Authorities in Spain arrested the founder of the once-hot Internet start-up Digital Entertainment Network on Thursday, capping a 21-month international hunt for the accused child molester.
Marc Collins-Rector fled the U.S. in 2000 amid allegations that he pursued teenage employees at the Santa Monica company, which was backed by NBC, Intel Corp. and Microsoft Corp. The company later filed for bankruptcy liquidation after burning through more than $60 million in two years.
"We're obviously happy that he's been arrested," said Michael Drewniak, a spokesman for the U.S. attorney's office in Newark, N.J. Prosecutors in that office secretly indicted Collins-Rector in August 2000, and that indictment was unsealed for the international arrest warrant used to hold him.
Collins-Rector was apprehended in the Spanish beach resort of Marbella and U.S. officials are seeking his extradition. Drewniak said he didn't know whether Collins-Rector had a lawyer or when a hearing will be held.Ronald Palmieri, a civil lawyer for Collins-Rector, said he hadn't spoken to his client in more than a year. "I am shocked at the indictment and the arrest," Palmieri said.
The indictment accuses Collins-Rector of five counts of transporting a minor across state lines for illegal sexual activity. The maximum penalty for each count is 15 years in prison; such sentences usually are served concurrently.
The victim in the case was a 13-year-old boy who worked from his New Jersey home for Concentric Networks, an Internet service provider that Collins-Rector founded and later sold, making millions before moving to Southern California.
The boy eventually told his parents that Collins-Rector had seduced him, and a tape recording was made of a conversation between the boy and Collins-Rector, sources said. The boy sued, and Collins-Rector was served with the legal papers just before the company's planned stock offering in the fall of 1999.
Collins-Rector and his two housemates left the company and it was regrouping two years ago when other teenage employees told The Times that they had been pursued as well. An article on the company's history reinvigorated the FBI probe and prompted the three company officials to leave the country.
After the company filed for bankruptcy, still more minors came forward, suing Collins-Rector, company directors and others over alleged abuse. The directors said they hadn't known what was happening.
The victim in the New Jersey case, who is 22, said Friday that he was glad that his tape-recorded conversation helped prosecutors win the indictment.
"It appeared that the activity and the behavior continued and got much worse. This will prevent anyone else from having to go through this," said the man, who spoke on condition of anonymity.
He said that he had been afraid to come forward after he realized that what had been happening was wrong. "Any fear that I had along the way was always unfounded. Everybody has been totally supportive," he said.
Many workers at the company said they had suspicions about then-Chairman Collins-Rector and discussed them internally before the New Jersey lawsuit. "There was something not right," a former executive said Friday. "There were too many little boys. People were willing to look the other way."
Matt Welch, a Los Angeles writer who briefly consulted for the company, said its collapse "would have been one of the textbook classic dot-com flameouts even without this. It was a bad idea, at a bad time, done by bad people.... I wouldn't say there was an atmosphere of criminal behavior, you just felt the decadence."
Collins-Rector, who is in his early 40s, shared a palatial Encino estate with longtime partner Chad Shackley, 24, and with Brock Pierce, a child Disney movie star who moved in when he was 17 and was paid a $250,000 salary by the company. Shackley and Pierce were executive vice presidents of the company.
The three were described as co-founders of the company, which filmed short episodes on a number of teenage themes for playback over the Internet and at one time boasted more than 300 employees.
The company secured big advertisers but failed to generate a significant audience or keep its expenses in check. The company's audience remained limited, in part because of the lack of high-speed Internet connections needed to stream entertainment videos.
Although the company was at the forefront of developing entertainment for the Internet, its competitors were soon drawing greater traffic while paying little or nothing for video content.
It spent freely on its productions and facilities and paid salaries that exceeded $1 million, unusually high figures for a start-up. In June 1999, the company was burning up $3 million a month when it had no revenue.
Among those who have filed lawsuits are four former employees, including one hired and allegedly abused before the age of 16 and another hired at 15 and abused at 16.
A suit by one of the teenagers was settled, but its terms were not disclosed. A suit filed by three of the teenagers resulted in a default judgment of $4.5 million.
The suits accused Collins-Rector, Shackley and Pierce of rape, assault and death threats. Shackley and Pierce have not been charged criminally.