The publishers of Penthouse Australia magazine have been accused by former staff and freelancers of not paying wages and superannuation entitlements.
Staff and freelancers allege they have not been paid for work published in the magazine and/or on the website from more than a year ago.
Mumbrella understands that at least $50,000 is owed.
The magazine is published by Filthy Gorgeous Pty after the previous licensee PH Publications was liquidated last year owing more than $600,000 to various creditors.
Journalist Ben Smithurst told Mumbrella he is owed more than $20,000. “My oldest outstanding invoices are 14 months old. I haven’t worked for them since mid-2015,” he said.
Costas: claims a “superannuation mix up” is responsible for some delayed payments
Penthouse publisher Damien Costas – who has been a director of both PH Publications and Filthy Gorgeous – claims there was a “miscalculation” of superannuation owning, and that the monies will eventually be paid.
Filthy Gorgeous was formally registered on September 14 2015, according to Australian Securities and Investments Commission (ASIC) documents submitted in May 2015 and obtained by Mumbrella.
PH Publications was sent into liquidation with the liquidator Alan Scott considering the causes of failure to be inadequate cash flow or high cash use and trading losses.
Costas was a director of PH Publications from the end of October in 2013 to the end of September 2014.
“I was involved in PH Publications Pty Ltd with several other partners and was acting as publisher of Australian Penthouse for a period prior to the dispute between the partners, which saw the company go into liquidation,” Costas claimed.
“In September last year, I formed Filthy Gorgeous Pty Ltd and took over the license for Penthouse Magazine in the Australia/New Zealand territory in my own right.”
According to Costas, when Penthouse Magazine was published by PH Publications there was just two full-time staff and two part-time staff.
In an email to Mumbrella Costas said: “They were made redundant under the new structure last year.
“All staff were remunerated in full (four weeks notice or payment in lieu), with the exception of a miscalculation resulting in unpaid superannuation for two staff members having not been paid by PH Publications Pty Ltd prior to the company going into liquidation.
“In an effort to ensure these and several other unpaid debts didn’t end up in the “unsecured creditors” list during the liquidation, I spoke to the people concerned and subsequently entered into an arrangement where the outstanding debts were carried over into our new entity.
“Payment arrangements with these creditors have been entered into with a view to being paid in full by June 30 this year.”
According to a document filed with ASIC, PH Publications’ unsecured creditors include the ATO ($46,652), Costas himself ($58,431), Filthy Gorgeous Pty Ltd ($104,651), Kane International ($116,000) – believed to be a company of former PH Publications co-director Louis Kane, also known as Louis Kanellos – and trade creditors ($321,355) including Getty Images, printers, photographers, model management agencies and property agents.
On why Filthy Gorgeous is listed as an unsecured creditor, Costas said: “Filthy Gorgeous took over the subscription liabilities and a number of the unsecured creditors of PH Publications – including staff superannuation – in an effort to keep them from losing what was owed to them under PH Publications. From an accounting and tax perspective, the debt has to be accounted for.
“In short, PH Publications owes Filthy Gorgeous money, not the creditors or subscribers.”
However, Smithurst claims that a number of previous assurances about forthcoming payments have been broken.
“Damien doesn’t answer calls, although I get the occasional email – mostly second-hand, from another contributor who is in a hole,” he told Mumbrella.
“When we do get any info, it’s repeated promises – ‘You’ll be paid next month, you’ll be paid next week, you’ll get the money tomorrow’, always smaller increments. Nothing ever happens and then it’s radio silence again, punctuated by very occasional promises to call – that never happen; no returned calls.
“You might get an email or a text or new promises to send a payment schedule, that also don’t happen, or a reassurance that we’ll be paid when an American deal happens, or when the money clears.
“One time were told that we’d be paid later that afternoon. It’s really frustrating,” Smithurst said.
Smithurst also said he and other former freelancers who prefer to remain anonymous – one of whom has also spoken to Mumbrella – were told the debts would be paid in four monthly instalments.
“We were finally told a couple of months ago that we’ll be paid-out in four monthly instalments and, to Damien’s credit, that he’d ‘pay 10% interest’ on what we’re owed,” he said.
“But the first payment was supposed to be two weeks back and it’s the same thing again. I know that small, partial payments have been made to others who were owed less than me – which, good on them – but it’s even more infuriating.”
According to ASIC’s guide on what to look out for when a company is in financial trouble or might be trading insolvently, signs include creditors unpaid outside usual terms, payments to creditors by rounded sums on a payment plan, poor cash flow, unrecoverable loans to related parties and “expectation that the next big job/ sale/ contract will save the company”.
Costas told Mumbrella that Filthy Gorgeous Media has won a new contract handling the layout, design and copy-editing of Penthouse US. He also asserts Filthy Gorgeous has committed to the Australian Tax Office to pay the superannuation debts.
Costas told Mumbrella: “This new partnership is not only a coup for us, but it ensures the profitability and continuation of the magazine in Australia, which has been on the shelves since October, 1979. In fact, I’m sure it’s a model that other publishers will replicate in order to save costs.”
He added: “As far as superannuation goes, in order to enter in an arrangement like this we had to seek approval from, and make a firm commitment to the ATO, effectively guaranteeing the superannuation obligations of PH Publications Pty Ltd.
“Filthy Gorgeous Pty Ltd is now guarantor for those amounts owing. Interest is also due and payable under this arrangement.”
Another former Penthouse employee, who preferred to remain anonymous, told Mumbrella the last superannuation payment they had received was in July 2014.
They left the magazine around a year later and are still waiting for their superannuation, and a promised additional 7% interest, to be paid.
The ex-staffer said they had lodged an enquiry with the Australian Tax Office but was told that an official investigation could take up to a year to be completed, with no assurance of the lost funds being paid.
Photographer Richard Arthur, a photographer employed by the magazine to shoot its covers and model features since day one of PH Publications, claims he was never paid for a cover he shot for the magazine in 2014 – the Penthouse Pet of the Year cover. Shooting the cover includes an additional 10-12 page photography spread inside the issue.
The current issue of Penthouse Australia is its ‘Sex and Money’ edition. In his Editor’s Letter, editor James Branson states: “I am, however, obsessed right now with money. That is, making as much of it as I can.
“As Al Pacino so eloquently put it, ‘First you get the money, then you get the power, then you get the women’.”
UPDATE: Branson contacted Mumbrella to say he was no longer working with Penthouse Australia, finishing up with the magazine at the end of last month.
For more stories like this sign up to the weekly Publish newsletter below