Denver man accused of obscenity, racketeering

11:15 AM CST on Tuesday, March 15, 2005

By MATT STILES / The Dallas Morning News

Edward Wedelstedt

A grand jury in Dallas has indicted a Denver-area pornography mogul on charges that he ran a multimillion-dollar criminal enterprise that distributed obscene material in Texas and across the country.

Edward Wedelstedt, 62, is accused of running an operation that illegally distributed pornography to stores in 18 states – and also sought to avoid reporting some of its income to federal and state authorities, according to a 23-count federal racketeering indictment made public Monday.

Six other people, including two Arlington residents accused of running pornography-related stores in the Dallas area, also are charged in the indictment with conspiring to sell or transfer the obscene material.

All were expected to surrender soon.

The case involves six videotapes and DVDs that a grand jury in Dallas considered obscene. The images in the movies are considered hard-core pornography with "patently offensive depictions" of sex, prosecutors say.

The titles of the movies, which apparently show women having sex with multiple partners, suggest that the materials don't depict children, rape or bestiality – images more commonly associated with criminal charges.

Mr. Wedelstedt and his attorneys couldn't be reached for comment.

The indictment comes after a lengthy investigation by the Department of Justice, U.S. Immigration and Customs Enforcement, and the Internal Revenue Service's criminal division.

"Effective use of law enforcement's full arsenal is essential to stop purveyors of obscenity from distributing their offensive and degrading material," Assistant Attorney General Christopher Wray said in a written statement Monday.

It was brought under a federal statute designed to combat corruption-influenced or racketeering organizations, often referred to as RICO cases. Such prosecutions are rare, and they are most often associated with organized crime.

In recent years, the government has expanded its use of the statute across the country, utilizing it, for example, to combat trafficking of immigrants.

Federal authorities also used it in 2003 to prosecute an enterprise that sold what were allegedly obscene materials, the first such case in a decade.

A Highland Village man was sentenced in September to more than five years in prison after he pleaded guilty to charges in connection with a similar racketeering, obscenity, fraud and income tax evasion scheme.

The man, John Kenneth Coil, 61, was the owner and operator of 27 adult-oriented businesses in Texas, New Mexico and Arizona. Prosecutors said he sold and distributed obscene and pornographic materials.

That and other recent cases reflect what some say is stepped-up enforcement against obscenity by the Justice Department under former Attorney General John Ashcroft.

Monday's indictment alleges that, through his company, Mr. Wedelstedt ran dozens of bookstores that sold sexually explicit products and operated pornographic arcades in 18 states. He's also accused of conspiring to defraud the government by not reporting large sums of cash income from the stores, federal authorities said Monday.

According to court records, Mr. Wedelstedt was a protege of Ruben Sturman, who is sometimes referred to as the godfather of American pornography.

Mr. Wedelstedt, who already has been to federal prison for a tax-related conviction, also runs a charitable organization, Eddie's Kids, which rewards youths for academic achievement by giving them trips to sporting events.

Mr. Wedelstedt's name sometimes appears in Denver newspapers in society items about charitable activity.

The charitable group's Web site states that part of its mission is to help kids in an era when violence is commonplace on television and video games.

"Sadly, it's become part of the national fabric," one passage reads.

The site doesn't mention pornography – or Mr. Wedelstedt's other company, Goalie Entertainment, which touts itself as the country's largest full-service adult retail management company. The site lists several Texas stores, including two in Hillsboro and Terrell.

The stores, court records show, typically have two functions. In the front, customers can purchase pornographic magazines, videos and products. In a back room, records show, patrons can view sexually explicit movies by purchasing tokens.

The government has alleged in the past that some proceeds from the back-room operations were skimmed, allowing Mr. Wedelstedt and the stores to avoid paying taxes.

The two Arlington residents, Leroy Moore Sr., 64, and Beverly Kay Van Dusen, 46, are accused of conspiring throughout the 1990s to sell some of the material at Dallas-area stores while paying a percentage of the revenue back to Mr. Wedelstedt's company.

Also named in the indictment are the company, Goalie Entertainment Holdings Inc.; Vivian Lee Schoug of Littleton, Colo.; Arthur Morris Boten of Des Moines; James Randal Martinson of Memphis, Tenn.; and Jeffrey Mark Parrish of Denver.

None could be reached for comment.

The obscenity, conspiracy and tax-fraud allegations each carry a maximum sentence of five years in prison. The racketeering charge against Mr. Wedelstedt is punishable by up to 20 years.

The government also alleges that $48 million in gross proceeds and several properties related to the alleged enterprise are subject to forfeiture.

Staff writer Michelle Mittelstadt in Washington, D.C., contributed to this report.

E-mail mstiles@dallasnews.com