The founder of Flix Club, the now defunct family-friendly edited-movie business, was arrested along with a Springville man Thursday night on charges that they paid two 14-year-old Orem girls for sex.

Thompson, owner of the edited-movie retail store at 908 S. State St. in Orem, was arrested on two charges of forcible sexual abuse and two charges of unlawful sexual activity with a 14-year-old. Lifferth was arrested on two charges of forcible sexual abuse, a charge of unlawful possession of a prescription drug, two charges of aiding prostitution, two charges of unlawful sexual activity with a 14-year-old and two charges of patronizing a prostitute.

According to a report Thursday by John McCombs, an investigating officer with the Orem Police Department, Thompson told the girls that edited movies were sold at Flix Club as a front, but he and Lifferth actually made and distributed pornography.

Thompson, a former dealer of edited movies with CleanFlicks, started Flix Club at the same address after the dealership was terminated at a time when the Hollywood movie industry was bringing legal pressure on businesses that edited movies.

Flix Club was forced to close last year in the wake of a landmark federal court ruling that said several movie-editing businesses violated U.S. copyright laws when they altered movies to remove nudity, profanity and other offensive content and offered "sanitized" versions for sale.

According to Orem police, on Jan. 22 a mother discovered that her 14-year-old daughter had a $20 bill and asked her where it came from. The girl told her mother that she and her 14-year-old friend had been paid for oral sex by an older man. The woman contacted police the same day, Edwards said.

The two 14-year-olds told police they decided to trade sex for money in order to move away from home, according to McCombs's report. They were assisted by a 16-year-old girl who sent text messages to several friends, and Lifferth responded to one of those, the report said. After more messages, they arranged to meet.

According to the report, he picked up the two girls on Jan. 19 and took them to a parking lot in an unknown apartment complex where he paid them $20 each to perform 15 minutes of oral sex on him.

The girls contacted Lifferth again and he took them to Flix Club in Orem on Jan. 22, where both girls agreed to perform oral sex on his friend Thompson, according to the report. One of the girls noticed that the store had video cameras and Thompson took them to his office where he said there were no cameras.

According to the report, Thompson asked the girls if they were over 18 years old, and they said they were. Again they were paid $20 each. Thompson asked the girls if they would participate in producing pornography and they said they would not.

After her mother reported the incident, one of the girls contacted Lifferth again and asked to meet. In interviews with police, both men said they thought the girls were 18, the report said. Both men have been booked into the Utah County Jail several times in the past.

Police also interviewed the 16-year-old girl, who said that she met Lifferth in "the summer" at Thompson's Flix Club business, where her father has been renting videos for the past three years. The girl had sex with Lifferth at least 10 times, the report said.

"The sex has taken place in Isaac's car, his apartment and inside [Flix Club] where the camera may have recorded," McCombs reported. Lifferth admitted to having sex with the 16-year-old but denied recording it.

The father of the 16-year-old, who spoke on condition of anonymity, said he found out about Lifferth's relationship with his daughter from her therapist a few weeks ago.

"She has been seeing a therapist because of the difficulties she's had since she was 11 or 12. She was going through puberty and a lot of stuff. Her therapist, after finding out what she was doing with the men, thought it was a safety issue and told me about it," he said.

He said that's when he contacted the police.

"It's very alarming. I've always tried to stress to my daughter and her siblings to be careful about who you hang around with. I think everyone has responsibility, even kids. But adults are more culpable," he said.

"I knew Daniel and I had liked him. He seemed real personable, friendly, outgoing and very kind to me. I brought my daughter in to rent edited videos when she was 14 years old. I knew both Daniel and Isaac, whom I believe is his business partner. He seemed to be real polite and decent."

"Then I saw my daughter starting to hug Isaac. It started last spring, and Daniel told me it was OK," he said.

Edwards said a decision whether or not to charge the two 14-year-old girls with a crime has not been made yet.

A police search of Flix Club found a large quantity of pornographic movies -- 10 to 20 copies of some titles, and two cameras, according to the report. Lifferth said he and Thompson had purchased pornography but had not sold or rented any. Thompson claimed to have purchased the pornography for his own use, the report said.

A large keg of beer and a large quantity of alcohol was also found, as well as Lortab pills without a prescription bottle. Lifferth said he purchased the Lortab from a friend, and he did not have a prescription.

The men were detained as the store was searched, and police confiscated numerous items, including computers.

"I would have never suspected there was other stuff going on," the father of the 16-year-old said. "I guess I didn't know Daniel. He always seemed like a real decent guy."

He said he believed that Flix Club is closed to the public but not to some existing customers because they are still waiting for edited movies that were ordered but not yet delivered.

For Troy Slade, owner of modest-clothing retailer Mod Bod in Orem and Pleasant Grove, the news was startling. Thompson managed the Mod Bod store at 910 S. State St. in Orem. He was fired last year, Slade said.

"We hired him to manage our store because he had a successful business running CleanFlicks at that time," he said. "He was always talking about fighting Hollywood for the good of the children," Slade said.

Thompson also was founder and former member of Truth in Politics, a group started in 2006 purportedly to expose the people behind anonymous political attacks. The idea for the group was conceived at Thompson's former CleanFlicks dealership in Orem.