Porn Hedge Fund Founder Refutes Fraud Claims

Is last year’s most provocative hedge fund launch just another fraud?

Sources close to AdultVest Inc., which manages the Priapus Investment Fund, an adult entertainment hedge and private equity fund, say that it is spending investor money on more than just investments, and that what investments there are don’t account for the returns it claims.

A former investor says that founder Francis Koenig is looting the fund to pay for fine art, expensive wines, cars, personal trips and alimony. Meanwhile, a former employee tells FINalternatives “there was no capital being generated” during his time at the firm.

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“Priapus’ only asset is iPorn.com, which cost about $250,000, yet $3 million is missing,’ the former investor says. The investor also alleges that a related firm, Adultvest Events, a conference company that seeks to bring investors and adult industry insiders together, did no business, and that all of its cash was stolen.

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The former employee, who says there were about 11 employees when he worked at the firm, claims that some of the few remaining staff members, including a secretary and the firm’s Web site manager, have had their salaries halved because the firm is running out of money. He also says that they are only coming into the office once or twice a week.