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Sunday Times article version one

Category : Internet, Journalism, Sex.com · by May 26th, 2007

To find out what on earth this is all about, please read this blog post.

“In all the years you’ve been chasing me, you have never got a single asset in my name. And you never will.”

That was how Stephen Michael Cohen made it plain to the man sitting opposite him – a man who had been on his trail for over a decade – that he would never admit defeat. The statement was all the more poignant given the fact that Cohen was wearing an orange jumpsuit, standard-issue to inmates at the Santa Clara correction facility. Even though he was in jail, with no date set for release, and the man he was addressing was his best route out of there, Cohen remained defiant.


Gary Kremen had been after Stephen Cohen since 18 October 1995 – the day Cohen stole his most valuable possession. He had fought him through the law courts, against the odds, and won a ground-breaking $65 million court judgment in April 2001. And then he had traced and chased him as he fled across the US border rather than pay up. Through Europe, across Asia and around the Middle East, Kremen pursued both the man and his money before Cohen was finally arrested in Mexican border town Tijuana on 27 October 2005. Ten years. Nearly a quarter of his life spent trying to capture a thief.

But it was no ordinary possession that Cohen had stolen. It was the most valuable piece of real estate that exists on the Internet – sex.com.

The value of those three letters, even in the age of Google, is enough for it to have fetched $12 million in January 2006. But back when Cohen stole the domain name in 1995, most people hadn’t even heard of the Internet. And when Kremen first registered it in May 1994, he didn’t even have to pay for it. So long as the name hadn’t already gone, it was yours for free. By 1999, it was a different story, and just being able to put up a webpage at sex.com was sufficient to bring in $1 million a month. Which is what Gary Kremen would have done had it not been stolen from under his nose by Cohen who used it to build an international business empire.

How do you steal a domain name worth millions? Well, the story has always been that Cohen forged a letter purportedly from Kremen’s company that stated it had fired Kremen and was handing over sex.com to one Stephen Cohen because he had prior trademark rights in the name.

That forged letter exists, but after years of investigative work it has been discovered that Cohen had already stolen the domain when he forged and then backdated the letter to cover his tracks (and make sure the real method by which he had stolen it wasn’t discovered). Stephen Michael Cohen, if you hadn’t already figured it out, is a con-man. A very, very good con-man.

In as far as you can draw up the characteristics of a man who is willing to lie and cheat for a living, to lead a life outside society, and deceive for personal gain at any opportunity, Stephen Cohen fits the bill exactly. Highly intelligent, but with poor schooling and no father figure, he tried to enter the establishment, failed, and then rejected it absolutely. The result was a tendency to slip into fantasy and a pathological desire to break society’s rules.

Horatio Bottomley, the flamboyant MP for Hackney South in the early 1900s, who started up the patriotic newspaper John Bull and then proceeded to cheat, swindle and con his way around the UK, lost both his parents at five, and created a fake and glorious ancestry for himself. The inspiration for Conan Doyle’s “Moriarty”, a man called Adam Worth, who stole the world’s most valuable painting (Gainsborough’s Duchess of Devonshire) in 1876, left home at 14, joined the army and posed as a member of the upper classes. Frank Abagnale, the con-man later immortalised by Leonardo di Caprio in Catch Me If You Can, came from a broken home, left it at 16 and spent the 1960s posing as everyone from airline pilots to doctors to sociology professors.

Stephen Cohen saw his family break apart when his father left their home in the Los Angeles suburb of Van Nuys to live with his secretary in exclusive Beverley Hills. Cohen left High School with poor grades, tried to become a lawyer and failed, but decided thereafter to pretend to be one. Over the subsequent course of his criminal career and five marriages, Cohen became a registered private investigator, a locksmith, a repossessor, a software pirate, strip-club owner, shrimp farmer, sex club operator and, eventually, the owner of the Internet’s Holy Grail – sex.com.

He started out ripping off stoned hippies during the Summer of Love, 1967, before moving onto cheque fraud, and then counterfeiting. But his particular genius rests in his understanding of US corporate law. When he discovered the ability to register companies and then declare bankruptcy, wiping out debts, he was unstoppable. The first company he registered was in mocking tribute to his mother’s frequent refrain when he was a teenager. It was called Ynata and stood for “You’ll Never Amount to Anything”.

There were two Ynatas, one in California and one in the British Virgin Islands – where he hid the tens of millions of dollars he made from running sex.com. There were also two companies called Omnitec. And three Sporting Houses. At some point, one of each of these companies was listed as the owner of sex.com. It is impossible to know which because Cohen simply jumbled around ownership of each company as it suited him – making one the subsidiary of another, “selling shares” in one to another, or drawing and redrawing the names of the directors of each.

It was into this world that Gary Kremen – a geek entrepreneur, a man with a computer science degree and an MBA from Stanford – walked, completely unawares.

Kremen noticed his name and email address had changed on the electronic ownership records for sex.com but initially dismissed it a glitch. When, a few weeks later, his address also disappeared, he contacted the company that ran all dotcoms, Network Solutions (NSI), and complained. It said it would investigate. The company then called Cohen, and Cohen called Kremen. Except Cohen claimed to be NSI’s head of investigations and told Kremen they had reviewed his case and found Cohen had legitimate rights in the name “sex.com” so they would not hand it back.

Kremen bought the story, at least for a few months. But it wasn’t until he got his hands on the forged letter that he realised the whole thing had been a clever, calculated con. NSI and Cohen left him with no choice but to sue, except he didn’t have any money, so he accepted a deal to hand over 51 percent of Sex.com to two big names in the adult industry in return for which they secretly funded his legal campaign.

That campaign floundered but was refreshed when the dotcom boom left Kremen personally with millions of dollars’ worth of shares which he cashed in and used to fund a series of new lawyers. It took years but he would eventually win in court. Although not before the case had nearly collapsed three times, and been up to Supreme Court and back twice.

The judge awarded him $65m. But despite hiring a slew of specialist investigators and lawyers, Cohen’s skills at hiding money were too good. Cohen then decided to skip the country, sparking a chase that would eventually result in a gunfight in Tijuana.

What Kremen did get however was Cohen’s house: a mansion in the exclusive Rancho Santa Fe district of San Diego. Cohen couldn’t wire a six-bedroom, eight-bathroom mansion to a Swiss bank account and so, after months of vicious fighting, Kremen eventually won control of it. When Kremen turned up, he found a multi-million-dollar calling card: Cohen’s henchmen had completed destroyed his old home, including pulling out all the toilets and plumbing, wiring, carpets, even trees in the garden.

It took another four years but eventually Kremen got him. Stephen Cohen was arrested while trying to renew his visa and transported over the border. Kremen had only met Cohen once before, but a few weeks after Cohen’s arrest, he was in a small room facing him. That was when Cohen told him he would never get a cent of the money.

And despite another year in jail, during which time Kremen and his lawyers tore into every bank account and property trying to find where Cohen’s estimated hundreds of millions are kept, Cohen was right: they couldn’t find the money. They’re still trying. Stephen Michael Cohen is no longer in jail but he is due in courtroom eight at the end of June in the District Court of San Jose to explain where it has gone. Kremen won’t be there. But his lawyers will.

Kieren McCarthy’s Sex.com details for the first time the extraordinary battle for sex.com. It is out on 21 May 2007. A supplementary website to the book can be found at http://www.sexdotcom.info.

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