Teen Worker Sues DEN, Its Founders on Sex Charges

A former employee of Digital Entertainment Network has sued the bankrupt company and its three founders, accusing them of inducing him into sexual relationships after hiring him as 15-year-old actor.

The teen’s suit, filed in Los Angeles County Superior Court, names as defendants the company known as DEN, former Chairman Marc Collins-Rector, and former executives and co-founders Chad Shackley and Brock Pierce.

The suit alleges that Collins-Rector and Shackley plied the youth, who is now 18, with such drugs as Ecstasy, Percocet and Valium. It also alleges that they took him on out-of-state vacations and gave him presents, including $5,000 for a car, Versace clothing worth $15,000 and a Rolex watch worth $3,000. The suit seeks unspecified damages for negligence, assault and sexual harassment and discrimination.

None of the defendants could be reached for comment. Neither their attorney, Ronald Palmieri, nor DEN’s bankruptcy lawyer immediately returned telephone calls Friday. The suit also names DEN employee Darren Betencourt, who also could not be reached. Santa Monica-based DEN filed for bankruptcy liquidation last month after dropping its plan to sell $75 million in stock to the public.

The three founders left the company last fall, after Collins-Rector settled a sex molestation suit by another teen who had worked at his previous company, Concentric Networks. Longtime partners Collins-Rector and Shackley co-founded Concentric in 1991 and made millions when they sold control to other investors.

The FBI is investigating allegations contained in the first suit, and at least three teens have testified before a federal grand jury in New Jersey, where the first alleged victim lived, according to sources familiar with the proceedings.

At its peak, DEN had more than 300 employees and boasted of investments by Microsoft, Dell Computer, NBC and other major technology and entertainment companies.

The company won national attention for its pioneering and ambitious strategy for putting youth-oriented video programming on its Web site.

But DEN burned through more than $60 million in two years after spending heavily on show production and executive salaries that topped $1 million.

Turnover at the company was high, and a number of staffers felt uncomfortable because of the overlapping business and social lives of the three founders, who lived together in a multimillion-dollar Encino estate.

Some employees were asked to work at the mansion instead of at DEN’s main offices, and others were asked to accompany the three on vacations.

The names of the two teens who have sued are being withheld by The Times because they were minors when the incidents occurred.

The new suit says that the teen was initially hired in 1998 for a part in “Chad’s World,” DEN’s first production, which was about a teen, confused about his sexual orientation, who moves into a California mansion.

That show was taped at the Encino estate and briefly distributed via e-mail before DEN developed a roster of more than a dozen other shows, which failed to win a significant audience.

After “Chad’s World,” the teen was paid $4,000 a month to work three days a week as a computer technician at the Encino estate.

In September 1998, when the boy was 16, Collins-Rector gave the boy alcohol and made sexual overtures, the suit alleged. It was later made clear that he would have to go on the vacations to continue working at DEN, it said.