It is business as usual in government, despite a president who was elected with a promise of hope, change, and the end of, well, business as usual.

At a conference of the nation's governors in Boston this past weekend, the main topic of conversation was the country's ongoing economic woes. Above all, the governors say, their states need jobs. California may be the headline basket case, with an unemployment rate of 12.4 percent, but my home state of Nevada is even worse—a whopping 14 percent.

So you would think a small businessman like John Stagliano would be held up as a model of entrepreneurship in the United States of 2010. Stagliano built his Southern California company from scratch into a business now worth millions, creating dozens of full-time jobs with benefits (and providing well-compensated work to hundreds of others, too). Included among those jobs were hires necessary for the specific purpose of compiling the bureaucratic paperwork his industry is required to maintain by various levels of government.

Despite the red tape, Stagliano's California business, Evil Angel, has thrived. Then in 2004, Stagliano invested millions into the Las Vegas economy with an original, dance-centered production show on the Strip. The Fashionistas ran for years, far outlasting better known competing Broadway-generated titles such as Avenue Q, Spamalot, and Hairspray. The show proved a surprise favorite with critics, myself included, who were awed by the artistically ambitious choreography, costuming, and tight storyline told through music and dance.

I became friends with Stagliano after he closed Fashionistas to concentrate on Evil Angel, and so it seemed unlikely I would ever be called upon to write about him again. But then in 2008 something shocking happened: Stagliano was charged by the United States government with enough crimes to potentially put him in prison for the remainder of his life. How could this happen?

Because outside Vegas, Stagliano's day job is as a pornographer. Indeed, within the subculture of pornography, Stagliano is revered for being the originator of the "gonzo porn" genre, in which the viewer is brought more directly into the proceedings, often via performers themselves holding cameras. Stagliano has won numerous artistic awards from his indutry peers, almost too many to count. His movies are taught in graduate film programs, and psychiatrists have used them to treat patients with sexual issues.

Evil Angel not only distributes Stagliano's films, but also the work of other directors he hand-picks. In this, Stagliano turned out to be as good a connoisseur as director. By 2008, the year he was charged with obscenity, Evil Angel was perhaps the most successful adult DVD distributor in the country.

Stagliano was an economics major in college, and with Evil Angel he transformed the business model of porn. Before Evil Angel, traditional adult companies gave directors a flat budget for making a movie, then pocketed the profits. What was not spent on the actors, set, and production became the director's take-home pay. Once the director turned in the completed movie, he no longer held any financial stake in the project. The obvious economic incentive was to make the cheapest porn movies possible.

Stagliano instead entered into partnerships with his directors: They paid to make their own movies, Evil Angel paid for distribution and marketing, and the profits were split between the two. The result was that many of the best directors in the adult movie world immediately partnered with Evil Angel in order to maintain ownership of their work and have a unique chance at earning royalties from DVD sales. That a libertarian insight underlines Evil Angel's business practice is no accident; Stagliano is a committed libertarian and a donor to the non-profit Reason Foundation, which publishes this website.

Stagliano has operated Evil Angel this way for decades, which means he must comply with complicated government regulations set out specifically for his work. (Even his current prosecutors make no claim to the contrary.) Though the Justice Department in this case is essentially arguing that pornography is just a synonym for obscenity, that would seem to conflict with government rules such as the 2257 rule, a 1980s-era regulation requiring companies like Evil Angel to maintain documents proving that all of their performers in sexual videos are adults. Doesn't 2257 imply that pornography with adults, made for adults, is not a crime? Or is all pornography now obscenity?

The answer, and its history, are complicated. Obscenity law in the United States evolved piecemeal after the courts attempted to specifically define an obscenity exception to the First Amendment for the first time in 1957's Roth v. United States. The Roth case, with a majority opinion written by Justice William Brennan, created the first standard for distinguishing obscenity from First Amendment-protected expression: Whether "to the average person, applying contemporary community standards, the dominant theme of the material taken as a whole appeals to the prurient interest." This definition did not work.

In the decades since Roth, judges have tried and failed to develop an objective test separating porn from obscenity. The problem is, quite simply, defining what obscenity means. Currently the courts use the Miller test, which dates back to 1973's Miller v. California, again applying "community standards," though carving out protection for works that have "serious literary, artistic, political, or scientific value." Miller, like Roth, is more than a bit antiquated in our Internet age.

But doubts about the efficacy of obscenity tests long pre-date the Web. As the late Justice Brennan, who kicked things off with Roth, eventually came to conclude in a withering 1978 dissent:

I would place the responsibility and the right to weed worthless and offensive communications from the public airways where it belongs and where, until today, it resided: in a public free to choose those communications worthy of its attention from a marketplace unsullied by the censor's hand.

In other words, let the consumers and not the courts decide what is too obscene for a community. That bit of judicial wisdom has yet to take legal root.

But none of this history explains the prosecution of John Stagliano in 2010 for making movies with consenting adults and selling them to other consenting adults. When did his business suddenly become criminal? Why has the power and majesty of the United States government, the financial and personnel resources of the FBI, all joined forces now to try and send Stagliano to prison?

Here is the final piece of the puzzle. In 2005, under then-President George W. Bush, the Department of Justice formed the Obscenity Prosecution Task Force (OPTF). The ideological slant of the task force's "mission" is clear from its website: "Enforcement is necessary in order to protect citizens from unlawful exposure to obscene materials." In Stagliano's case, for example, an FBI special agent special-ordered movies that Evil Angel distributed. He then purchased the DVDs on the taxpayer's dime. There was never a single complaint from any actual citizen.

Last week, after much delay, Stagliano's trial finally began in Washington, D.C. So far little has happened in the courtroom, though the tiny events have been ominous. District Court Judge Richard Leon ruled that Stagliano cannot use expert witnesses, and shut the press out of the jury selection process (which, after a full week, has yet to finish). Things don't bode well for a free and open trial: The courtroom monitors that will display the crucial evidence are all arranged to be out of the sightlines of press and interested citizens, viewable only by jurors and lawyers. If the press and the public cannot see the evidence, how will we know if the trial is fair?

More importantly, why is this ridiculous case still going on at all in 2010? Justice Department inertia and business as usual seem to be the general explanation. The current attorney general may or may not approve of what Bush's Justice Department did, but he clearly lacks the desire to alter those choices. The result is that, because of Stagliano's unique stature in the adult world, this is the most important obscenity case of the century.

Nor will it be the last clash between government and porn. The OPTF is still out there, playing at movie critic, deciding which porn is fine and which is obscene. Unlike previous prosecutions of more fringe figures in the adult world, Stagliano is at the center of the industry, and among the most auteur-oriented directors that porn has ever known. If he loses this case, almost any current adult content could be declared obscene.

Is this the job you want the government doing? Do you feel "protected," as the OPTF site says, by the continuing work of buying porn with taxpayer money?

Well, forget hope and change. The Obama administration has opted for business as usual.

Richard Abowitz has chronicled the rise and continuing fall of Las Vegas for the Las Vegas Weekly, Vegas Seven, and the Los Angeles Times, most notably at the Movable Buffet blog. He now blogs chiefly at GoldPlatedDoor.com. He will be covering the Stagliano trial for Reason, and can be followed on Twitter at @RichardAbowitz.