R.I. pornographer pleads guilty

This story is from The Journal archives

By pleading guilty to a federal conspiracy charge, Kenneth Guarino avoids a trial that would have delved into his multifaceted adult entertainment business and his underworld ties.

By W. ZACHARY MALINOWSKI Journal-Bulletin Staff WriterTHE PROVIDENCE JOURNAL-BULLETIN
Saturday, 1/11/1997

Kenneth Guarino, whose multimillion-dollar erotic empire has gone global, is going to prison.

The Cranston-based pornographer pleaded guilty yesterday to a federal conspiracy charge in a Las Vegas courthouse. Just a few miles away, a provocative billboard on "The Strip" promotes his latest X-rated film, Zazel, The Scent of Love.

The plea, after four years of delays, averted a two-month trial that would have shed light on Guarino's multifaceted adult entertainment business, and his ties to the underworld.

From Wall Street to the Internet, from overseas acquisitions to international distribution, Guarino has in recent months expanded his empire of X-rated films, magazines and CD-ROMS.

Now, fantasy has taken a back seat to reality. Under the terms of Guarino's guilty plea, federal prosecutors anticipate that he will be sentenced to 16 months in prison and fined $250,000. Sentencing is set for April 25.

Yesterday's plea agreement said Guarino, 47, and his business interests have been controlled for years by a top-ranking member of the New York-based Gambino crime family, Natale "Chris" Richichi.

Yet Guarino said late yesterday, in a statement from his lawyer, that his conviction has nothing to do with Metro Global Media Inc., his publicly traded pornography empire.

"Normal business operations will not be interrupted by the resolution of these matters," the statement said.

On Thursday, Richichi pleaded guilty to conspiring to hide more than $1.7 million in cash that Guarino allegedly paid him "to protect his multimillion-dollar pornography empire from being invaded" by New England's Patriarca crime family.

Guarino and Richichi admitted that they defrauded the government by failing to declare the cash tribute payments for tax purposes.

Richichi's wife, Joan Richichi; their son Salvatore Richichi and reputed mob associate Stephen Cino, all of Las Vegas, were charged with related crimes.

The elder Richichi, 80, who is tethered to an oxygen bottle and suffers from several ailments, is described by authorities as a capo regime in the Gambino crime family, and a confidant of jailed mob kingpin John Gotti.

Guarino's conviction comes at a time when Metro Global has ridden a wave of success.

Last year, Guarino launched two web sites on the Internet and expanded distribution of his X-rated videos, magazines and CD-ROMS from a chain of stores in the United States into Europe and South Africa.

He opened a foreign sales office in Flensburg, Germany, and agreed to buy Phantasm Holdings, of Holland, a major European distributor of X-rated entertainment products.

The company also began selling franchises for its Airborne For Men stores, emporiums peddling sexually oriented products and military-style clothing.

In the last fiscal year, Metro Global's revenues climbed 10 percent, to $19.5 million. The company churned out 261 pornographic films - five a week.

Guarino's flicks can be seen from the comfort of a five-star hotel on the Playboy Channel or picked up at a windowless adult bookstore in downtown Providence. His products are available in seven countries and four languages: English, Spanish, German and French.

Customers who want to stay home can tap into cyberspace on a personal computer and use credit cards to order films and sex toys, or to chat with "live models."

Guarino has come a long way from the days when his products were sold from adult bookshops in Providence, Johnston and North Kingstown.

"This additional distribution and expansion of our foreign sales efforts should enable us to dramatically increase sales resulting in larger profit margin and net earnings," Guarino said in a statement after opening the German sales office.

A new headquarters is being renovated on Park Avenue in Cranston, in a building Guarino's wife bought for $455,000 that formerly housed a branch of the failed Rhode Island Central Credit Union.

The Cranston address appears on Metro Global's web page, above a smiling, scantily clad woman wearing a military cap and saluting. Another sexually explicit web site bills itself as "the next generation of erotica."

Guarino, a millionaire, lives in a posh waterfront home in Cranston's Edgewood neighborhood.

Last November, the day before he and his co-defendants were scheduled to plead guilty in the case, Guarino stepped down as Metro Global president for "personal reasons."

Guarino, however, remains a major shareholder, owning 2.2 million shares of Metro Global stock - about 60 percent - according to the company's most recent filings with the federal Securities and Exchange Commission.

The stock, which has dropped about 28 percent in the past year, closed yesterday up 1/8, at 1 13/16, making Guarino's stake worth about $4 million.

Guarino has stepped aside before. In July 1994, he relinquished his role as president, chairman and director of the company, then called South Pointe Enterprises, after a Wall Street Journal article drew unwanted attention. He returned in December 1995.

Paul Fishbein, publisher of Los Angeles trade magazine Adult Video News, predicted that Metro Global, which he called "one of the five largest companies in the business," will survive because it produces high-quality films with "good plots and good acting."

"They don't go for the real raunchy, dirty stuff," said Fishbein, whose magazine runs ads promoting Metro Global films. "A lot of their stuff is couples oriented. They really try to do quality stuff."

Guarino's relationship with mobsters is well-documented. In 1991, the Journal-Bulletin reported that Guarino, Natale Richichi and Gotti met at a Johnston restaurant with other mobsters.

The seeds of the criminal charges were planted in February 1993, when Guarino, Natale Richichi and Cino were indicted on charges that they conspired to bribe the president of the Las Vegas stagehands union.

The men were accused of seeking to obtain favorable treatment in a financially troubled stage show, at the now-defunct Dunes Hotel, that Guarino had invested in.

As part of yesterday's plea, the government dropped those charges.

Following that indictment, prosecutors said, they captured Guarino on federal wiretaps, offering his own contacts in the underworld to help Richichi get fake identification so he could flee to the Dominican Republic.

Subsequent indictments in 1994 and 1995 charged Guarino and Richichi with additional counts of conspiring to defraud the government.

Guarino admitted yesterday that, from 1985 to 1995, he paid Richichi $16,000 to $20,000 a month in cash "tribute." In exchange, the agreement says, Richichi protected Guarino and his business ventures from other organized-crime factions, including La Cosa Nostra in New England and elsewhere.

The plea agreement further says Guarino and others who worked for him in his American pornography business adjusted bookkeeping journals to conceal the payments to Richichi.

One of the workers identified was Jeanette A. Whitham of Johnston, Guarino's bookkeeper and "trusted ex-mother-in-law." She was not charged.

The agreement says Guarino also provided Richichi and his wife with health insurance, two Mercedes-Benz sedans, leased cars and a corporate credit card - even though Richichi had no visible means of employment for at least 2 0years.

Richichi apparently considered himself more than Guarino's protector. The plea agreement says federal agents intercepted Richichi telling Patriarca crime boss Francis P. "Cadillac Frank" Salemme "that everything of Guarino's was (Richichi's)."

Salemme is awaiting trial in Boston on unrelated racketeering charges.

Prior to this week's pleas, Oscar Goodman, Natale Richichi's Las Vegas lawyer, who has defended several prominent mobsters, brushed off the government's assertion that his client is a high-level mob figure.

"(Richichi's) a very nice man with a beautiful family as far as I'm concerned," Goodman said in a telephone interview.

Not everyone agrees.

Last Nov. 1, a federal judge in West Palm Beach, Fla., characterized Richichi as "the devil," before he sentenced him to six years in prison in an unrelated racketeering and extortion case. The charges stemmed from his secret financial interest in a Pompano Beach strip club.

Guarino has had past run-ins with the law. In June 1985, he pleaded guilty to federal tax-evasion charges. He served three months in prison and was fined $5,000.

In 1980, Guarino was arrested with 44 others in gambling raids in 12 Rhode Island communities, and charged with operating an organized-crime gambling business. Seven years later, in 1987, he pleaded no contest to bookmaking charges and was fined $250.