This story is from freelance reporter MARTHA SANCHEZ-AVILA, who initially covered Fabulis’s financing for Reuters.com. –Alex
Jason Goldberg says he has no plans to sue Citibank after the company blocked him from accessing his startup’s bank account for several days, citing a problem with the content Goldberg had posted to his startup’s blog.
The repeat entrepreneur says he will, however, pull the startup’s money out of the Citibank account by Monday and will look for another bank.
Goldberg runs Fabulis, an Internet startup which promotes networking for gay men and was shocked to learn that Citibank had recommended terminating his company’s corporate account based on what its compliance officers read on his blog.
The blog features startup news, pictures of men’s underwear for sale with the startup’s logo and videos of gay men talking about themselves. None of the content is sexually explicit.
After more than three hours of telephone calls to the bank, a manager informed Goldberg that Citibank had reviewed the Fabulis blog and determined that the company’s content “was not in compliance with Citibank’s standard policies,” Goldberg says of the discussion.
“I did not know that they did a content review,” he says. “That is really scary.”
One of the reasons Goldberg cited for not suing Citibank was that as much as 10% of his personal wealth is invested in Citibank stock.
“I want a proper apology and to move on,” he says. <<UPDATE: Citibank Division Manager William E. Brown has formally apologized to Goldberg via email.>>
Earlier, a Citibank manager called Goldberg to apologize for the account snafu after prominent bloggers wrote about Goldberg’s experience. The manager said that the blog had been reviewed by three Citibank employees over a 24-hour period and that each had recommended the bank account be terminated.
Goldberg, who previously founded tech companies Jobster and Socialmedian, came up with the idea for Fabulis while working in Europe. He said that when his boyfriend visited from the United States, they were unable to find many gay-centric activities online.
The sites he found were “representing 50-year old women, but not addressing my demographic,” he said. “I realized then that I needed to create a product that I wanted to use.”
Goldberg recently received $625,000 from investors to get Fabulis up and running. The seed-financing round was led by The Washington Post Co. and various individual investors, some of whom previously backed Jobster and Socialmedian, which Goldberg sold to Xing last year. Individual backers include Allen Morgan, a venture partner of the Mayfield Fund; Don Baer, worldwide vice chairman of Burson-Marsteller; Lars Hinrichs, CEO of Xing; and three other undisclosed investors.
Goldberg says that he has never faced this type of incident before in business. “This raises some interesting first amendment rights,” he says. “It’s a gay website.”
UPDATE. WE REACHED OUT TO CITIBANK TO GET IT’S SIDE OF THE STORY. HERE IS THE COMPANY’S OFFICIAL STATEMENT:
Citibank sincerely apologizes to Mr. Goldberg for this misunderstanding. This situation had nothing to do with the content of his web site and any comments by our staff to the contrary were incorrect; we are reviewing what happened. This was a technical issue about missing documentation that is required for new business accounts. Once we resolved the situation, we unblocked the account immediately. Mr. Goldberg is a valued customer and we appreciate his business. Also, Citi is strongly committed to diversity, including support for the gay, lesbian, bisexual and transgender community, and other organizations promoting diversity. In fact, this week Citi has announced the financing for the True Colors Residence, a housing facility for homeless GLBT youth in New York City.
Citi Public Affairs
In addition to the statement above, Julavits also wrote to us via email:
Banks are required by law to conduct due diligence and understand the nature of business accounts. For Internet business accounts, we specifically reserve the right not to open, or to suspend, an account if we find illegal or discriminatory content.