks ago, he then called Cornetta, but avoided any talk of the lawsuit.

Koretsky, who’s trying to go Hollywood, doesn’t like the fact that his connection to the adult business is publicized. When times were good, Koretsky and Cornetta partied like rock stars. Frank would stay in Cornetta’s mansion, drive Cornetta’s Maserati and they produced a mainstream film together called Lynch Mob.

Here’s the icing on the cake. All those mainstream websites that are now touting Koretsky as a philanthropist and astute business man were built by Cornetta.

Another rumor on the street is that the Brothers Koretsky are fighting and that IVD will be split up.

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