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Porn profitable for Kenny Guarino

NORTHAMPTON, Massachusetts – Pornography has been very good to Kenneth Guarino.

The man behind the adult book and video store vying for a spot on King Street is a big name in the industry who has served time for tax evasion and hobnobbed with organized crime figures, according to court records and published reports.

Guarino, the chief executive of Capital Video Corp., has done well enough in the pornography business to buy a Beverly Hills mansion. In fact, pornography has been so lucrative for him that he had to pay “tribute” money to keep the mob from muscling in, according to prosecutors.

Capital Video has filed an application to locate a store selling adult videos, magazine and other products at 135 King St. The company has other stores throughout New England, including one at 486 Bridge St. in Springfield that has operated under the names Video Expo and Amazing.Net, both of which are Capital subsidiaries, according to Dun & Bradstreet, a company that analyses the financial status of businesses.

The Springfield store has sparked controversy as far back as 1990, when police seized 355 X-rated publications. Hampden County District Attorney William Bennett invoked a 1945 state law in filing a suit against the company to determine if the publications were obscene by county standards. A jury determined that they were not.

In 2002, the Springfield City Council rejected a special permit request by Video Expo to allow it to expand the store. Residents of the Apermont Triangle area had argued that letting the store expand would be a setback for the neighborhood.

Although he is credited with starting the business in 1979, Guarino has been in and out of public view as his company has changed names, merged with other corporations, and absorbed smaller ones. In the wake of a 1994 Wall Street Journal article that focused on his porn empire and alleged association with the mob, Guarino stepped down as president only to return to the post the following year, according to the Providence Journal-Bulletin.

Guarino’s name does not appear on the Northampton application, but Dun & Bradstreet lists him as the head of the company and states that Capital did more than $21 million in business in 2005.

In additional to owning porn shops, Guarino has produced pornographic movies, according to the Journal-Bulletin. Court records state that he has also owned a precious metals business and was an investor in a Las Vegas musical called “Night Dreams.”

Guarino did not return repeated telephone calls for this story, but some of his personal and legal history is detailed in a 2002 1st U.S. Circuit Court of Appeals case in Boston in which he unsuccessfully contested a tax court decision against him and his company.

As the agreed upon facts are stated in that case, Guarino created Capital in 1979 and was its sole shareholder. To fend off extortion attempts, he began paying “tribute” to Natale Richichi, whom the suit describes as a “capo (chief) in the Gambino family of La Cosa Nostra.” Between July 1985 and September 1995, Guarino paid Richichi at least $1.7 million, according to the suit.

In 1992, both men were indicted for conspiring to bribe a union official in connection with Guarino’s Las Vegas show. Three years later, another grand jury indicted Guarino and Richichi for interstate transportation of obscene materials.

As part of a plea agreement, Guarino pled guilty only to a charge of conspiracy to evade taxes, admitting that he helped Richichi hide the tribute money from the Internal Revenue Serv0ice. He was sentenced to 16 months in prison. Guarino served 11 of those months in a halfway house and paid a $250,000 fine, according to the suit.

Guarino got into further trouble when he paid his legal fees out of Capital’s corporate funds and tried to deduct them as a business expense. When the IRS disallowed the $343,971 that Guarino deducted, he and Capital sued in U.S. Tax Court.

Guarino argued that the tax evasion charge was directly related to the tribute payments, which were made to protect Capital and therefore, he reasoned, were business expenses. The Tax Court disagreed, prompting Guarino’s 1st Circuit appeal. The court affirmed the Tax Court ruling.

By all accounts, Guarino has managed to carve out a major role for himself in the pornography industry. The Providence Journal-Bulletin describes him as the head of a global “multi-million dollar erotic empire.” The Wall Street Journal wrote that Guarino’s decision to focus more on soft core pornography opened up the pay-per-view cable market and shifted the direction of the entire industry.

A Los Angeles Times story reports that in 1999 Guarino bought a $5 million mansion in Beverly Hills formerly owned by the sultan of Brunei.

Richichi did not end up as well. According to a story in the Las Vegas Review-Journal, the alleged mobster died in 2001 at the age of 84 while serving a racketeering sentence in federal prison.

Adam Cohen and Jendi Reiter, a Northampton couple operating as the group NoPornNorthampton, have been campaigning relentlessly to keep Guarino and his store out of the city. After the Northampton building commissioner determined that there wasn’t enough parking space on site, the company promised to reduce the square footage of the building, thereby reducing the number of parking spaces needed. It also eliminated the private viewing booths it had proposed in its original application. The booths were the focus of much of the opposition to the store.

NoPornNorthampton recently posted an open letter on the Internet to Barry G. Goldberg, who owns the King Street building, decrying his decision to lease the space to Capital.

“The law may permit you to rent to Capital Video Corporation, but landlords also have a duty to the community to use good judgment,” the letter stated. “We urge you to terminate your relationship with Capital Video and find a more suitable tenant for your King Street property.”

Goldberg did not return repeated calls for this story.

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