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How an Orange County business fought the feds and helped make the world safe for sex toys.

The Siege of Adam & Eve 

How an Orange County novelty company fought the federal government and helped make the world safe for sex toys

Fifteen years ago last week, the U.S. Department of Justice tried to swallow Phil Harvey whole. Backed by the Reagan administration's Meese Commission, prosecutors declared him a peddler of obscenity. On May 29, 1986, 37 officers invaded his Orange County adult novelty company, Adam & Eve, in a surprise raid.

But Harvey, armed with a strong belief in the First Amendment, a stubborn streak, and the backing of loyal employees, slowly pried the monster's jaws open, climbed out and went about his successful business--but not before teaching Uncle Sam to think twice about his tactics next time.

Today, Harvey's 30-year-old company thrives in Hillsborough. Every day, employees ship more than 15,000 boxes of sexually oriented merchandise across the country. Adam & Eve and its parent company, Phil Harvey Enterprises, Inc. (PHE) have grown to include Internet sales, a wholesale branch, three retail stores and at-home parties a la Tupperware. PHE doesn't sell Tupperware, though. It sells X-rated videos, lingerie, vibrators and other merchandise that people don't generally discuss in public. Still, 1.5 million customers bought $66 million worth of PHE merchandise last year.

But this story is not about sex. This story is about the founder of a homegrown Orange County company who carried the banner of civil liberty for eight years. He did it to protect his profitable company. He did it to ensure opportunities for people to buy sexually oriented materials and enjoy them in private. He did it because he hates government telling people what they can't do.

"The natural progress of things is for liberty to yield and government to gain ground," Thomas Jefferson said in 1788. It's that tendency that frightens Harvey, that goaded him into each new round of the legal battle as it dragged on for the better part of a decade.

"It's the duty of people who love freedom to hold back the tide as best they can," says Harvey, 63, who calls his company's mission "fun for cheerfully consenting adults."

The siege of Adam & Eve, which Harvey chronicles in his new book, The Government vs. Erotica, sparked a courtroom epic that eventually embarrassed prosecutors and dictated long-reaching changes to the Justice Department's policies in obscenity cases.

Harvey had been preparing to tangle with authorities from the beginning of his career. He started PHE in 1970, selling condoms through the mail as part of his master's thesis in family planning administration at UNC-Chapel Hill. Operating out of a Franklin Street office, his fledgling business openly flouted a hundred-year-old regulation called the Comstock Law. Passed in 1873, it declared contraception "obscene" and prohibited its dissemination through the U.S. mail. Disregarding cautions from legal advisers, Harvey put 2-by-3 inch, smart-aleck ads in magazines. ("What will you get her this Christmas ... pregnant?" was the headline of one.) He was soon mailing condoms wrapped in plain brown paper--often by the gross--to customers all over the country.

"I love this," Harvey said recently in his Hillsborough office, where a current copy of Playboy graces the desk and a framed newspaper article about one of his court victories adorns the wall. "I love being in a controversial business."

"Phil is very sincere in his feelings about civil liberties and the First Amendment," says Chapel Hill attorney David Rudolf, a member of PHE's 1986 defense team. "But there's another side to Phil that likes the battle."

The story of the battle between PHE and the federal government has all the classic elements of a war epic: a protagonist fighting for his beliefs and his financial survival; antagonists backed by the power and resources of the White House; skirmishes, ambushes, and full-throttle engagement; a supporting cast loyal to its hero.

During the initial raid in 1986, 118 employees were detained, searched, subpoenaed and terrified by the 37 officers representing the U.S. Postal Service, the State Bureau of Investigation and local sheriff's departments.

Officers herded employees into the warehouse, separating managers from the rank-and-file workers for questioning, and refusing to admit a company attorney.

"I couldn't believe it, for a while, and then I--like everybody else--was scared to death," says PHE Vice President David Groves, a department supervisor at the time. "They treated us like criminals. We couldn't make phone calls, we couldn't touch the computers."

Indictments were handed down in neighboring Alamance County, because investigators had set up the raid by having PHE products delivered there. They considered Alamance more conservative, and therefore more likely to return a guilty verdict than a jury in more liberal Orange County, where District Attorney Carl Fox had said publicly that PHE was obeying the obscenity laws.

The Alamance trial in March 1987 brought a decisive victory for Harvey. A jury took less than five minutes to reach a not-guilty verdict on the charges of disseminating and offering to disseminate obscenity.

But that was just the first round.

The U.S. attorney for the Eastern District of North Carolina, Sam Currin, then went looking for other venues in which prosecute Harvey.

"We also need to locate some other district attorneys who will prosecute Adam & Eve in their districts," Currin wrote in a staff memo of March 30, 1987, four days after the Alamance verdict.

After two years of living under threats of indictments from Currin and prosecutors in Utah (who had ordered PHE merchandise similar to the Alamance case), there was a moment in 1989 when Harvey and his legal team considered pleading guilty and paying a $750,000 fine to call a truce.

Harvey recounts the turning point in his book. In a law firm conference room, during a conversation about a plea bargain, Rudolf stood up and said: "Goddammit, we're talking about the First Amendment here! If you don't stop the government, who will?"

Rudolf's outburst echoed Harvey's convictions, and he says the option of giving in suddenly seemed unthinkable.

"It was becoming more and more clear to me that a guilty plea on our part would lead to the annihilation of one company after another. ... Five or six of our competitors were going down like pins," he writes.

The federal government's strategy, revealed in court records, was to bully PHE and similar companies out of business by bringing suit in several jurisdictions at once, a tactic designed to bankrupt the companies with defense fees, intimidate them out of operation, or both.

"It was all an intimidation thing," says Rudolf. "Their strategy was clear--indict PHE in as many places as possible to shut them down."

Harvey really dislikes a bully. In March 1990, weary of defending his company on so many fronts and appalled by the government's approach, he decided to take the offensive. Harvey sued the Department of Justice, accusing the government of abusing its power by using the multi-jurisdictional approach to prosecute obscenity cases.

In September of that year, the U.S. attorney's office in Utah brought more indictments against Harvey. In December 1992 and May 1993, Alabama officials also got involved, staging two smaller raids on PHE's headquarters west of Carrboro.

In November 1993, as Harvey's lawyers pushed forward with his civil suit, subpoenaing government records and memos and preparing to go to trial, Utah dropped its case. Later that month, an attorney for the Justice Department told a judge that the government would change its policy to discourage multiple prosecutions in obscenity cases, a change that became part of the department's official handbook.

One month later, the war ended officially. Faced with the civil suit challenging and exposing its tactics, the Justice Department agreed to halt all prosecution of PHE for any obscenity-related violations in any jurisdiction. In exchange, Harvey agreed to drop the civil suit and plead guilty to one of the Alabama charges, that of violating postal regulations.

"It was one of those great moments lawyers have, when you feel like you were part of a fight that was bigger than you," says Rudolf, whose career in criminal defense cases has earned him a national reputation. "I think we had a real impact on preserving a piece of the First Amendment. We stopped a strategy that would have worked."

Harvey had held out for eight years, refusing to quietly fold his tent and go home.

Today, PHE and its subsidiaries, including Adam & Eve, occupy a large office building and warehouse complex in Hillsborough's Meadowlands Business Park. When the company moved from its old location west of Carrboro to the Orange County seat seven years ago, there was some furor from local ministers and other protesters. But that was the last ripple of controversy.

The Adam & Eve division--the largest within PHE--did $66 million in sales last year, up from $30 million in 1990. The company's first three retail stores in Raleigh, Greensboro and Fayetteville have opened in the last 18 months. ("It seemed like fun," Harvey says of the stores.) The newest branch of the company, Temptations Parties, has grown to nearly 70 independent distributors across the United States in the less than a year.

"We rely on the creativity and the energy of a lot of people," says PHE Vice President Groves. "People here perform hundreds of miracles every day."

Employees say their esprit de corps is one unintended byproduct of the federal siege. Employee Cindy Lutz remembers feeling committed to her colleagues and her company as she stood with co-workers over copy machines they rented so authorities couldn't walk off with their only copies of hundreds of company records after the raid.

"I had this tremendous faith that we weren't doing anything wrong," says Lutz, who was working in the marketing department when a co-worker told her there were law officers storming their reception room. "There was a feeling of 'us against them.' Our morale was probably higher than ever that day."

"This is a free-spirited place to work," says employee Marlene Janssen. "They encourage creativity from everybody, and they let you challenge boundaries."

Employees have proposed at least two successful ideas in recent years: AdamMale, a line of merchandise that caters to gay men; and Temptations Parties. The latter was the brainchild of Jannsen, a former Playboy centerfold (Miss November 1982) who came to PHE after a career selling chemicals and Yellow Pages ads.

The idea behind Temptations Parties is similar to Tupperware or Pampered Chefs: A host or hostess invites a group of friends over, and a PHE distributor brings an array of merchandise. In eight months of parties, Janssen has seen everything from bachelor and bachelorette parties

to Sunday-school teacher gatherings. The parties attract buyers who might be embarrassed to walk into a retail store or order a catalog through the mail, she says.

"Everybody has their own view of sexuality," Janssen says. "It gets born and reborn every day. People don't need to walk around talking about it."

Janssen's 10-year-old son knows all about her job. "When he's in his teens, there will be condoms in the candy jar at home," she says. "I really believe that we promote sexual health."

This practical approach to sex runs throughout the ranks, and employees sometimes chuckle at how little the nature of what they sell really affects their jobs.

"We're just normal people really," says new product buyer Charles Huff, who endured the second Alabama raid in 1993. "We act in a professional manner. There are no wild parties going on behind closed doors."

Employees enjoy perks like a 37.5-hour workweek that ends at 2:30 p.m. on Fridays, bonuses and profit-sharing.

"There's a family feeling to the place," says Harvey, surveying the call center where workers cheerfully answer phones and take orders. "Even though we're not threatened by outside forces, there's enough of a siege mentality--the 'what do you tell your mother?' syndrome--to draw us together."

There's also an air of tolerance in the office, because, well, uptight people generally don't apply for jobs there.

PHE is also known as a "good corporate citizen" around Hillsborough. It's a member in good standing of the local Chamber of Commerce and makes generous contributions to local nonprofits such as Planned Parenthood. With 300 employees, it is the sixth-largest private employer in Orange County.

"We have 30 years of history. We're not some fly-by-night company in somebody's garage," says Lutz. "We have been and will be as reputable as some company you would buy a computer from."

PHE officials, employees and attorneys say they don't worry about a second war with the government, even though there's a Republican in the White House again.

All PHE materials are reviewed by certified sex therapists, a practice the vice president says gives the company a safety net.

"We realize there are people in influential places who disapprove of what we do," says Groves. "But we have a real understanding of the legal issues, and we are sensitive to areas where we might be vulnerable. We have the utmost confidence that what we sell is good and healthy."

But the waters are still muddy when it comes to defining what's illegal under current obscenity laws.

"It's a question of who's offended--it's in the eye of the beholder. It's not like larceny, where it's clear," says Orange District Attorney Fox. In 1985, Fox drafted the "community standards" for Orange County that still stand. They define child pornography, bestiality and sex involving violence or bondage as "material subject to prosecution." Fox finds PHE to be in compliance.

Today, people who follow First Amendment issues say that if the Bush administration chooses to hunt obscenity, it will likely start in cyberspace.

"I think the focus will be much more on the Internet," says Rudolf, who has recently defended several college students accused of downloading pornography off the Web. "And what Adam & Eve ships is so middle-of-the-road compared to what else is available on the Internet."

Fox believes society's tolerance for nudity and sexuality in the public domain has changed significantly in the 15 years since the siege on Adam & Eve began. For example, he contrasts presidential candidate Gary Hart being forced out of the 1988 race for cavorting with a mistress with President Clinton's Monica Lewinsky scandal.

Harvey sees the drug war as the next major threat to civil liberties in the United States. He also worries that the federal government seeps surreptitiously into schools, churches and other institutions via its deep pockets.

"Once federal money comes in, people will alter their behavior in the most awful ways to keep it coming," says Harvey, whose next book is called Government Creep.

"The long-term trends are positive. We're not going to outlaw Ulysses or Lady Chatterley's Lover," he says. "But I'm not nearly as optimistic about the natural tendency of things for government to grow and liberty to yield."

ACLU President Nadine Strossen writes in the foreword of The Government vs. Erotica: "This story is about freedom as an ongoing process, demanding not only eternal vigilance, but eternal activism."

Rudolf puts it another way.

"When you're dealing with a bureaucracy like the government and they're trying to eat you, you can either be a juicy, tasty piece of filet mignon, or you can be a spiny cactus," says Rudolf. "We wanted to make ourselves as indigestible as possible." EndBlock

  • How an Orange County business fought the feds and helped make the world safe for sex toys.

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