from www.adultcybermart.com – Time was Harry Mohney was some mythic figurehead in the adult business.

You heard about him, but you never heard from him. There was the famous case involving director Gail Palmer and the late gonzo journalist Hunter S. Thompson back in 1990. The story comes to mind because the movie The Rum Diary, based on Thompson’s book, is playing the theaters.

Palmer, a former cheerleader was Mohney’s mistress [he financed her movies]. They had already split up by then, but she later claimed Thompson sexually assaulted her by twisting her left breast. Thompson was also supposed to have tossed cranberry juice in her face. Thompson was hit with a total of eight charges in that incident but they were all dropped. He wrote about it in another book, Kingdom of Fear.

There were strong rumors that anyone who had bad things to say about Palmer were dealt with in dark alleyways. Yet Palmer later became a star witness for the federal government in a tax fraud prosecution of Mohney, and Mohney was sent to prison for four years as a result. Palmer also sued Mohney for something like $15M, claiming it was her half of the revenue Mohney took in with her films.

So lawsuits are nothing new to Mohney who is linked to some 50 clubs across 17 states and four countries. This week Mohney, a resident of Las Vegas and often referred to as “The Howard Hughes of the Adult Business,” came out of the woodwork and filed another suit in Clark County District court.

This one was against Laura Henkel [pictured], a former assistant curator of the Erotic Heritage Museum.

In fact, Mohney owns the museum on Industrial Road [one of his Déjà vu clubs sits across the parking lot].

The two-story 17,000 square foot museum which opened in 2008 is run by a nonprofit, The Exodus Trust, which controls warehouses full of erotic artifacts.

In the literature for the Erotic Heritage Museum, Mohney is referred to as a “Grand Patron” and as “America’s leading Erotoligist.” This week Mohney became the Grand Inquisitor, thanks to rulings by the IRS.

Here’s the problem. Henkel allegedly caused problems with the IRS for Mohney by providing a faulty appraisal of adult material he donated to the museum.

The way I understand this story, an appraiser is supposed to be independent of whatever they’re appraising, but Henkel, being joined at the hip to The Exodus Trust, was far from that. She was later made assistant curator of the Erotic Heritage Museum, but on September 24, 2010 Henkel was fired from that job. The whys are also interesting.

From the time of its opening the The Erotic Museum gained national and international attention, hosted events and became a hub for dialogue, wild parties, fringe groups and other gatherings, all with Laura Henkel at the helm. But according to a story in the Las Vegas Weekly, internal drama was hampering further growth.

“Progress lagged on the administrative side. After two years, the Erotic Heritage Museum had not established a formal board or any kind of organized structure. Missing receipts and records made grant filing impossible for the public charity.”

Just two days after Henkel and the museum’s informal advisory board met with local historian and museum expert Dennis McBride to discuss organizational options, she was terminated.

Ted McIlvenna of the Exodus Trust, who gave Henkel the job at the Erotic Heritage Museum, cited numerous problems that led to her dismissal. The big question then became: What happens.

There was all sorts of scuttlebutt about the museum shutting down. According to the Las Vegas Weekly story, Henkel was at the center of a storm that included legal wrangling, along with Trust accusations of theft and rogue management.

Henkel was not without her fans. McBride credits Henkel for her marketing prowess: “She’s been wonderful for promoting it, keeping it in front of the public.”

Attorney Allen Lichtenstein, who’s on the informal advisory board, says Henkel made it a local institution that people can be proud of. The way Henkel went about it, however, fueled the rift with the Trust, McIlvenna says. Partnerships, fundraisers and art exhibits were done without approval from The Exodus Trust’s headquarters in San Francisco.

Moreover, other nonprofit groups were given half or all of the proceeds from events, McIlvenna says, and Henkel’s focus on contemporary art was not in line with the museum’s mission to represent erotic heritage.

Her off-site private art gallery, Sin City Gallery, McIlvenna adds, was a conflict of interest. On her behalf, Henkel said her efforts were designed to generate publicity for the museum and get people in the door and introduce it to the community.

Except McIlvenna says financial records from the events were never provided, nor were any receipts of art sales: “We are a nonprofit trust. We require certain rules and regulations in the management of money. You have to save receipts.”

You hear a comment like that, and it sure sounds like someone’s being accused of pocketing money. So you wonder if Mohney’s lawsuit has ulterior motives.

The lawsuit presents Mohney as owning the world’s largest collection of vintage 16mm porn films with titles like “Tales of an Oriental Sex Kitten” and “Wild Girls.”

The suit also says Mohney, beginning in the 1990s donated material from his porn collection to the Exodus Trust. In anticipation of donating more material to the Exodus Trust for use in the Las Vegas museum, Henkel was hired to appraise the material at the suggestion of the IASHS [Institute for the Advanced Study of Human Sexuality in San Francisco] of which she was a graduate, the suit says.

Henkel, in lobbying to appraise the material for a fee, also stated she was accredited by the American Society of Appraisers, the suit goes on to say.

Henkel represented that she was qualified to praise the material but Mohney’s lawsuit charges that “these representations were false.”

It’s when Mohney claimed charitable deductions on his income tax forms based on the appraisals, that the IRS disallowed most of the deductions. The IRS said the materials were grossly overvalued. There was also questions whether Mohney owned copyrights and distribution rights to the films.

One appraisal in 2005 was for “mint condition” 16mm films and loops, flyers and press kits and came in at $5.92 million, the suit says. Another appraisal was for $5.872 million covering loops, trailers, short films and feature films. Additional appraisals were conducted in 2006 for undisclosed amounts.

Henkel apparently failed to disclose she was paid $28,892 in 2005 and $64,255 in 2006 by the Exodus Trust and that this alleged conflict of interest wasn’t disclosed to Mohney.

And the fact that she would be named assistant curator of the museum didn’t seem a little odd?

IRS regulations require independent appraisals and prohibit appraisals conducted by groups receiving gifts, the suit says.

Mohney’s suit alleges malpractice, breach of contract, fraud and misrepresentation and demands unspecified damages.

Henkel this week commented on the lawsuit saying that it was related to a dispute with Mohney over her termination from the Erotic Heritage Museum, and the fact that she had been threatening to sue him.

“The allegations made by Mr. Mohney are completely false, and were made in retribution for my pending lawsuit against him for his previous defamatory comments,” Henkel said.

“This just continues the pattern of behavior by Mr. Mohney to attempt to smear my good name, and I look forward to complete vindication in the courts.”

Henkel continues to run Sin City Gallery.