MONTREAL —​ ​Pornhub’s owner Ethical Capital Partners, the private equity firm that professes “transparency and accountability,” is based in a known haven for tax avoidance where the directors and beneficial owners of companies are not publicly listed, The Logic has learned.

Ethical Capital Partners was established in Ontario in December 2021, according to the province’s business registry. Yet the company set up three entities in the British Virgin Islands between August 2022 and February 2023, before ECP acquired MindGeek, company behind Pornhub, Brazzers and other adult websites. 

In an interview with The Logic, partner Solomon Friedman said Ethical Capital Partners managing partner Fady Mansour is the beneficial owner of the three BVI-based entities, and he owns at least 75 per cent of their shares. Buying a foreign corporation and immediately moving it to Canada “would be an incredibly irresponsible thing to do,” said Friedman, adding: “That’s not done in private equity.”

Friedman wouldn’t disclose whether there are other shareholders in the three BVI-based entities. “I’m not going to discuss the terms of the transaction, as I’m not permitted to. Like most private transactions, the parties to the transactions cannot discuss the price or the terms,” Friedman said. 

The opacity of the arrangement, and ambiguity around who has stakes in the sites, contrasts with public claims by the Ottawa-based businessmen and lawyers who bought MindGeek that they are ushering in a new era of accountability and openness, with a view to stamping out the abusive activity.

When Ethical Capital Partners acquired the company in March, Mansour called the Montreal-founded, Luxembourg-based company “a dynamic tech brand that is built upon a foundation of trust, safety and compliance.” Yet MindGeek had been mired in scandal for nearly three years, after a New York Times column said Pornhub, which bills itself as “the world’s biggest porn site,” was “infested with rape videos.” 

Visa and Mastercard suspended its payment services on the site, as well as on MindGeek’s advertising platform. MindGeek has faced a litany of lawsuits related to racketeering and sex trafficking, including one from Serena Fleites, the subject of the New York Times piece. That case is ongoing.

When it acquired the MindGeek properties, Ethical Capital Partners said there would be a hard pivot from the company’s past. Friedman has said he wants to make investing in the adult industry “boring” and “institutional,” in part by being “public and vocal and open.” 

This spring, Friedman and Ethical Capital Partner partner (and a former RCMP Chief Superintendent) Derek Ogden met with the Canadian Centre for Child Protection, a Winnipeg-based youth protection group that has been critical of MindGeek in the past. And the private equity firm has set up an advisory board made up of academics and sex work advocates, as well as a compliance adviser and an anti-money-laundering expert, to assist on investing and advisory decisions.

“We need to bring these parties together so they can stop speaking past each other, but you can’t do that unless the people who are managing these companies, like Ethical Capital Partners, are willing to step forward and be visible and transparent,” Friedman told the Ottawa Citizen in April.

Yet the firm has refused to divulge the identity of the investors who funded the MindGeek acquisition, or provide a full accounting of shareholders in the new organization. Though Ethical Capital Partners lists its headquarters in Ottawa, it was the three BVI-based ECP entities that acquired just over a million MindGeek shares on March 21, five days after Ethical Capital Partners announced the sale, according to Luxembourg business registry documents. 

The complex transaction saw a transfer of shares from entities that one lawyer dubbed “shadow MindGeek”—holding companies associated with former MindGeek owners that ultimately reaped MindGeek’s profits. 

According to these documents, ECP One acquired 310,095 “category X” shares from FDCO Holding, a Montreal-based holding company founded in 2013. Feras Antoon and David Tassillo are listed as FDCO Holding president and secretary, respectively, according to Quebec business records. Antoon and Tassillo respectively served as CEO and CFO of MindGeek until June 2022, and remained shareholders in the company after resigning their posts.

At the same time, ECP Three acquired 590,161 class X shares and one class Y share from Acaju Investments S.A. Luxembourg’s Reporter and Milan-based Corriere della Sera identified Acaju’s owner as Bernd Bergmair, a reclusive Austrian-born financier revealed to be a MindGeek investor in 2020.

Finally, ECP Four acquired 100,017 class X shares from Bergmair-owned RK Holdings, LLC, a Florida-based holding company identified in court documents as a wholly owned subsidiary of MindGeek SARL.

In all three transactions, the shares bought represented the entirety of the companies’ holdings in MindGeek, according to the documents.

The result of the acquisitions was “a complete change of control,” said Friedman: “David, Feras and Bernd, or any entities controlled by them, have absolutely no shareholding relationship and no legal beneficial interest whatsoever. Outside of the acquisition—that is, the transaction itself—there is no relationship whatsoever with the prior shareholders.”

The British Virgin Islands is a popular tax haven. The British overseas territory has no income or capital gains taxes, and though its corporate disclosure regulations were updated in 2023, information about company directorships remains limited. In February, the European Union placed BVI on its list of non-cooperative jurisdictions for tax purposes, deeming the territory “not to be sufficiently in compliance with the OECD standard on exchange of information on request.”

“Nobody would buy a Luxembourg entity and import it into Canada,” Friedman told The Logic. “That would trigger tax consequences to import a foreign entity into Canada. So there’s no one who would advise that as a prudent business move.” ECP advisory board member Shayna Miller, a director at the Montreal-based accounting firm Raymond Chabot Grant Thornton described on Ethical Capital’s website as a “certified fraud examiner [and] expert in financial compliance and anti-money laundering processes”, echoed Friedman’s sentiment.

“Prior to joining as an advisor, we did have conversations pertaining to structure. To me, it made obvious sense given the acquisition of a foreign corporation,” Miller said in an email to The Logic. “ECP has been fully transparent and answered any questions I have had regarding incorporation and disclosed ultimate beneficial ownership.”

Ethical Capital Partners’s business office is in downtown Ottawa, with Mansour listed as the company’s president, secretary and active director, according to business registry records. The company’s Ontario entity was incorporated on December 21, 2021, and shares an address with Friedman Mansour, the law firm in which Mansour is a partner along with Friedman. The Ontario-based entity provides investment services as well as management advice and acquisition advice in Canada, and pays “all the taxes that are required,” Friedman said. 

Bergmair, Antoon and Tassillo are named as defendants in a sex trafficking and racketeering suit in California brought by Fleites. RK Holdings is among the MindGeek-related entities also named as defendants. Visa is named as well, with Fleites’s lawyers alleging the payments company “profited from MindGeek’s trafficking venture.” 

The sole director of ECP One, ECP Three and ECP Four is listed as FFP (BVI) Limited, a British Virgin Islands company billing itself as a “leading offshore firm, providing fiduciary, restructuring, trustee, economic substance and registered office and agent services.” Hosana Guterres, FFP’s corporate administrator in the British Virgin Islands, didn’t respond to a request for comment.

Mansour is also listed as “ultimate beneficiary” and owner of at least 75 per cent of two Quebec-based numbered companies that hold and control MindGeek’s Quebec service company. The numbered companies are owned by Luxembourg-based MindGeek, which is itself owned by BVI-based ECP, according to Friedman.

The president of both numbered companies, MindGeek’s Cyprus-based manager Andreas Andreou, was deposed by Fleites’s lawyers on June 2 regarding MindGeek’s corporate structure.

“I am committed, as are my partners, to just outcomes,” Friedman said of the pending lawsuits against MindGeek. “It means taking responsibility. And it means investigating these claims to their fullest and having them determined in one way or another, either by having the claims withdrawn, by a resolution or determined by a judgment. I would consider each of those to be a just outcome.”

Both Friedman and Mansour were part of an attempt by Canadian cannabis entrepreneur Chuck Rifici to purchase MindGeek in 2021. Dubbed “Project Narsil,” the approach saw Rifici offer US$525 million for MindGeek through Bruinen, his private equity firm. Friedman served as Bruinen’s chief ethics officer, while Mansour was president. The deal ultimately fell through.