Seth Warshavsky, the 26-year-old Internet porn mogul, runs one of the best-known entities in the fast-growing world of e-commerce. Last week he was listed 40th on Time magazine's list of "technology's 50 most important faces." He now courts Wall Street and hopes to take his company public in the near future.

An aggressive entrepreneur, Warshavsky is best known for his media coups--including distribution of the home video of actress Pamela Anderson Lee and husband Tommy Lee having sex, and nude photos of talk show shrink Laura Schlessinger. His successes have brought his company, Internet Entertainment Group, both windfall profits and near-constant press attention.

But this week he has found himself fighting troubling accusations of current and former employees. The allegations, made in sworn statements, include overcharging thousands of customer credit cards for memberships to pornography Web sites. They also say the company's revenues are substantially less than Warshavsky has said in public statements.

Warshavsky denied the allegations. He said instances of multiple charges were accidental and the customers who were overcharged have been reimbursed. He also stands by public statements that his company's revenues are about $50 million per year, though he acknowledged that he has had cash flow problems and "an accounting mess" this year.

The allegations were filed in connection with a suit he brought against two former executives and a company lawyer. Warshavsky accused the three--Evan Wright, Bert Reitsma and Eric Blank--of violating a non-compete clause in their employment contracts and stealing an IEG e-mail list. The three deny any wrongdoing.

Warshavsky settled the lawsuit late Monday afternoon in exchange for the two former employees--Wright and Reitsma--signing a statement saying that information they provided to The Washington Post "may be incomplete and could be inaccurate." The company lawyer, Blank, did not sign such a statement. "I told you nothing inaccurate," he said.

Before the settlement Monday, eight other former or current employees had signed statements that were submitted to the court about their knowledge of irregular financial activities at the Seattle-based company. Wright, Blank, Reitsma and another former employee said they severed their ties with Warshavsky because they did not want to be implicated in what they feared were illegal actions.

Ron Chao, the company's chief technical officer from June to late August, said in an interview and in an affidavit that he left IEG after Warshavsky pressed him to overcharge credit cards. At the time, the bank that processed the company's credit card transactions had been withholding funds, according to Chao.

In the affidavit, Chao said: "Seth demanded that I cause the billing system to generate between $400,000 to $2 million on various occasions. This is in addition to the normal daily revenue generation. At first, Seth told me that we would credit the people we were 'double-billing' (to generate revenues, we were charging credit cards that had already been charged for the same purchase); then later he told me not to credit anyone unless they called to complain."

In an interview, Chao recalled: "I heard Seth get angry when he saw customer service was crediting people. . . . He said, 'Don't you [expletive] do that.' " He said Warshavsky continued to pressure him "to double- and triple-bill credit cards," at times storming into his office and unleashing a stream of verbal abuse and insults, including calling him a "slant-eyed baboon." Witnesses confirmed the verbal abuse and the ethnic slur. Warshavsky said he was sometimes "difficult" but never made such a remark.

Chao said after he realized that reimbursements were not in the works, he stopped the overbilling and tried to stall Warshavsky.

When that didn't work, Chao continued, "that's when I walked away. I didn't want to participate in what Seth wanted me to do."

An Aug. 19 e-mail from Chao to customer service director Deanna Hepp states, "Here is the list of duplicated charges that we ran through Epoch [the credit card processor] for July 21-31 on purpose." Attached was a list of 4,000 credit card numbers. The e-mail tells Hepp to credit the charges back to customers through a different bank, but Chao and others who gave affidavits say that so far as they know the reimbursements were not made.

Hepp, who no longer works for the company, denied any knowledge of such practices and said any talk of double-charging in the office "may have been a joke."

Chao quit on a Friday. Reitsma, IEG's chief operating officer from June to September of this year, took over his duties. The following Monday, Reitsma said, Warshavsky asked him to overbill credit cards to generate $2 million. He said he responded that he did not know how to do that. Reitsma, a computer engineer, said the response was meant to put Warshavsky off. "I decided to leave IEG as soon as possible," he said.

Asked about these incidents in an interview last week, Warshavsky stated, "That is absolutely infactual. Completely untrue whatsoever."

Instead, Warshavsky said, there was a problem about six months ago when a number of customers--he couldn't remember how many--were mistakenly billed multiple times due to a "computer glitch" related to an IEG Web site called Voyeurdorm (a "real-life, adult version of 'The Truman Show' " with "47 cameras, 7 Women, 1 House"). Those customers were accidentally billed up to five times each in a 50-day period, he said, but were all reimbursed.

He said there was no instance of overbilling in August of this year. "There is no way in the world," he said. "It's absolutely absurd, unless Bert didn't understand what I asked him to do." Then Warshavsky noted that Reitsma was being sued by the company and should not be considered a credible source.

Other ex-employees have supported allegations of deliberate overbilling in affidavits filed in connection with the lawsuit.

In one of them, accountant James Trujillo said he heard Warshavsky direct Chao to charge credit cards "without regard to whether these cards were held by active members or not."

Trujillo confirmed his statement in an interview with The Post.

In another, Sabrina Lytton, who began working in IEG's customer service department in December 1998, said that the company received "hundreds of calls" that month from irate customers who had been erroneously charged by IEG after having canceled memberships, or who complained of multiple billing of a single membership.

Lytton did not return phone calls.

Though Warshavsky strenuously denied any financial wrongdoing, he acknowledged that his company has experienced accounting difficulties this year, and did not grow as much as he'd hoped.

He said the company has been without a controller, and just hired a chief financial officer after more than a year without one.

"Our books aren't 100 percent in order. It's not perfect. We need to get it together," he said. He said the situation is more difficult because of the departures of Reitsma, Wright (who oversaw the editorial content of the Web sites) and Blank, the company lawyer. Because of all that, he said, IEG has an "accounting mess," and will delay its public stock offering by a month.

None of these problems were apparent from most of the media reports on the porn company. Earlier this year, Worth magazine said, IEG's growth has been "between 100 percent and 300 percent each year, nearly matching Wall Street favorite Amazon.com." And Time magazine wrote in a recent special supplement: "This is no money-losing Internet company: profits this year were $15 million."

Reitsma, who ran the company day to day and drew up its budget, said in an interview last week that IEG took in between $700,000 and $900,000 a month during his tenure there.

Warshavsky said that Reitsma's estimate of IEG's revenue is "grossly, grossly, grossly, grossly inaccurate. . . . We did $49 million in revenue last year." Warshovsky provided the Post with confidential sales reports and statements from the bank that processes some of its credit card transactions showing revenues well in excess of Reitsma's figures. Warshovsky said company had substantial additional revenues.

Employees said in the affidavits that in the past year their paychecks frequently bounced. Court papers show that many vendors are suing IEG.

According to Reitsma and others who worked for IEG for several years, Warshavsky often did not pay creditors until they sued. They said phone service was cut off twice in the past several months.

Reitsma, who said that his very first check from IEG this spring--for $20,000 to cover his moving expenses--bounced, recalled that Warshavsky "would say, '[Expletive] 'em,' go find another vendor. There is always another vendor.' And in many cases he's right. Many times there is another vendor. But it became a problem over time because word had gotten around about this. We were being blacklisted, like by recruiting agencies."

Fifteen suits by creditors have been filed against IEG in Superior Court in Washington state since 1996, and a number of other cases have been brought against the company in small claims court. According to Blank, IEG's attorney of record on a score of cases, there are several dozen more across the country. Most have been settled.

Asked about these issues, Warshavsky said that the company's revenues are up slightly and its cash flow situation is now in order. "We would never do anything that wasn't 100 percent aboveboard. We may slow-pay someone if we're having a cash crunch, but double-billing people deliberately--never ever."

He added, "We wouldn't jeopardize our business."

CAPTION: Seth Warshavsky says his company's books "aren't 100 percent in order," but allegations of intentional overbilling are "absolutely infactual."