On May 19, 1994, Gary Kremen registered
with Internet Solutions the most valuable internet domain name Sex.com.
Kremen got the name for free and without any official contract.
Over a year later, however, he found that the name had been stolen from him by notorious felon Stephen Michael Cohen.
Kremen sued to regain the name and eventually prevailed.
Read the November 27, 2000 court decision here returning Sex.com to Gary Kremen.
It was a long and bitter struggle for Kremen who went through a string of lawyers until guided to victory by Charles Carreon.
In 1998, Seth Warshavsky (ClubLove.com) and Ron Levi (Cybererotica.com) agreed to help fund Kremen's legal fight to regain the domain name Sex.com. But Warshavsky quickly dropped out of the deal. Levi kept paying to the eventual tune of either $10,000 or $150,000, depending on who you talk to, until he quit in disgust with Kremen's attorney of the time Joel Dichter.
Kremen next gave the case to a female attorney (Katie Deamer) who seemed intimidated by Cohen's crack legal team. She also appeared to be killing Kremen's case, which looked dead until Gary brought on Carreon.
Though many, perhaps most, internet pornographers loathe Cohen, many of them did not think his legal team could be beat. They were wrong.
Cohen's a close friend of convicted crook Michael Milken. They spent time in jail together in Northern California and they talk on the phone several times a day. Stephen met his invaluable business partner Marshal Zolp, a con artist, at the same correctional facility.
Zolp runs stock scams out of Tijuana. He's wanted by the FBI and federal marshalls. American law enforcement can't get the Mexican authorities to cooperate in the handing over of Zolp. Marshal lives under aliases and the Mexican government is not concerned with American financial crimes.
Cohen got out jail first (in 1995). Zolp (who also uses the names James Powell, Werner Wassler and Frank Williams) did time in a halfway house where he created Sporting Houses Management. Zolp has talked about doing a similar brothel in Costa Rica for the fishing industry.
Cohen, a friend of Las Vegas gambling empressario Steve Wynn, owns all the companies connected to sex.com - YNATA, Sand Man, Ocean Fund International, Omnitech. None of them have real boards of directors and nobody else has ownership interest aside from Cohen. He made up the name Sir William Douglas. He read it somewhere and decided to use it. But the real man was never involved. Sand Man and Ocean Fund etc were established to hide Cohen's ownership of Sex.com.
Cohen has incredible energy. He sleeps little. Very crude but interesting say those who know him well. Marshall, a heavy drinker, is a consummate gentleman but Steve is a vulgarian.
Ocean Fund International's much publicized offer to buy Caesars Palace in Las Vegas was a stock play, not a publicity ploy. Cohen owned stock in the corporation expected to buy Caesars, Starwood. He expected the stock in Starwood would plummet based on the news that Caesars was being bought by someone else and then Cohen would buy even more of the company.
11/27/00
Gary Kremens Wins Back Sex.com
XXX writes: Dear Luke: Hello from San Jose! This morning Judge Ware granted Plaintiff Gary Kremen's Motion for Summary Judgment, ruling from the bench that as a matter of law the domain sex.com was stolen by Defendant Stephen Michael Cohen. The Judge ordered NSI to immediately return the domain registration of sex.com to Plaintiff Gary Kremen. In addition, Judge Ware granted a permanent injunction against further transfers of money to overseas banks, ordered deposit of $25 million dollars to the court against damages, and ordered Cohen to provide a full accounting of all profits from 1995 to the present.
Read today's story in the San Jose Mercury News, written before the decision.
From Judge Ware's Ruling:
The Court finds that plaintiff has clearly established (1) a likelihood of success on the merits, (2) that he faces a significant threat of irreparable injury if hte requested relief is not granted at this time, (3) that the balance of hardships tips sharply in plaintiff's favor, and (4) that the public interest will not be disserved by granting the injunction...
Furthermore, the evidence demonstrates that defendants, including Mr. Cohen in particular, appear to have thwarted plaintiff's efforts to obtain discovery of financial information, to have engaged in activities designed to conceal money they have made from the operatio nof the sex.com website, and to have transferred substantial assets to entities for the purpose of avoiding ultimate financial responsibility at th conclusion of this litigation. These wrongful activities have accelerated in recent weeks, and the threat of irreparable injury to plaintiff is imminent.
Read a transcript of Cohen's deposition. Cohen Part Two Cohen Part Three Cohen Part Four
Luke says: In his deposition, Cohen said he only received a salary of $12,000 per year. And for expenses, he received $6.5 million. Cohen recently purchased a three million dollar house. Stephen had put in a million dollars downpayment. He has numerous bank accounts and numerous corporations which appear like classic money laundering schemes.
On Cohen's home loan application, he represented that he earned $100,000 a month from Omnitec, a company (created by Cohen?), which claims that he does not have an employment agreement and has no tax returns relating to him.
The State of Nevada doesn't have tax records for any of Cohen's corporations. They're all incorporated in Nevada. I suspect that most of Cohen's money flows to his British Virgin Islands accounts. The BVI is well known for its laws guaranteeing secret banking.
From 1992-94, Cohen served about two years in prison for impersonating a lawyer.
Some of the best money finders in the world at the US Justice Department have not been able to track Cohen's money.
Cohen tried to keep 50% of his deposition secret but the judge overruled him. Cohen's so smooth and evasive that he didn't give any information which could be considered confidential.
Kremen's lawyers tried to get out of Cohen how exactly I had harmed him to the extent of $50 million (as alleged in Cohen's suit against me) and Cohen could not come up with anything specific.
Stephen's third legal wife, Karen Cohen, says that Stephen had CIA involvement when Stephen was in Panama. Stephen's supposedly a friend of Manuel Noriega.
It's not clear that this is true. It's not clear that Cohen was ever in Panama or he just told his wife that. But Karen says that the CIA came to her directly and asked for files. I don't know if our government has some interest in seeing him succeed.
Now Stephen's married to Rosa Montoya, a woman with big money ties in Mexico. Cohen's consolidated most of his operation in Tijuana, Mexico though he still lives in San Diego.
Why isn't this story of interest to 20/20 or Dateline or 60 Minutes? Instead we just get these lame lazy articles.
Cohen asked that the following portion from his deposition be considered confidential. But the judge denied Cohen's motion.
It's interesting that those parts of Cohen's deposition where he talks about f---ing and sucking six women for five hours, he did not ask that they be kept confidential. No that part of it doesn't embarrass him at all. It's the operative parts of the case - how he got the domain name sex.com. Who helped him to steal it and where the money's gone.
Cohen's a charmer. He can play a room. He loves the litigation game. There are people for whom conflict is a stimulant. And Cohen's lawyer Robert Dorban is a pleasant guy.
Sporting Houses Management thing was a securities scam started by convicted securities defrauder Marshal Zolp. Cohen and Zolp made off with $300,000 from a bunch of dumb people. And that money was probably the seed money for Sex.com. Because right after that scam, they took off to Tijuana and created Sex.com.
XXX writes: "I worked for Marshal Zolp in Tijuana, for most of 1999. Zolp worked with Cohen on nearly all the enterprises you identify. Your information on the Cohen-associated outfits is sketchy, but paints a damning portrait of Cohen. It is deserved. He is a diabolical guy who will stop at nothing to gain attention. He is not the mastermind, however. Zolp is the brains behind the money laundering and the corporations, from Sporting Houses Management to Ynata (pronounced "Why Notta.")"
Prosecutors and FBI agents get up in the morning and they've got their hands full already. They don't need to look up another scam. Prosecutors wait to hear from many people screaming. With Sex.com, who's been hurt? One entrepreneur in San Francisco. It doesn't raise a clamor. Gary's a rich guy anyway.
Cohen's spent his time in jail thinking how not do time anymore. Because he was much sloppier with his scams in the old days. So he stole Sex.com, and started shipping his money offshore through Electronic Fund Transfer. And Kremen and company will never get it. Cohen never needed to send his cash flow through traditional channels. He just skipped over taxes etc...
He doesn't have big chunks of cash coming in, so cash reporting requirements are nonexistent. He's just billing people's credit cards.
Cohen loved owning Sex.com. You can get everybody to look at you if you have a beautiful girl on your arm. But everybody really looks if you have Sex.com in your palm. It makes him feel important and it's hard for him to give that up.
When Cohen went into prison, what did he have? He had a redneck wife, Karen, who did not want to give up on him. Karen was sweet and simple and he had her...
He had high aspirations. When he went to prison, he decided he was going to do better. He pulled up his socks, pulled off a big caper and husbanded the assets.
History Of How Cohen Lost The Domain
Miami Voter writes on Netpond:
Cohen made only ONE mistake. In 1997 he went after 3 sex related domains: SexQ.com (Dokk's), HotSex.com (Mike & guys from Boston) Sexia.com (Serge's).
First one didn't matter, Dokk called FBI, he thought he had something going, FBI told him: suck our dicks and that was the end of Dokk's struggle.
Guy from Hotsex.com called his lawyers and mounted strong opposition against Cohen. Incidently, HE discovered KREMEN, pennyless wonder, claiming to be the original owner of sex.com, but having difficulties paying his San Francisco female attorney. HotSex.com told Serge about Kremen.
Serge, who was blasting Cohen on YNOT board and who was sued by Cohen for sexia.com made 2 decissions:
1) give Cohen sexia.com without fight
2) get TOP go-getters with proven track records after Cohen.
Yishai claims 'till this day that he didn't understand Serge' heavy russian accent when Serge told him that Yishai can own sex.com 'cuz Serge knew the REAL owner.
Seth Warshawsky and Ron Levi DID understood Serge's English. Serge was offered part of sex.com in exchange for financing of law suit, but Serge said: GET THIS DOMAIN AWAY FROM COHEN, THIS WILL BE MY ULTIMATE SATISFACTION.
And this is how Cohen, the "napoleon" who burnt Moscow and lost the war (per serge's posts on YNOT) lost his prized sex.com.
If he was smart and didn't touch hotsex.com and Serge in 1997, none of you would know about existence of Mr. Kremen.
Cohen, as I recall, you were wished brain cancer in 1997. You don't have it, you only lost $1,000,000 a month domain, that's all, do you feel lucky, punk?
Ron Levi helped fund Kremen's lawsuit in exchange for sex.com. Serge still has faxes from Levi saying that he would own one-third of Sex.com. But Serge only wanted the satisfaction of creaming Cohen.
Here's a snippet from Cohen's Deposition Part Three:
Q: Now, you filed a lawsuit in your individual capacity against Luke F-rd fairly recently [dismissed 1/01], didn't you?
A. Yes, sir.
Q. And you did that because he wrote some things about you you didn't like, right?
A. You could say that, sir.
Q. That's right. And you brought that lawsuit with Ynata as a co-plaintiff, didn't you?
A. Yes, sir.
Q. And that's the Ynata of the British Virgin 18 Islands, right?
A. Yes, sir.
Q. And you -- you were concerned because you thought what Mr. Ford wrote was going to cause you economic loss, right?
A. Yes, sir.
Q. Do you recall a complaint was filed on your behalf by Mr. Dorband's firm alleging that your economic loss exceeded $15 million?
A. Yes, sir.
Q. Do they?
A. I think if you look at the lawsuit, sir, you'll see there's more than one party in that lawsuit.
Q. Well, I'll read your paragraph, paragraph 11, from your complaint filed in Oregon -- excuse me, filed in the Central District of California.
A. What I'm stating, sir, is I believe there's more than one plaintiff.
Q. I'm asking the questions. I'll read a statement, paragraph 11, of your complaint: As a result of defendant's defamatory statements, plaintiff Cohen has sustained economic losses in an amount exceeding $15 million. Is that an accurate statement?
A. Yes, sir.
Q. You personally have suffered damages exceeding $15 million, right?
A. Yes, sir.
Q. And that's caused by Mr. Ford, right?
A. Yes, sir.
Q. This is $50,000 you've lost in possible profits, right, that you could have earned but for this terrible defamatory statement made by Luke F-rd, right?
A. The Luke F-rd statement, sir, had nothing to do with Gary Kremen.
A. I think we sued him for $50 million. I don't know if I necessarily calculated $50 million, number one. And number two is that Mr. Ford's statements -- he alleged criminal activity with unknown parties, racketeering, and all sorts of crazy things that never took place with 18 people we never heard of, and it was a fabrication. The whole story was a fabrication.
Q. Okay. And that's a cause of economic damage to you personally, right?
A. I don't know if necessarily to me personally. I consider it damage.
Q. Whatever state your reputation was in prior to his writing the article, he's caused additional damage to it?
A. He's caused additional damages to me. It's my position that I've got a terrible past. We all know it. There's nobody in this room that doesn't know it. And it's something unfortunate that I've done and I'm responsible for. But there comes a point in a man's life where he's allowed to rehabilitate. There comes a point in a man's life where he's allowed to change. There comes a point in a man's life where his reputation can be further damaged.
Q. Well, I just want to make sure that your allegation is based on your own belief, which is you allege that you have suffered in excess of $50 million as a result of Mr. Ford's statements, right?
A. Yes, sir.
Q. The damage you've suffered as a result of Mr. Ford's statements are separate and apart from whatever damage you've suffered as a result of whatever Mr. Kremen has said about you, right?
A. That is correct.
Q. Are any of the $50 million lost financial opportunities?
A. I don't know that, sir.
Q. Have you lost any financial opportunities as a result.
A. I don't know, sir. Me personally? We're talking me personally?
Q. Sure.
A. I don't know that, sir. I had people tell me they wouldn't do business with me based on racketeering.
Q. Okay. Who?
A. I don't know. I'd have to go back and look, sir.
Q. Do you keep records of it?
A. Usually when people are negative toward me, I don't keep.
Q. Do you have any records of those communications?
A. I'd have to sit down with myself and have a hard thought about it.
Q. Have you had any discussion with anyone who says that statements Mr. Kremen has made about you has caused you to lose business?
A. Yes, sir.
Q. Who?
A. Numerous. I've had calls from Jordan Levinson, which I've already testified to. I had calls from a lot of people that have read the Wired News article, sir.
Q. Any of those people also call you about 2 Mr. Ford's article?
A. Yes, sir.
Q. Okay. Now, did you see an allegation in this lawsuit that said that as a result of Mr. Ford's statements that Ynata had already lost sex.com advertising revenues worth $2 million per month? Did you see that?
A. Yes, sir.
Q. Is that an accurate statement?
A. Yes, sir.
Q. And that Ynata had sustained economic losses in an amount exceeding $50 million?
A. Yes, sir.
Q. Has Ynata sustained economic damages resulting from Mr. Ford's article in excess of $50 million?
A. Yes, sir.
Q. Have you made any effort to quantify that number?
A. Just discussions, sir.
Q. All right. And, again, that 50 million is separate and apart from whatever damages Ynata has suffered, if any, as a result of Mr. Kremen's comments?
A. It has nothing to do with Mr. Kremen, sir.
Q. How did you come up with the figure $2 million 21 per month?
A. That was the cost of the ad, sir.
Q. What ad was it?
A. A banner ad, sir.
Q. What banner ad was it?
A. I don't know, sir. I don't handle the advertising, as I've already testified to numerous times in this deposition, sir.
Q. How do you intend to prove your damages against -- how do you intend to prove the damages of Ynata if you go forward against Luke F-rd?
A. Luke F-rd's lawsuit, sir, is a completely different lawsuit. It has nothing to do with the Kremen matter. Luke F-rd's lawsuit, sir, had to deal with racketeering, criminal activity that was totally unrelated to Mr. Kremen in any way, form, or shape. He alleged through his articles -- and this is the only thing that we limited that particular lawsuit to, was the criminal activity that we were engaged in, when in fact these people that we were supposed to be engaged with, we never knew, never heard of, never met, never had any relationship with; they've never met us, never heard of us, and it is a complete fabrication. Now, Mr. Ford had printed articles --
Q. Let me interrupt for a second. You allege in that lawsuit that Ynata suffered a loss of business as a result of Mr. Ford's articles, right?
A. That is correct.
Q. How will you go about trying to prove -- what documents will you use, what will you look to -- to prove that Ynata lost business?
A. Very simple. Bring Jordan Levinson in, have him explain who the clients were that were lost, and we'll proceed against Mr. Ford. But that has really nothing to do with this action in any way, form, or shape. What I was going to say is that at one time Mr. Ford had printed articles about what Mr. Kremen had to say and what Mr. Carreon had to say. However, we decided not to pursue that. And we at this point, as of -- I speak at this moment right at this day have no intentions of proceeding against Mr. Kremen or his attorney relative to Luke F-rd. I don't see -- without being disrespectful, sir, I don't see what damn business it is of anybody in this room other than my counsel and myself. It isn't against your client.
.................
Luke says: I was introduced to Stephen Michael Cohen at the 1999 AVN Awards by Russ Hampshire, a part-owner of Babenet.
According to the following report, Cohen is thought to be a major cog in a worldwide money laundering scheme.
February 2, 2000 The Express
Police and accountants tracking millions of pounds missing from trade financier Versailles Group believe they have uncovered links with sex.com, which claims to be the world's biggest and most profitable Internet porn site.
Sex .com is operated from the British Virgin Islands by Ocean Fund International, a mysterious company that claims to be a mutual fund.
OFI has broken cover only twice, last summer when it purported to make a bizarre GBP2billion takeover bid for a group of Las Vegas casinos, and later when it claimed to be setting up a fibre-optic network in Tijuana, Mexico.
The casino bid failed because OCI's "offer", which the casino owners say they did not receive, was below a previously agreed bid that was duly completed. Nothing more has been heard of the Mexican brainwave.
Even the ownership of sex.com , undoubtedly a valuable asset, is in doubt. Convicted American felon Stephen Michael Cohen says it belongs to him. But this is hotly disputed by a rival pornographer who claims that Cohen stole the site name. Either way, Cohen sold it to Ocean Fund for GBP60million in stock options, a guaranteed salary of GBP17million as "consultant", and an unknown sum in cash.
Investigators believe that Ocean is simply a shell company set up by Cohen to shield sex .com 's affairs from taxmen and company regulators. Virgin Islands law allows companies much privacy.
Possible links with the Versailles group, which collapsed into receivership last week, began to emerge when investigators tried to follow tangled trails left by millions of pounds apparently diverted from the finance company. One trail led to the Dubelle Foundation in Liechtenstein, another country favoured by companies wishing to keep their affairs secret.
Dubelle appears to be headed by Leslie Cairns, who admitted fraud at Cardiff Crown Court eight years ago and is serving a 10-year disqualification as a director. The other money trail leads to a network of companies in the Cayman and Virgin islands. Some appear to be connected to Versailles' ex-finance director Fred Clough, whose whereabouts are unknown. There also appear to be links to investors operating through a Surrey-based firm.
Police now believe Ocean and Assets may be key nodes in a world-wide money-laundering network. At its peak the stock market valued Versailles at more than GBP600 million. It is headed by British businessman Carl Cushnie, who was heavily criticised last autumn when he sold GBP29million of shares without telling his advisers that Versailles was under investigation by the Department of Trade.
......................
I received a fax of an April 24, 2000 ruling by United States Magistrate Judge Janice M. Stewart favorable to Kremen.
In the U.S. District Court for the District of Oregon, Judge Stewart issued this Opinion and Order for the case of Stephen M. Cohen vs Charles Carreon and Gary Kremen.
Judge Stewart writes: Plaintff, Stephen M. Cohen, brings this action against defendants, Charles Carreon and Gary Kremen, under RICO... Carreon and Kremen each seek an Order staying all proceedings in this case pending a final ruling in a related case entitled Kremen v Cohen, et al., Civil No. C-98, 20718 JW, currently pending in the Northern District of California, San Jose Division. Cohen opposes the motion... For the reasons set forth below, both motions [by Carreon and Kremen] are granted.
Kremen, dba Online Classifieds, contends that he created the "Sex.com" Internet domain name as an item of personal property and as part of a plan involving the wholesome aspects and sex and personal relations, namely public health issues such as sexually transmitted disease education, underage pregnancy, and women's health... Kremen contends that he did not intend to use this domain name as an Internet pornography distribution center. On May 19, 1994, Kremen maintains that he delivered the "Sex.com" Internet domain name by electronic and registered mail to Network Solutions...a company which had contracted with the United States government to serve as the register of Internet domain names for a term extending through September 309, 1998. He claims that by registering this domain name, he acquired all financial benefit deriving from its use.
Kremen alleges that after being released from federal prison on February 1, 1995, Cohen began setting up sex-related businesses over the internet. Allegedly, Cohen had previously managed a profitable sex-related business involving computer networking, realized the lucrative potential of the "Sex.com" domain name, and sought to register it with NSI. Kremen further alleges that upon learning that "Sex.com" had already been registered, Cohen devised and executed a plan to convert hte domain name and the revenue it would generate because of its unique and attractive character.
Cohen allegedly carried out this plan on November 15, 1995, by sending a letter to NSI on what purported to be official Online Classified letterhead and signed by a person acting as an Online Classifieds officer. The letter purportedly stated that Online Classifieds relinquished any interest in the "Sex.com" domain name and expressed no opposition to Cohen taking over the right to register it. Kremen also alleges that Cohen sent an electronic mail message to NSI at about the same time purportedly from Kremen further authorizing the transfer of ownership of the domain name and providing Cohen's own telephone number as the location at which to contain Kremen. Based on this information, NSI registered the "Sex.com" domain name to Cohen and cancelled Kremen's registration. Kremen has since demanded the return of the "Sex.com" domain name to him which NSI has refused.
On July 19, 1999, Kremen and Online Classifieds, through their attorney Carreon, filed a Third Amended Complaint against Cohen and various other defendants...
The basis for the lawsuit in this court originated on February 2, 2000, when Cohen alleges that Carreon, upon instruction and direction from kremen, sent a press release via electronic mail to various individuals in the media, including Jon Swartz at Forbes magazine. The message allegedly identified Cohen by name and labeled him a "con man," identified his company as a "brothel management company," falsely accused him of using hte legal process to "waste" Carreon's client's funds, falsely accused him of intentionally stalling the legal process, and implied that his companies are not legitimate. This message was allegedly used by Swartz as a basis for his article published in Forbes' online magazine. Based on the release of this message, Cohen filed suit in this court on February 15, 2000, against Carreon and Kremen.
As a preliminary matter, this court notes that the Honorable John Jelderks, another Magistrate Judge in the District of Oregon, has already stayed three other actions seeking to enforce Cohen's ownership of the "Sex.com" domain name filed in this court by Cohen... [Luke: Including a suit against Voice Media Inc, aka Ron Levi's Cybererotica.com.]
CONCLUSION
All three CMAX factors weigh in favor of defendants' request for a stay of this case pending a final ruling in the California action. The claims in both cases are substantially similar, if not identical; Cohen will suffer little harm if a stay is granted; and defendants will be unfairly overly burdened if a stay is not granted.
10/10/1999
The Express On Sunday
Ocean Fund International seems the very model of a go-ahead business. It is one of the fastest-growing companies in the world, is chaired by the retired chief justice of Barbados, pays its chief executive GBP17million a year, and has enough cash to bid GBP2billion for a job lot of casinos in Las Vegas and Atlantic City.
But Ocean Fund is not what it seems. Although it claims to be a mutual fund registered in the Virgin Islands, it is in fact the company at the heart of the worldwide Internet porn industry. It claims its master site, sex . com , receives 146million visits a month from nine million subscribers, each paying about GBP180 a year for the sleazy privilege. Advertising brings in another GBP1million a month, it claims.
"Many people in this industry say they make a lot of money," said chairman Sir William Douglas [not really him] at the time of the casino bid two months ago. "But we make more than Penthouse, Hustler, Playboy and all the other major sex websites combined. We are extremely proud of our record of success."
If Douglas is proud of his sordid business, how much prouder must be 50-year-old chief executive Stephen Cohen, who founded sex.com 20 years ago? At least he says he did.
Rival pornographer Gary Kremen, of San Francisco, has other ideas. He claims Cohen stole the site name by misleading the Internet- naming authorities. Kremen insists it was he, not Cohen, who founded sex . com in 1994. Kremen, inevitably, is trying to sue Cohen, who denies any wrongdoing. Cohen, in turn, resents Kremen calling him a "twice-convicted felon" and is threatening to counter-sue for libel. Whoever wins, they are fighting over a gigantic, if tawdry, prize.
Last year Cohen sold sex.com to Ocean for an undisclosed sum. On top of the purchase price, he received about GBP60million in stock options and a guaranteed salary of GBP17million a year. In the three months to June last year, the last time Ocean published figures, its net income jumped 81 per cent to GBP60million. That is about GBP250million a year and the income is growing fast.
Analysts think total Internet porn revenues this year could top GBP15billion, and sex . com has a stake in most of it. One estimate suggests that two-thirds of the traffic on the Net is porn and that sex . com controls three-quarters of it through its franchise deals.
In spite of the lurid trade it dominates, Ocean runs a surprisingly conventional business, though it is hard to trace exactly who owns whom. Mexicans, for example, deal with a company called Sand Man International, based in Tijuana. Sand Man is either a subsidiary of Ocean, or a close associate. The same goes for Omnitec, registered in Nevada, which seems to handle some of Ocean's non-porn interests.
But the face Ocean and sex . com present to the world is of a straightforward entrepreneurial company that just happens to be in what it calls the adult entertainment business. It even has a mission statement. In high-flown language it talks of bringing customers the very best in legal adult entertainment, insists it will never infringe copyrights and says it will have no truck with the seediest end of the trade: No children, no animals, no violence.
Most of sex . com 's revenue comes from 50-50 revenue-sharing arrangements with local website operators. Ocean licenses them to use its material; in turn, the locals promote their sites, sell advertising, and keep half the takings. Just like a Dyno-Rod drain-cleaning franchise, in fact.
And just like other franchise operations, sex . com bombards its licence holders with tips on how to build their businesses and increase revenue. Its regular newsletter to webmasters could have been written by a professor at the Harvard School of Business. There are hints on writing promotional material, how to display thumbnail pictures - free miniatures of the paid-for real thing - and notes on the importance of keeping track of who visits the sites and how often.
Advertising on porn sites is a sophisticated business, too. Hawkers of films and sex toys pay according to the number of "clicks"-visitors to the site. On a sex . com site, they can expect to pay about GBP2,500 for 4,000 clicks, with discounts for quantity. The sites themselves look garish. But they are built by some of the world's best male and female programmers.
Many of the gimmicks now common on mainstream websites had their origins in the porn industry, often at sex . com . Among the latest are "page-jacking" and "mousetrapping", about which America's Federal Trade Commission had harsh words last week.
Page-jacking techniques mean you may innocently find yourself confronted by hard-core porn when you were looking for something perfectly inoffensive. MANY ingenious programmers create "shadow" sites that look like conventional pages but contain messages to mislead search engines such as AltaVista and Lycos. Among those whose sites have been page-jacked are the Harvard Law Review and stockbrokers Paine Webber. The official page of the movie Saving Private Ryan was also taken over.
Mousetrapping is a way of keeping visitors caught in an endless sequence of porn sites. It disables navigation buttons on your computer so that when you try to escape from one blue page, you find yourself in another, and another.
"Our audience is not America, it's the world," says Cohen. "There's only one word that everybody in the whole world understands - sex. "And when you type in the word sex on your computer, you come to us."
Luke says: In June of 1999, Ocean Fund International made a bizarre bid for Caesars. OFI claimed that its chairman was Sir William Douglas, the former chief justice of the Supreme Court in Barbados. Sir Douglas vehemently denies any relationship to OFI. He got this retraction from the London newspaper "The Independent" on 6/27/99:
"We wish to make it clear that the article in the City and Business section of the 20 June edition of The Independent on Sunday headed "Save the City from Sex . com insanity", written by Peter Koenig, contained allegations in relation to Sir William Douglas which were wholly untrue. Sir William Douglas is the former Chief Justice of Barbados and Barbadian High Commissioner to London.
"He has never been the chairman of Ocean Fund International, nor has he ever had any association with that organisation nor any of the other organisations or persons named in the article. We accept that the article so far as it related to and attributed statements to Sir William Douglas was incorrect and unfounded.
"We apologise unreservedly for these errors and for any distress and embarrassment caused to Sir William."
07/02/1999
The Star-Ledger Newark, N.J.
What made it all the more curious was that Ocean Fund wasn't a mutual fund at all, but the operator of a hard-core pornography site on the Web. The name of its chairman, a Sir William Douglas, appears in old newspaper clippings as the former chief justice of the Supreme Court in Barbados, one of the British Virgin Islands. It was Sir Douglas who refused to extradite to England one of its "Most Wanted" train robbers back in the 1980s.
Ocean Fund's president, Stephen Michael Cohen, was brought on board last year, ostensibly at a salary of $17 million a year, plus $100 million in "options." Truth, it seemed, was stranger than fiction. Never mind that while the company is supposedly based in the British Virgin Islands, it doesn't have a phone number there.
No wonder James Gallagher, vice president of Caesars owner Starwood Hotels and Resorts Worldwide, gagged last month when Ocean Fund International announced via press release that it was offering to buy the Caesars casino chain for $3.6 billion. Not only did Starwood know nothing about it, the company had, and has, a definitive agreement to sell Caesars to Park Place Entertainment Inc. for $3 billion.
"We are not giving any consideration whatsoever to this Ocean Fund communication," Gallagher said in recalling the unusual series of events, an account of which made the news wires worldwide. "We're not taking it seriously at all."
The drama started to unfold last month on a Monday night, with a fax of the offer sent by Ocean Fund. But it seemed to have ended almost as quickly as it began.
The PR Newswire, which transmitted the release worldwide on its electronic wire service, pulled the release by Tuesday afternoon and launched an investigation. It later said Ocean Fund did in fact provide a copy of the bid letter. The release revealed Ocean Fund's main line of business: sex . com , which it called the world's largest pornographic Internet site whose 9 million users pay $24.95 a month to access sex-related material.
The release trumpeted more: Its advertisers pay up to $1.5 million monthly to buy a piece of the hard-core real estate. Sir Douglas, listed as Ocean Fund chairman, was quoted as saying the company makes more money than Penthouse, Hustler, Playboy and all the other major sex Web sites combined.
Ultimately, Starwood and Park Place confirmed they did indeed receive the offer but weren't about to do business with Ocean Fund, even if the offer was $600 million higher than the one on the table.
The letter, they said, was from O. Robert Meredith, an attorney based in Salt Lake City, who was listed as corporate counsel. But when Meredith was reached on the phone, he said he wasn't corporate counsel but an attorney who had represented the company before and who was asked to draft the offer and send it to the sellers.
"I'm just the guy who ended up fielding all the calls," he said. As to shore up the bidder's legitimacy, he did say this: "The company does exist. It is a privately held offshore company, but I can't tell you much more than that."
As to the seriousness of the offer, Meredith said Douglas assured him that the $3.6 billion for the purchase was available, dismissing notions that the offer was a publicity stunt. "Publicity for what? It's a privately held company that wouldn't get any mileage out of it for stock plays. The sex . com , I hate to comment, but what type of publicity does it need? It doesn't," he said.
As for the name Ocean Fund, he said the company used to sell mutual funds but stopped many years ago. "They were requested by the British Virgin Islands government to stop using the name because they passed a law in 1997 saying you can't use the word fund in your business name if you don't sell funds, but they haven't changed the name yet," Meredith said.
Gallagher expressed doubts about the offer and his skepticism seemed to grow healthier as more information came out. "I think Sir William Douglas is a little confused. Their press release is full of mistakes. For example, they refer to the Caesars river boat as the Glory of Roam in Indiana," Gallagher said.
Caesars has a Roman, not in," theme.
"Besides, how easy do you think it would be for the largest purveyor of pornographic material in the world to be licensed by the various gaming authorities?" Gallagher said.
From www.redherring.com, on 2/7/00:
"In 1995, Mr. Cohen, who had been recently released from federal prison after serving an abbreviated 46-month sentence for bankruptcy fraud, false statements, and obstruction of justice, began his plan of deception to create his Internet company, according to the lawsuit, filed by an attorney for Gary Kremen.
"According to Mr. Kremen, Network Solutions granted him use of the sex.com domain name in 1994. Such names typically are valid for a two-year period and are renewable every two years at the discretion of the party using the name.
"Mr. Kremen claims that in 1995 Mr. Cohen fradulently wrote a letter to himself using letterhead with the name "Online Classifieds Inc.," the name of Mr. Kremen's business at the time. The letter stated that Mr. Kremen had been dismissed from his position at the company and that he no longer had rights to sex.com. The letter also stated that Mr. Cohen was authorized to take title of the sex.com name.
"At the bottom of the letter was the signature of President "Sharon Dimmick." Mr. Kremen, who still owned Online Classifieds at that time, insists his company never employed a Sharon Dimmick. The letter was sent to Network Solutions.
"In what should have been a red flag, the letter stated that Online Classifieds didn't even have an Internet connection. In other words, such a letter would be like Microsoft (Nasdaq: MSFT) stating that Bill Gates doesn't have Windows on his personal computer.
"In any event, Network Solutions granted the name to Mr. Cohen. Ever since then, Mr. Kremen has been trying to wrestle back the sex.com name."
Luke received this email from Stephen Michael Cohen which I run in full:
You repeated a story that came from Kremen's attorney and most of it is untrue. I am under a protective order not to talk about the case, but it is my intention to litigate against all parties that have made statements about me that are untrue. This includes YOU, WIRED, New York POST, REDHERRING and Luke F-rd.
I can tell you that if you had taken the time to read the case instead of repeating untrue hearsay for an attorney who has lost most of our motions, you would have noticed that there are several unique motions before the court.
1. There is a motion against Kremen's attorney for violation of the court's protective order.
2. There is a motion for sanctions against Kremen's attorney which may result in jail time. Obstruction of justice is a very serious charge and only the court will determine what recourse it will take.
3. There is a complaint which is or has been filed with the State Bar of California and Oregon against Kremen's attorney which might result in his disbarment.
4. There is also a motion which was filed under seal. This will be very interesting.
5. There is a motion to disqualify Kremen's attorney for misconduct now before the court.
6. And of course there is a motion for summary judgment brought by NSI which could determine the final issues remaining for all parties in this case.
(If you had taken the time to read their motion which is now before the court, you would have never made your false statements. I believe that you have a duty to verify your statements before you publish them and maybe a substantial judgement will make you and other members of the press think twice before they publish false and misleading statements which are defamatory. If you had taken the time to read the case at the courthouse, you would have notice that we WON the trademark issue on December 9, 1999 against KREMEN. Further, you would have notice that we won 98% of the issue's and decisions before the court which has resulted in 6 complaints, 7 attorneys for Kremen of which only Carreon now remains. It is possible that this case may end in February or March of this year,.. The United States Trademark and Patent Office has now declared KREMEN'S trademark ABANDONMENT for Failure to RESPOND as of 1/12/2000. This was a result of Judge Ware's decision to dismiss the Kremen's trademark rights on December 9, 1999. The appeal period has run its course and this issue is now at its ends. (check with the court for the order)
http://trademarks.uspto.gov/cgi-bin/ifetch4?ENG+ALL+3+952023+0+-1+-1+F+1+2+1+MS%2fsex%2ecom#CgiTop
The protective order in this case was issued by the United States Magistrate assigned to this case in January 11, 2000, it currently makes the case, attorney's eyes only as it relates to evidence.
I can tell you that YNATA Corporation and or Ocean Fund is not a shell corporation, nor has it ever been. It does maintain numerous offices around the world and employs a substantial amount of employees including me. Further, I am not an owner of any stock in YNATA which owns SEX.COM and your continued comments are not only false but may result in litigation from Ynata.
For your information, we have not taken in any new advertisers in over 1 year and there currently is a waiting list of 2 1/2 years for new advertising on our first page. Freedom of the Press does not allow a writer to publish statements or comments which are determined by a court to be defamation. I intend to file the requisite actions very shortly and our legal counsel is waiting for permission from the company to litigate. As of this date, our company has never lost a case and considering that we are before numerous judges and courts that says something. It is the policy of our company and of our legal counsel Duboff, Dorband, Cushing and King not to discuss an active case which is before the courts. The law states that I have to give you the option to print a retraction within a reasonable period of time (48 hours) before I am able to file my action. You now have that period to time.
Stephen M. Cohen
President Sand Man International Limited
SEX.COM
PS if you had taken the time to check out MATCH.COM, I think you would have noticed that KREMEN was not the seller of that DOMAIN. It was sold by Electric Classifieds to CENDANT a large corporation listed on the New York Stock Exchange and they sold it to Ticketmasters. Further, according to Electric Classifieds president (which his discovery has not been taken as of yet, so this is not before the court) He states KREMEN received NOTHING for the sale of MATCH.COM. I wish I could talk about the case because I would point out numerous possible statements which may very well be lies and or perjury. but then again, nothing prohibits you from showing up at the courthouse and listening to the judge and the attorneys and knowing the REAL story.
5/25/99
Luke writes: A big internet war pits three of internet porn’s biggest companies, www.sex.com, www.cybererotica.com and www.clublove.com (IEG).
Luke talked 5/25/99 with Stephen Michael Cohen, administrator of www.sex.com, based in Tijuana, Mexico. Owned by the international company Ocean Fund International, based out of the British Virgin Islands, www.sex.com claims almost nine million members, making it the biggest internet site. It dwarfs all other porn sites such as industry leader www.cybererotica.com and the highly publicized www.clublove.com which brought us nude pictures of Pamela and Tommy Lee, as well as Dr. Laura.
A convicted felon, Cohen was sentenced to 46 months in federal prison for bankruptcy fraud, false statements and obstruction of justice. He served three years at the U.S. Penitentiary at Lompoc, and was released Feb. 1, 1995, on three years' probation.
Cybererotica and IEG (Seth Warshavsky) are funding a lawsuit by internet pioneer Gary Allen Kremen against Ocean Fund’s Sex.com over the domain name sex.com. Kremen claims that he owns it.
Like Cohen, Kremen has received write-ups in numerous newspapers. Here is a sample:
Newsday 3/5/95
"Electronic cash will let the Internet take over TV," David Chaum, managing director of DigiCash, told a reporter. "Quote me." Another gushing man crammed a card into Chaum's hand with the name of a San Francisco company that did not exist a year ago. It had to happen, he explained, because the whole world will need what he has to offer very, very soon. "Classified online - it's the future," said Gary Kremen, president of Match.com. "It makes sense. Doesn't it?"
Atlanta Journal and Constitution 12/6/98:
Kevin Sinclair, who
lives in a Silicon Valley suburb, is the lucky owner of http://www.computer.com,
presumably one of the most valuable domain names on the World Wide Web.
And now he wants to sell it for at least $500,000. So far the highest
bidder has offered $300,000.
His associate representing
him, Gary Kremen, insists Sinclair is not a speculator but that he planned
to start an online computer store when he acquired the name in 1994.
He quickly realized he did not have a shot in such a competitive market,
even with the right address. So he left the working world to stay home
with his children.
Kremen may be just the right guy to help him make a deal: Kremen was involved in the negotiations between Digital Equipment Corp. and Jack Marshall, who until earlier this year owned the address www.altavista.com. Digital, which owns the AltaVista search engine, paid Marshall $3 million to give the name up, reportedly the largest amount ever paid for a domain name.
San Jose Mercury News 2/9/99:
And often they fear ruining their maverick reputation.
Such fear is keeping Gary Kremen, 35, from launching his fourth company, at least for now. "When you start a company, everyone knows it," he says. "It's made me a little bit gun-shy. It's a type of performance anxiety."
Among his ventures was the Web-based dating service Match.com, which was sold to Cendant Corp. for about $7 million in 1997. Currently, the San Francisco resident is advising several existing businesses, including one that puts advertising on golf driving ranges. What he calls his "risk profile" -- his tolerance for risk -- is "temporarily lower."
On July 15, 1998, Ocean Fund released this:
Ocean Fund International, a British Virgin Island International Corporation announces today the appointment of Stephen Michael Cohen at a record salary of 17,000,000.00 a year and $100,000,000 in stock options to run its' wholly owned subsidiaries SEX . COM and Sand Man Internacional in Tijuana, Mexico.
Sir William Douglas, Chairman of the Company, said, "Cohen was the founder of the French Connection BBS and SEX . COM in 1979 which were subsequently sold to Ocean Fund. Cohen left the company in May of 1998, in order to spend more time with his family.
" SEX . COM reported to Ocean Fund net income of $95.5 million for the fourth quarter ended June 30, 1998, an increase of 81.2% from that reported for the same period last year. The major increase was due to 1200% increase in advertising rates and a membership of 8.5 million users each paying $24.95 per month which is increasing monthly at 18%.
" SEX . COM is by far the largest web site on the internet which has resulted in major internet congestion problems at Mae-West and Mae-East. Consequently, it was forced to open its own internet NAP in Tijuana, Mexico with the help of WorldCom and UUNET.
"Our success in developing our marketplace which has resulted in our 40 to 61 million unique hits per day has been a product of Cohen's outstanding organization and execution."
Luke talked to Stephen M. Cohen Tuesday night, 5/25/99.
"Gary Allen Kremen filed a lawsuit in the northern district of California against us and Network Solutions over the domain name sex.com," says Cohen. "Supposedly Ron Levi (Cybererotica) and Seth Warshavsky (IEG and Club Love) put up the money. We filed a motion to dismiss his lawsuit. Kremen was deposed by Network Solutions. US district court (San Jose) Judge Weir dismissed 98% of Kremen’s with prejudice, which means he cannot refile.
"Kremen’s attorneys (Sheri Falco and Katie Deemer) have not done anything they were supposed to… He made a demand for $20 million and the return of the domain name. We laughed at him and sent him a letter and told him, what has he been smoking.
"His deposition was the April 16, 17th of April. I’ve read the deposition. He was hypnotically glued to the camera. He wouldn’t look at anybody or talk to anybody. Based on his deposition, we’ve filed a motion to dismiss his complaint in its entirety. His attorneys went nuts when he admitted that he did not own sex.com. They ended up in a big screaming match.
"I’ve had the name sex.com since 1979, when I had the French Connection BBS (Bulletin Board Service). Sex.com originally meant Sex Communications. Sex.com was used in the chat system we had for swingers and nudists. Back in 1979 we had 7-8,000 members. We had it long before the internet was invented. I sold the domain name to Ocean Front. And we’ve used it continuously.
"With trademarks, you have to litigate to protect the trademark or you can lose it. We’ve taken away marks from several people. When Kremen filed this lawsuit, he did us a big favor. Because if you don’t sue someone within a period of time, it can be construed as giving implied permission. We decided at that point, instead of fighting 40 lawsuits [against people using the name sex.com], to take care of Kremen.
"We’ve also filed a lawsuit against Ron Levi at Cybererotica. He’d taken the name www.sex.com. We initially filed a racketeering lawsuit against him. He agreed to take down the name. He subsequently put up the name again and we filed another lawsuit. Now we’re going for full damages and we’re going to take over Cybererotica.
"We’ve got Seth Warshavsky’s tit in the wringer. He came out with some ludicrous statement that he is making $50 million. He hired a publicist that puts him in all these newspapers. He’s admitted that he’s engaged in internet gambling, which is illegal in the US. There’s a company that went public and published his ridiculous statements to his stockholders. We’ve found people who invested in that company and are now filing a lawsuit against Wired magazine. Wired will be held responsible because they did not verify the information. This will probably cause the demise of the publicly held corporation. Seth is the least culpable of the three but we hope that through discovery we will get his real income tax returns. We’re in contact with three government agencies and we’re working with them to have this man prosecuted."
Luke: "Isn’t he and IEG going public?"
Cohen: "He’s going to be lucky if he’s not in prison. We’ve got him cold. He’s f---ed. His statements that he makes $50 million a year were used in a prospectus for a publicly held company. Stockholders invested in the corporation based on those statements. This man is lucky if he makes a million dollars a year. By the time the US government gets through with crawling up his asshole, he’ll have serious problems.
"We have 8,799,232 members. The other adult internet sites are not even in the ballgame. Most people do not understand the internet. You get these fools like Seth Warshavsky who claims he’s doing all these millions of dollars worth of business. If writers were more technical, they could check out the information. One way is to go to www.arin.net who issues the autonomous system numbers. He doesn’t even have an autonomous system number, which means that he only has one ISP (Internet Service Provider).
"Go to www.arin.net, to whois, and write in "sexcom". Result comes back:
Ocean Fund International Ltd. (ASN-SEXCOM)
Ave. Diego Rivera #2532, 6 Piso
Zona Rio, Tijuana, B.C. 22320,
MX
Autonomous System Name: SEXCOM
Autonomous System Number: 11083
Coordinator:
Cohen, Stephen Michael (SMC4-ARIN) steve@SEX.COM
0115266343480 (FAX) 0115266 343480
Cohen: "Do you see the number 11083. That’s an autonomous system number. That means you report to more than one place, that means that more than one ISP feeds you. Type in IEGCOM and see what comes up. Nothing. Let me show you something, I can do something you can’t do. I can do a real trace. I will type in www.clublove.com. Hear that noise in the background. Club Love’s internet provider is cable and wireless. He’s running out of an IP address of 166.48.217.250. Club Love is registered as JNS Communications Inc and the address is 208.139.0.21. He only has one ISP. He’s probably running less than a T3 [internet line] and yet he claims he’s doing all this business. From what I can see, he’s not running more than a couple of T1s. His claims of millions of dollars are all BS.
"Now let’s take a look at Cybererotica. Cybererotica is fed by IGallery. Cybererotica is running greater than a T3. About 60-70 megs, probably two T3s. It looks like they have a big video stream coming through. Clublove is a dinky site. Cybererotica doesn’t even have an autonomous system number.
"Bandwidth is not indicative of how much money you make. You can make millions of dollars with a T1 if you’re running nothing but text. But once you start doing video and pictures, it eats up more bandwidth. For every dollar made, how much is kept. Cybererotica does lots of webhosting and buying of other people’s traffic. He has a great gross but a s---ty net. While sex.com has a tremendous gross and a 98% net. I don’t need to buy traffic. That is what separates the men from the boys.
"Ron Levi has stolen traffic from us [through using the name sexcom]. We’re going after him, for full accounting records since he has been in business and we’re going after a portion of his income. If he wants to f--- around, we’re going to play with him. In addition to an injunction, we’re going for damages. We’re going to take over Cybererotica.
"Let me tell you something. If I had to go against Ocean Fund International, I’d bend over and kiss my ass goodbye. You’re talking about a billion dollar company who pays their attorneys more money per year than 40% of the webmasters put together.
"One of the reasons we filed our action against Cybererotica is that we became aware that the FTC and the criminal enforcement division of the IRS are looking seriously at Cybererotica and we want to go in there fast enough so that we can get something out of it. We have made IGallery aware that Cybererotica has serious problems.
"When Ron found out that someone was using his name [Cybererotica], he went berserk. It would be outrageous for him to assume that Ocean Fund will allow him to do to Ocean Fund what he didn’t want done to him. He’s got some serious problems. He picked a fight. It reminds me of the old Japanese admiral. They told him about Pearl Harbor and said they were successful. And he replied, "All you’ve done is step on the toe of a f---ing giant. And he’s going to f---ing crush you." And Ron has stepped on the toe of Ocean Fund.
"My function is not advertising or memberships. My function is strictly administration of programmers and staff. I haven’t handled advertisers on sex.com for three years. Other people handle that stuff. So this dispute with Cybererotica is not personal. Ron knows how to find me. He’s been to our offices."
Luke: "I hear that you have an extensive criminal record?"
Cohen: "That allegation has been made. And assuming that I was a mass murderer, what would be the relevance anyways. The relevance is only one issue – trademark rights. Either you have or you don’t. Even Al Capone could have trademark rights."
On the www.condomchronicles.com posting board 5/26, Vegas Lee wrote: "You can not believe anything dealing with Steve and sex.com anyway... two years ago he screwed more webmasters then anyone on the net and makes him money off suing the world... just the type of people we need in the business.
"I only have one
real question about Steve Cohen.. if he really makes all this money..
then why did he screw so many webmasters two years ago when he was running
live shows out of mexico and never paid us? I even talked to him on
the phone and all he had to say was, call my Sec. she will send you
a check.. called her and she had no idea what we where talking about....
hell, I have ***sex***.com names, have had for years, he threatened
me three years ago at the migrage in Vegas... still no suit.. I would
love to have his off shore company come to vegas for a fight.. would
be fun.. he is not liked in this town either.."
Earlier in the day, Mr. Small wrote:
Last Friday, I went
to visit the new offices at SEX.COM and to meet James Powell, and I
wanted to see this infamous COHEN, everyone always talks about. The
offices are about 25, 000 square feet in a new building in the Tijuana
area of Mexico. There computer room look quite full, what and who owns
what I am not sure about. I would think some of the equipment belongs
to their clients.
I never got to meet Cohen; I was told by several employees that he was
in Vegas. Powell reminds me of my grandfather. Nice guy with who is
seems to be level headed.
I also met Miguel Betincourt, who I was able to spend some time with.
From him I learned that their company had filed an action against CYBEREROTICA
and FM. I asked to see the law suit and I read it, it is true that there
is a hearing scheduled for June 2, 1999 in the U.S. District Court in
Orgeon. From what I learned, they are trying to get the court to stop
FM from using www.sex.com and they are going after CYBEREROTICA as damages.
From what their attorneys have told them, there is a good shot that
they may end up with CE. I also read that.
I asked Miguel about the KREMEN action and who really ownes SEX.COM!
Miguel let me read the KREMEN'S deposition that was taken on April 16
and 17. This guy is the one big dummy! When the attorney for network
solutions asked him what other names he was know as, he answered IDIOT,
DUMMY and FOOL. He also tesitified that he was not the owner of SEX.COM.
The deposition was taken before a court reporter and it was videotaped
at the request of Network Solutions. I saw a motion to dismiss that
case that is scheduled for June by SEX.COM and Network Solutions.
They seem to know about Forbes article and Miguel comments were good
news, bad news brings more people to our site. I asked about Joe Dickers
injunction against them and it seems that so such action was ever filed.
I also saw something that made me sick, it was two letters, one was
from the CRIMINAL INVESTIGATION UNIT of the IRS regarding CE and IEG.
Looks like they have some problems. I never knew the government pays
for turning someone in. Seems that Seth told some media people that
he made in 50 million dollars in 1997 and that he is into gambling on
the internet. The government knows that he paid very little taxes.
The other letter was from a federal agency that investigates credit
fraud by merchants. It seems that these people got this agency and the
U.S. Attorneys office involved. I didn't want to look at the other lawsuits
they were in the process doing, because I felt so sick after seeing
what I saw, that I just made an excuse and left Tijuana.
I am into this business because I enjoy it. These people are into a
very heavy revenge trip that goes well beyond scary and it seems to
me they do not care about the harm to our industry that they will cause.
I now know why VISA and MC are getting on our backs and I think it is
going to get a lot worse. Someone needs to sit down with these people
and talk some sense into them. I was not going to say anything, but
I felt I had to!
Globiz: "Cohen glosses over his criminal record in this supposed "interview" as being unimportant. Considering that I read his felonies involved forgery and running cons, I'm not so sure that's true. Personally, it sounds to me like a disinformation campaign is being waged. And on the face of it, it sounds like a real reach to say that sex.com was used as a trademark for "Sex Communications". I mean, is this the FIRST thing YOU would think of when coming up with a trademark for a name like that before anyone had ever heard of using .com domains?"
James Powell [really
Marshal Volp], VP of Ocean Front International replies to a Cybererotica
employee defending her boss Fantasyman aka Ron Levi: "I go out
of my way to protect my employees until it is proven that they are wrong.
I read a lot of things about Cohen and 98% of it is just crap. I never
make comments on my own, however, I do respond to comments made by others
when they are clearly wrong!
You made the comment that "This is again just another example of Mr.
Cohen's desire to stir hate and discontent..."
The facts…Cohen didn’t order the law suit against your boss, I did and
the buck stops with me.
The whole world knows that your boss and the other fellow put up the
money for Kremen and personally, I do not have a problem with that.
That is their right! They can spend their money any way they wish.
Why did I go after your Boss? Because he was served with 3 different
law suits and each time agreed to stop using wwwsex.com. Your boss has
attorneys and he knew what he was doing and thinks this is a joke. Well,
believe me when I say it is not! I refuse to argue the merits of this
case and or any other case that is before the courts in this forum.
That is why we have judges and attorneys.
Regarding this so called Mr. Small, whoever the hell he is, I just love
these crazy names! If you read his comments, they were not favorable
to SEX.COM by any stretch of the imagination. Furthermore, if you look
at his IP address it goes to a site in the State of Louisiana. We are
located in Tijuana, Mexico, which is a far cry from that state. Again,
it would not be fair for me to comment about a unknown person who makes
comments about us.
As far as the other fellow who made comments about our trademark rights
relating to SEX.COM after going to the library. I guess if we buy your
logic, if you go to a book store and read one book about "how to do
a heart surgery" then that in itself makes you a doctor. That logic
smells like bad fish! Please seek the advise of a license attorney that
deals with trademark laws and litigation!
You may not like our company, its employees, Cohen or me, but you might
as well face the fact that we are here to stay and do whatever it takes
within the law to protect our rights!
2/5/01
On January 26, through his attorney Robert S. Dorband, Stephen Michael Cohen filed to dismiss his lawsuit against Luke. That means I currently have no outstanding lawsuits against me. One lawsuit from a porn star I settled out of court. One suit against me by Laurie Holmes was dismissed by the court in a rare sweeping judgment. And now this. Hooray!
"Those who sow in tears will reap in joy." (Proverbs)
Bob Jones writes: I tried to do some looking into Stephen Cohen and sex.com, but didn't find very much. Except that I interviewed once with one of the (many) judges who've convicted and sentenced Cohen.
There are a lot of Stephen M. Cohen's out there, many of whom are (apparently) lawyers, and at least one is a judge. This may have made it easier for Cohen to perpetrate what appears to have been his usual scam, impersonating an attorney. (This, as I'm sure you could surmise, is right at the top of my personal list of Deadly Sins, along with filing a frivolous lawsuit, discovery abuse, impugning the reputation of an attorney for engaging in legitimate buy highly profitable conduct, and trying to negotiate down legal fees.)
I do wonder if he's the same Stephen M. Cohen convicted of drunk driving in Pennsylvania in 1980. Cohen v. Penn., 414 S.2d 740 (Pa.Cmwlth. 1980). Or the same one tried for possession of marijauna (consumed apparently with a young prostitute) in California in 1970. Cohen v. Superior Court, 5 Cal.App.3d 429 (1970). There's like a 10 year gap, between the late 70s and early 90s, between his convictions, and I don't think he was in prison that long. What was he doing? Inquiring minds want to know...
About Kremen v. Cohen: (Again with the standard disclaimer that I am not a lawyer. With the additional disclaimer that this is not meant to be a comprehensive treatment of trademark, just a little bit of necessary info.)
There were two suits. Kremen filed an action against Cohen in California, seeking to get back his domain name. Cohen filed a RICO action against Kremen and his attorney in Oregon, but it was stayed pending the outcome of the California case. It will presumably now be dismissed.
The California case was pretty straightforward. Essentially, Kremen said that Cohen stole the name using a forged document claiming to be from Kremen's roomate; Cohen admitted writing the document, but claimed the roomate was paid to sign it. Cohen's major defense was that, from a BBS he ran in the 1970s, Cohen acquired a trademark in "Sex.com".
Kremen's Claim: Kremen's claim is that Cohen forged a document, purporting to be from Kremen's roomate, and sent it to NIS transferring the domain name. Kremen asked the court to declare that he had never agreed to transfer the domain name. Cohen accused the roomate of lying on the stand, and said he paid the roomate $1000 for the domain name. He offered no evidence of this, and the court dismissed it out of hand. The court found that Cohen did, in fact, forge the document.
Cohen's Claim: Cohen claimed that even if he did forge the document, that was A O.K. because he owned the trademark "sex.com." On this theory, Kremen never had a right to register the domain name sex.com, and Cohen's little forgery just did very quickly what courts would have done anyway. This was utter bulls---.
It is important to understand a little bit about how trademarks work. The theory of trademark law is that, unlike books and inventions (protected by copyright and patent) trademarks are really easy to come up with. Trademarks (except in some unusual circumstances) are therefore not something worth protecting for the benefit of the owner. The law could (except in some unusual circumstances) give two s---s whether Bob's Auto-Mart has to come up with a new name.
However, the law cares very much about consumer confusion. Consumers do get some benefit from being able to know, when they buy Neutrogena soap, that it is made by the Neutrogena company and will be the same as the soap they bought last week.
This is the limit (except in unusual circumstances) of what trademark law protects. For that reason, a trademark is only infringed if the other use can cause customer confusion. If you own "Bob's AutoMart" in New York, you can't stop me from opening "Bob's Pizza" in New York, or "Bob's AutoMart" in Florida, because consumers aren't going to confuse me for you. You also can't (except in unusual circumstances) trademark a generic names that describe the product offered rather than the producer, like, say, "The Furniture Store."
To make trademark easier, the government established a system of trademark registration. When you start to use a trademark, you can register it, and that proves that you owned it first. It doesn't mean that another use is necessarily an infringement, but it is proof that if someone else is infringing, that you and not they have the right to the mark.
Cohen never registered sex.com as a trademark. He apparently only used it as the title of some chat room on his BBS. Since it was not registered, Cohen had to prove to the court that: 1) "sex.com" is a sufficiently unique name that it was worth of protection; 2) that customers so associated "sex.com" with Cohen in the 70s that the mark had acquired "secondary meaning"; and 3) that Cohen had the mark first.
Cohen failed on 1 and 2, and never made it to 3. The court found that "sex.com" is probably generic. (I think, I'm not sure but I think, that if it is generic it clears the way for sites like wwwsex.com.) No evidence was presented to show that sex.com had acquired secondary meaning in the 70s, except for a dozen people who used the BBS and said they remembered the name. This was insufficient, because Cohen had to prove not just that he used the name, but that customers came to associate the name with Cohen's products. Cohen didn't even come close.
The Judgement: Cohen's claims were partially dismissed, and the court ordered Cohen to transfer the domain name back to Kremen.
The Remains: Cohen filed an appeal, and asked that the order to transfer
the domain to Kremen be stayed pending the appeal. I believe the request
was denied.
Here are excerpts of articles about Stephen Michael Cohen and his frequent brushes with the law:
12/17/1990
The Orange County Register
Residents of million-dollar-plus homes in the exclusive Brier Lane area of Cowan Heights weren't thrilled at the goings-on after a new resident moved into their quiet neighborhood.
They watched for weeks as scores of cars parked every Friday and Saturday night on the dead-end street. Couples poured out of those cars and quickly entered the nondescript, one-story home at 9881 Brier Lane.
Eventually word leaked out: The new neighbor -- identified in court documents as Stephen Michael Cohen -- was operating a sex club in the house.
Cohen made no effort to keep his activities secret. Sheriff's investigators say Cohen told them that the 2,600-square-foot, four-bedroom house is the location for The Club, a place where couples swap partners for sex.
"We don't believe that kind of operation is appropriate in a residential community," said one neighbor, Alvin J. Glasky. "It's probably not appropriate in any community, but certainly not in a residential community."
When The Club opened in 1988, windows were blacked out and fences were raised to prevent anyone from looking in, according to court records. The garage was converted into a wet bar and the dining room was transformed into a dance floor, complete with revolving, disco-style lights.
Pornographic films were shown on a wide-screen television in the living room and in the bedrooms were padded bunk beds and tunnels and crawl spaces for more intimate contact, the court file shows.
07/18/1991
The Orange County Register
The operator of a sex club in Tustin won't be retried on charges of running an adult business in a residential area, an Orange County prosecutor announced Wednesday.
Stephen Michael Cohen , 44, of Trabuco Canyon had been charged with violating a county zoning ordinance for running The Club, a "swing" party house on Brier Lane where members swapped sexual partners.
After a three-day trial this month, jurors voted 8-4 to find Cohen not guilty of the misdemeanor charges. Deputy District Attorney Stephanie George said her office decided it lacks the evidence to win a conviction in a new trial.
The Club moved out of the house on Brier Lane several months ago to a nearby undisclosed location.
"Everybody wants to put the emphasis on sex and on swinging," Cohen said after the charges were dropped. "(But) it's my position that as long as there are no laws being broken and it's lawful conduct, the police and the state should be stopped from interfering."
"As long as (The Club) is not a business and it's a lifestyle ... this is lawful conduct."
06/18/1996
The Orange County Register
The concept: Create a sexual wonderland, where no fantasy goes unfulfilled.
It would cater to the manly man with car racing, golf courses and skeet shooting _ but the main draw would be 500 exotic women who "live to serve your every desire."
"Select as many companions as can be indulged in a weekend," says a sample brochure for the time-share brothel. "There is no request that can be denied you at Wanaleiya."
Last December, four Orange County entrepreneurs formed a new company in Nevada called Sporting Houses Management Corp. to build The Wanaleiya Resort. They're in the midst of a $1 million public stock offering, partly dedicated to purchasing one of the best little whorehouses in Nevada _ Sheri's Ranch _ as the resort's anchor.
The man [Stephen Michael Cohen] who was Sporting Houses' registered agent in Nevada has a criminal record for fraud and representing himself as an attorney when he is not, according to court records. He no longer works for the company.
The company has its own site on the World Wide Web: "Purchase stock in a REAL WHOREHOUSE!" it says, beside photos of naked women. Beneath the flashing "You will have sex soon!" is the company's prospectus.
Wanaleiya's mock-up brochure wastes no time on formalities. Its cover photo: a narrow slice of a dripping wet, bikini-clad torso.
"You may choose a special companion or browse the Resort in search of the lady that you'd like to accompany you to dinner on your first night," it says. "The 500 companions are friendly and experienced _ they will not hesitate to see to your comfort with pleasure and spare no time in making you feel at home."
But the owner of the brothel canceled Sporting Houses' option to buy the place weeks ago.
"They were supposed to come up with the money. They never did," said James Miltenberger, floating on his yacht off San Diego. "So we canceled their option. We told them unequivocally `no.' Sheri's Ranch is not for sale to them at any price. I want nothing to do with them."
It didn't start out so acrimoniously.
"It originally sounded pretty good," Miltenberger said. "They said, `We want to buy.' I'm going to listen."
Miltenberger dealt with Stephen Cohen, a big man with a confident air who represented Sporting Houses. The company paid $25,000 for an option on the brothel _ and Miltenberger says he waited and waited for Cohen to come through with further payments.
"I'd say, `Cohen, where's the money?' and he'd say, next week, he was going on vacation. I'd say, `Cohen, where's the money?' and he'd say he was sick and going in the hospital," Miltenberger said.
The brothel owner said he thought it an odd breach of protocol when Cohen _ trying to tie up a $7 million deal _ didn't pick up the tab for dinner and drinks.
"The longer they talk, the more you realize ... ," Miltenberger said. "So I canceled them out."
Cohen was Sporting Houses' spokesman from December until the first week of June, when, Powell said, Cohen stopped working for the company.
"Mr. Cohen was our administrator _ he worked in the capacity of a high-priced secretary," Powell said. "That's why he's not with us anymore _ he was looking for more money than we were able in good conscience to pay. His background had nothing to do with his moving on."
6/10/00
Sex.com Sues Luke F-rd
From www.stunningcurves.com: We just posted the docket info, in the previous post, of the lawsuit against Luke F-rd (www.l-keford.com). The lawsuit comes from Stephen Cohen and Ynata Limited, formerly Ocean Fund International, Ltd., the company that owns Sex.Com. We just talked to Steve about the lawsuit and this is what he could tell us.
"Real simple, what’s happened is he has made some false statements and now he's got to face up for it."
"Our parent company used to be Ocean Fund International. It became Ynata Corporation and what has happened is Ynata Corporation and myself have sued Luke F-rd. He's made some outrageous statements that he failed to check out the truth of. Now he's going to have to pay the piper."
When asked what exactly Ford printed, Steve couldn't get into details. "Well I don't want to get into exactly what he said, because that’s part of the lawsuit. He was served today. He's got twenty days to answer and we're going to go forward with it. We're not going to stop. There's no settling on this. Sex.Com lost an advertiser and they've sued him for 50 million dollars. They're going after him and I'm going after him. The man doesn't have very much, but this will force him into bankruptcy."
Steve also mentioned that Luke was served through substituted services. "Most people in the press are protected. Your not protected if you make malicious statements that you fail to investigate and caused damage. If people want to do crazy things they should pay the penalties."
Steve also gave some info on Sex.Com. "Sex.com is the largest site on the Internet. We get anywhere between 185 to 195 million unique visits a day. We have servers in the United States. We actually have servers in most of the main centers around the world. Our main headquarters is in Tijuana Mexico where we maintain a full staff. We control a tremendous amount of Internet sites under a variety of names and we do everything from adult to non-adult. We own the largest ISP in Tijuana."
Steve sums up how he feels about this so far, "Most of the people in this industry are very hard working people. They don't need this kind of nonsense."
We are in the process of contacting Luke F-rd to get his reaction to this lawsuit. Make sure to check back often as this story unfolds.
Darren writes: Hey Luke. I have been reading your site for a few years now. I only thunk it was a matter of time before you got sued by someone with backbone AND money. But, it is Stephen Cohen from sex.com He has sued every mother f---er to hell and back. The truth is....the strong stood up to him and survived...the weak failed. Be strong. I would love to take over a domain that he could sue. I would plaster his ass against a wall. I am still shocked that no one has given him some good old American justice.....In other words, I am surprised he is still alive.
Cheers, Darren BTW. We own 5 VERY profitable porn sites and a hosting company too...6 years doing this now....We may not play with the big boys, but our profit levels smoke theirs, and we have a nicely padded bank account.:) I laugh at all these pr0n stars trying to make it on the net...hahah...I mean, we make more in a day then they make in a month....Bianca Trump could afford a reality spanking from us. :) Best of luck, though. If sex.com sued us I would welcome it. They are a joke.......Remember.....the strong have beat them.....
Luke F-rd Sued for 50 Million
4:57am EST posted by: Kevin Moore [at stunningcurves.com]
U.S. District Court Central District
of California (Western Div.)
CIVIL DOCKET FOR CASE #: 00-CV-5966 Stephen M Cohen, et al v. Luke F-rd,
et al
Filed: 06/02/00 Assigned to: Judge
Nora M. Manella Jury demand:
Plaintiff Referred to: Discovery Ann I. Jones
Demand: $50,000,000
Nature of Suit: 320 Lead Docket: None Jurisdiction:
Diversity Dkt# in other court: None
Cause: 28:1332 Diversity-Libel, Assault, Slander
STEPHEN M COHEN, an Individual Robert S Dorband plaintiff FAX 503-968-7228 [COR LD NTC] DuBoff & Ross Hampton Oaks 6665 SW Hampton St 2nd Fl Portland, OR 97223-8357 503-968-8111 YNATA LIMITED, a foreign Robert S Dorband corporation (See above) plaintiff [COR LD NTC] v. Luke F-rd, an individual defendant DOES, 1-10 defendant STEPHEN M COHEN, an Individual; YNATA LIMITED, a foreign corporation plaintiff v. Luke F-rd, an individual; DOES, 1-10 defendant
6/2/00
1 COMPLAINT filed Summons(es) Issued referred to Discovery Ann I. Jones; Jury Demand (pc) [Entry date 06/06/00] 6/2/00
2 CERTIFICATE OF INTERESTED PARTIES filed by plaintiff Stephen M Cohen, plaintiff Ynata Limited (bp) [Entry date 06/07/00] 6/7/00
3 STANDING ORDER: This order controls this case & differs in some respects from the local rules by Judge Nora M. Manella (see doc for deails) (bp) [Entry date 06/08/00] 6/7/00 4 MINUTES: cnsl are notified that the above-entitled actn has been recently assigned to this crt. The correct number for this case is now CV00-5966-NM(AIJx) by Judge Nora M. Manella CR: N/A (bp) [Entry date 06/08/00] Case Flags: (AIJx) END OF DOCKET: 2:00cv5966
Gene Ross writes on AVN.com:
Cohen claims Sex.com lost an advertiser, prompting them to sue for $50 million as well. "They're going after him, and I'm going after him," Cohen had said over the weekend. "The man doesn't have very much, but this will force him into bankruptcy."
"Most people in the press are protected," he continued. "You're not protected if you make malicious statements that you fail to investigate and caused damage. If people want to do crazy things they should pay the penalties."
"First of all, the guy's a wannabe in the sex business. The four major distributors want virtually nothing to do with them," he continued. "He prints a lot of stuff that's just untrue. He does no investigation. He's malicious and the law's quite clear on this stuff. If you're malicious and print something that's not true, you have to face the piper and that's exactly what he's going to be doing. We've got him in the United States District Court for the Central District of California..."
"Luke F-rd's conduct has been so egregious, that we picked him first. But they're in a list. We've never lost in the courts and we're very aggressive to protect our rights. The problem with this character is that nobody cares if you speculate or say you're speculating. But to print something as the truth when in reality you've done no checking or no verification, where it causes damages, that's where we have to draw the line." (From AVN.com)
9/18/00
Sex.com Lawsuit Swings Kremen's Way
As I've reported for months, Gary Kremen is suing Stephen Michael Cohen to regain control of the sex.com domain name. It now appears clear that the suit is swinging Kremen's way.
Judge James Ware in the US District Court, San Jose division, last week ruled decisively in Kremen's favor in several motions. For instance, Ware granted Kremen's motion to strike Cohen's counterclaims"
Introduction
Plaintiff, Gary Kremen, filed this suit alleging misappropriation of the internet domain name, "sex.com." Defendants and Coutnerclaimants, Stephen Michael Cohen, Ocean Fund International...filed counterclaims...claiming...defamation... Plaintiff has moved to strike these counterclaims under California's anti-SLAPP statute [against frivolous lawsuits]. ...Motion GRANTED.
Background
... In October 1995, Kremen discovered that "sex.com" was registered to Cohen. Kremen alleged in his First Amended Complaint, filed October 16, 1998, that Cohen forged a letter, which bore the signature "Sharon Dimmick," as president of Kremen's company, and which purported to transfer the "sex.com" domain name to Cohen. Kremen further alleged that Cohen submitted the fraudulent letter to NSI as the basis for misappropriating the rights to "sex.com." Kremen further alleged that, at the time Cohen submitted the letter to NSI, Cohen had just been released from prison for bankruptcy fraud, false statements, and obstruction of justice...
In April 1999, Kremen conducted an interview with a reporter for Wired News, an online news service. While discussing the current lawsuit, Kremen stated that (1) Cohen had stolen the sex.com domain name and (2) Cohen had called Kremen and identified himself as a trademark attorney...
Luke writes: Judge Ware last week also denied Cohen's motion to dismiss Kremen's third amended complaint. Judge Ware writes:
Sharon Dimmick was Kremen's housemate in October, 1995. It is undisputed that Ms. Dimmick did not sign or have any knowledge of the Dimmick letter. In fact, her first name is misspelled in the signature of the letter. Ms. Dimmick has submitted an affidavit confirming that she had no involvement with creating or authorizing the letter...
Plaintiff [Gary Kremen] asserts that Cohen forged the Dimmick letter to improperly gain control over the sex.com domain name. In his Response to Plaintiff's Requests For Admissions, Cohen has admitted that he directed Mr. Vito Franco to prepare the Dimmick letter. Cohen has admitted in deposition that no person other than himself and Mr. Vito Franco was involved in producing the Dimmick letter. Cohen stated that the letter was typed on the computer system of Mr. Franco, and that Mr. Franco had told him that he had geenrated the letterhead for "Online Classifieds" on his computer. Cohen also admitted that he may have drafted the text of the letter with Mr. Franco.
Luke writes: Gary Kremen's attorneys have filed for summar judgment on the heart of the case. I quote from Kremen's attorneys motion:
Please take notice that on October 16, 2000, at 9:00 a.m., or as soon thereafter as this matter may be heard, in the court...located at 280 South 1st Street, Courtroom 8, Fourth Floor, San Jose, California 95113, before the Honorable James Ware, plaintiff Gary Kremen willl...move...for summar adjudication of plaintiff's claims for declaratory relief and defendants' claim and defenses for trademark infringement...
The controlling issue in this case is simple: who owns "sex.com" - Gary Kremen or Stephen Michael Cohen and his shell corporations... As will be demonstrated below, the transfer of the domain name "sex.com" to Cohen - based as it was on an indisputably forged document - was invalid and, therefore, Kremen is entitled to summary adjudication on his claim for declaratory relief. Furthermore, there is no dispute that Cohen's fanciful claims to trademark rights to sex.com are meritless as a matter of law.
Cohen's involvement in the Dimmick forgery and its use with NSI is not the first time that he has engaged in criminal misconduct and impersonations to defraud others. Indeed, Cohen has spent a lifetime perfecting his "art" of defrauding and manipulating unsuspecting victims. He has an extensive criminal record, and has been convicted on multiple occasions for fraudulent activities, obtaining others' property under false pretenses, criminally impersonating others, as well as other crimes.
From 1974 to 1977, Cohen was convicted of various state law crimes in no fewer than three separate prosecutions. For example, in 1974, Cohen was charged with and convicted of multiple counts of grand theft and writing bad checks. Significantly, in 1977, Cohen was convicted inter alia, of several counts of false impersonation, forgery, and grand theft.
Then, in November of 1990, Cohen was named as a defendant in a five-count indictment filed in federal court in San Diego. He was charged with and ultimately convicted of obstruction of justice, bankruptcy fraud, and making false statements. The crux of this criminal conduct was that Cohen misrepresented himself as a bankruptcy attorney to various people and to the Bankruptcy Court in the Central District of California. He was found guilty of fraudulently gaining access to funds belonging to the Debtor in Possession and hiding his misconduct through a series of shell-companies and fraudulent transfers. IN denying him bail, the president federal judge cited Cohen's penchant for lying to courts.
At his recent deposition, Cohen also admitted to impersonating attorneys at various points in his life, in addition to the pattern of such misrepresentations for which he was convicted in federal court. Although he is not an attorney, Cohen falsely represented himself to be one (as he did in this litigation) and assumed the identity of other attorneys on numerous occasions when communicating to others. He also admitted to using at least two different Social Security numbers during his life - no doubt to divert others from traking his true identity.
Significantly, the Dimmick forgery is not even the first time that Cohen has utilized a forged letter to obtain the beneficial interest in the nameo f a business not otherwise his own. On October 13, 1982, Cohen submitted a letter purportedly from "Araldo Peralta," the President of Omni-tech, Inc, purportedly authorizing Cohen to incorporate a new corporation named "Omnitech International" with the Secretary of State of California. The 1982 Peralta letter, like the Dimmick letter, is a forgery...
Kremen's Motion For Preliminary Injunction
The evidence is overwhelming that Cohen - consistent with his life-long pattern of criminal fraud and impersonations - stole the sex.com domain name enterprise and devised a scheme of supposed transfers to shell corporations and offshore entities in an effort to avoid facing ultimate financial responsibility for his misconduct.
Cohen's theft has been highly renumerative - even by his own felonious standards and according to his own testimony. Since the theft, he has used the domain name to create a pornographic website that boasts at being the largest website in the world, eliciting millions of "hits" per day and generating hundreds of millions of dollars in income. Although Cohen has been far less than forthcoming in discovery in this action, he has acknowledged that the domain name sex.com was worth "megamillions" and produces an enormous sum of advertising and membership revenue on an annual basis.
It recently became clear at Cohen's deposition (obtained as a result of a Court order) that he has every intention of immunizing himself from teh effects of any financial relief this Court could award after a trial. Not only has he set up a series of interrelated offshore companies through which sex.com related assets are held and developed, Cohen is thwarting plaintiff's efforts to obtain critical information through discovery. For example, at his deposition, Cohen invoked the Fifth Amendment over twenty-five times as part of his refusal to answer numerous questions relating to the financial affairs of the various offshore entities. In addition, he relied on the Fifth Amendment in refusing to provide any information about the terms of his alleged transfer of the domain name sex.com to one or more of these entities. Moreover, when plaintiff's counsel asked about the profits and losses related to sex.com, Cohen stated that he lacked any knowledge about these topics.
...Kremen will demonstrate that he is entitled to the following provisional relief against Cohen...
1) Defendants must return the status quo by returning the domain name sex.com to Plaintiff [Kremen];
2) Defendants must return to or maintain in the United States a meaningful portion of the revenue already generated from sex.com to be held by the Court pending final judgment;
3) Defendants must provide a complete accounting as to all revenues, rents and profits in connection with the sex.com enterprise;
4) Defendants must return to or maintain in the United States all revenue generated between now and the entry of a final judgment...
...As demonstrated in the companion Motion for Summary Adjudication, Stephen Michael Cohen has spent most of his adult life pursuing criminal schemes to deprive others of their money and property through impersonations, forgeries and fraud...
Court and prosecutors have long noted that Cohen is untrustworthy and perfectly capable of saying or doing almost anything to avoid financial responsibility for his misconduct. For example, after Cohen's conviction in federal court of bankruptcy fraud in 1991 (in connection with his impersonation of attorney Frank Butler and as part of a Ynata Corporation bankruptcy), the government sought to have his bond exonerated and have Cohen remanded into custody. The prosecutor noted that:
"as was clear from his testimony, this man changes his identity, changes his occupation, changes his location at will. He drives on a Colorado driver's license. He recently lost his house. It was finally foreclosed on after a number of shell corporations that had been holding the house had gone bankrupt and managed to get stays... He has lied to courts repeatedly, not just in the matters that came before this Court in the course of this trial but over a period of 15 years or so."
...Cohen admitted at his deposition that prior to his release from prison in 1995, he would freely forge others' names on documents or would misrepresent his identity to others.
...At his deposition, Cohen offered the following whimsical chronology of those transfers: after acquiring rights, title and interest to "sex.com" through the forged Dimmick letter, Cohen transferred the domain name to a Nevada corporation, incorporated by him for the purpose of taking a brothel public, Sportin gHouses Management Corp ("SHM I") for $2 million in cash plus $2 million in stock. Pursuant to Cohen's agreement with SHM I (one that was made with no appraisals, lawyers and conspicuously was not memorialized anywhere except in phantom "minute orders" of SHM board meetings), Cohen purportedly retained a right of reversion in the event that SHM failed to pay the specified sum.
Sometime thereafter, and as a result of fraudulent activity uncovered by the Secretary of State of Nevada, SHM I dissolved and transferred most of its assets (including sex.com) to a newly formed California corporation (again incorporated by Cohen), also exactly and confusingly named Sporting Houses Management Corp (SHM II). Significantly, the prospectus for SMH II did not list "sex.com" as an asset. According to Cohen, SMH II failed to honor its predecessor's agreement, and sex.com thus reverted back to him. Again, there is no writing to reflect this supposed transfer of this multi-million dollar asset.
Then, sometime in 1996 or 1997, Cohen purported to transfer the domain name to Ocean Fund Internacional, Ltd, an offshore corporation formed by Cohen...
At his recent deposition, Cohen disclosed for the first time that OFIL supposedly has changed its name to Ynata, Ldt (another offshore corporation incorporated by Cohen)...
Despite the fact that the terms of the sex.com transfer and the profits generated thereafter are highly relevant to this action, Cohen has thwarted numerous discovery efforts to obtain information on these matters. At the outsdet of this case, Cohen resisted even appearing at deposition, requiring extended discovery motions and a court order to obtrain his recent deposition conducted in July, 2000...
In spite of defendants' discovery stonewalling, Kremen has obtained documentary evidence establishing that defendants' use of the sex.com domain name has been highly profitable...
While Cohen refused to answer questions about Ynata's or OFIL's profitability, he did disclose the following:
1) In 1996, he told the Board of Directors of Sporting Houses of America, Inc. that the domain name would be worth "megamillions";
2) defendants recently turned down an offer of $48 million in cash for sex.com
3. As of mid-1999, sex.com had approximately 9 million subscribers paying $24:99 monthly for access to sex.com, meaning, on an annualized basis, gross revenues of several billion dollars...
4/3/01
Biggest Internet Domain Name Award - Final Judgment In Kremen vs Cohen
We finally got the final judgment in the Kremen v. Cohen case. The Judgment awarded Gary $40 million for damages and $25 million in punitive damages. This is already being written up as the biggest internet domain name award on record.
Here's the press release from Kremen's attorney:
SAN JOSE (Tuesday) --- U.S. District Judge James Ware today found the former owner of the "sex.com" domain name liable for fraud and forgery, ending a contentious three-year court fight with an award of $65 million --- the largest in Internet domain name history.
Judge Ware's findings of fact, which are equivalent to a jury verdict but are issued by a judge after a trial without a jury, found that Stephen Cohen, the former operator of the sex.com online adult entertainment empire, "devised and executed a fraudulent plan to steal the domain name 'sex.com' from Gary Kremen."
Ware found Cohen liable to Kremen, a San Francisco entrepreneur, for $40 million in compensatory damages and $25 million in punitive damages. The judgment issued by Ware also commanded that an arrest warrant for Cohen remain outstanding until Cohen surrenders all of his property to the Court.
Kremen had originally registered the domain in 1994, but discovered a year later that it had been re-registered by Cohen using a forged letter to Network Solutions, Inc. The trial, which ended March 9th, included testimony about the millions Cohen had received from operating sex.com since the domain was stolen in late 1995.
The trial also included a highly-unusual bench warrant for Cohen's arrest arising from his failure to appear in court in violation of the judge's orders. Speaking through his criminal defense attorney, Cohen has claimed that he is under house arrest in Tijuana pending investigation into unspecified charges by Mexican officials. Cohen has previously served time in federal prison for bankruptcy fraud and impersonating an attorney.
Lawyers watching the case noted that it was exceptionally difficult to uncover the amounts of money Cohen had earned from the domain, since he placed the vast sums in offshore accounts in Liechtenstein, Luxembourg, and the British Virgin Islands and has invoked the Fifth Amendment when asked about the funds. To combat the offshore flow of funds, the court in November froze $25 million in Cohen's assets. Cohen failed to comply with that order.
Kremen's attorney, James Wagstaffe of San Francisco's Kerr & Wagstaffe LLP, was pleased with the large verdict. "The substantial size of this damage award sends a message that the Internet is not a lawless wasteland," Wagstaffe said. "If you take someone else's property, you simply have to give it back, no matter what kind of property it is."
6/26/91
SACRAMENTO (AP) -- Federal investigators are probing the role of a former trustee of the state workers' mammoth pension fund in connection with an unsuccessful $100 million investment scam.
The investigation was disclosed yesterday when convicted swindler Marshal Zolp , 44, pleaded guilty in Newark, N.J., to federal racketeering charges that included a fraud scheme involving the $63 billion California Public Employees Retirement System. The identity of the former trustee, who investigators said was involved with Zolp in the alleged scheme, is being withheld by federal authorities pending the outcome of their investigation. State sources said only that the subject of the investigation was an appointee of former Gov. Deukmejian.
According to court records, Zolp tried to obtain $100 million from the retirement system through the influence of the former trustee. The money was supposed to go into a fraudulent investment account. In return, prosecutors said, Zolp offered the former trustee a $10 million bribe.
7/9/99
NEW YORK (Dow Jones)--When con man Marshall Zolp was released early from the federal prison system two years ago, the authorities gave him simple instructions: Don't sell or offer to sell securities again, or you'll find yourself behind bars - again.
Now, the U.S. Marshal Service is searching for Zolp because he violated the terms of his release.
Information from interviews by Dow Jones Newswires with executives of three small companies suggests Zolp, using the aliases Werner Wassler and Frank Williams, represented a financial-services company that last year and earlier this year offered to sell securities for the companies. The firm, Union Trading-International Ltd., purports to be based in Geneva, Switzerland, with offices in Amsterdam.
But the circumstances surrounding Union Trading's work for one company, U.K.-based GS Telecom Ltd. (GARD), have attracted the attention of the Securities and Exchange Commission. Revenue Forecast Retracted GS Telecom's shares went from less than $2 each to more than $8 for a brief time in late March and early April after the company - which has no revenues and about $32,480 of assets - issued a press release containing a $1 billion revenue forecast that the SEC later asked it to retract. The stock, which trades on Nasdaq's over-the-counter bulletin board, recently changed hands at $1 a share.
GS Telecom's director of marketing, Stuart Ashmore, says the press release and others that followed were Union Trading's idea. "They said they needed to put out some positive announcements to support what they were doing," Ashmore says. "We kept toning (the press releases) down, changing them retrospectively. It was a very embarrassing situation."
Union Trading, which was retained to underwrite a $25 million bond offering for GS Telecom, hired CompletePR, a Phoenix-based public-relations firm, to write the press releases. Lee McCaskill , one of the now-defunct PR firm's principals, says GS Telecom did ask her to tone down some of the press releases, but it didn't reject any of them. "Everything that CompletePR put out was run through and approved by the officers" of GS Telecom. McCaskill says she got the $1 billion revenue projection from a prospectus for the bond offering.
"From what I understood, they had run it through legal, it was copacetic."
Ashmore says Union Trading's president, Werner Wassler, wrote the prospectus. Shown a photograph of Zolp taken in 1986, Ashmore said it is "absolutely, without a doubt" the same person he met in San Diego on Feb. 19. That person claimed to be Werner Wassler.
At the time, Zolp was a suspect in a penny-stock fraud scheme revolving around a fictional company, Laser Arms, that claimed to have invented a self-chilling beer can. The can ended up being a device filled with a canister of freon gas that made the can cold to the touch, but left little room for any beverage. Zolp later would plead guilty and cooperate with federal investigators in return for a shorter prison sentence.
In 1990, while serving out his prison term in a federal halfway house, Zolp launched a plan to bilk $100 million from the California Public Employees Retirement System, the country's biggest pension pool. When caught by the FBI, Zolp was in negotiations to pay an ex-trustee of the pension system a $10 million kickback in return for a $100 million investment in a phony company Zolp controlled. Zolp also admitted to buying shares of a publicly traded beverage company for 5 cents each, issuing false press releases about the company, and selling the shares for 55 cents each.
In 1992, Zolp received a 12-year sentence from U.S. District Judge Alfred J. Lechner, who called Zolp the "consummate racketeer" and predicted he would commit another crime within months of being released.
Zolp was released from a federal halfway house on June 30, 1997. In December 1998, a federal judge in Los Angeles issued a warrant for Zolp's arrest for selling securities in violation of the terms of his supervised release.
Another Blow To Stephen Michael Cohen
From Wired.com 2/7/01:
Things were looking bad enough for Stephen Michael Cohen back in November, when he lost ownership of the domain name sex.com.
But that was just the beginning. Now, Cohen stands to lose income generated from sex.net, kinkymate.com, nastydate.com and a list of more than 80 other predominantly porn-related domains registered under his name.
Those are the terms laid out in a Friday ruling from a federal judge in San Jose, California, who authorized a legal advisor to collect income from any of Cohen's Web businesses to raise money for lawsuit damage payments.
In his ruling, Judge James Ware said the court would "take custody of any proceeds generated from the operation of any Internet domain name for which Stephen Michael Cohen is listed either as a technical, administrative or billing contact."
Warrant Issued For Cohen's Arrest
Howard Mintz writes for the 3/6/01 San Jose Mercury News:
The former owner of sex.com, stripped of his lucrative porn portal last November, is now considered an international fugitive.
In a highly unusual move in a civil proceeding, a San Jose federal judge on Friday issued an arrest warrant for Stephen Cohen, who apparently has defied repeated court orders to relinquish millions of dollars he has earned from sex.com -- a domain name he is accused of stealing. U.S. District Judge James Ware ordered Cohen jailed because he repeatedly has failed to show up for court appearances in a lawsuit against him and defied instructions to relinquish his sex.com-related assets.
At this point, it is unclear whether U.S. marshals will be able to get their hands on Cohen, who had been living in Mexico and whose whereabouts now are unknown. Cohen's lawyers recently filed court documents claiming he was being detained by police in Mexico, but the judge dismissed the excuse as ``unsubstantiated.''
Luke says: I hear Cohen is hiding out with fugutive San Diego porner Steven Donald Wiener.
From CNNfn.com: While Kremen was busy developing his online dating service and registering Sex.com, Stephen Michael Cohen sat in federal prison serving a 42-month sentence for bankruptcy fraud. The prior felon had orchestrated a number of impersonation and deception schemes in the past. Cohen finished his bankruptcy fraud term in February 1995, and left federal prison.
Then the tale's first plot twist began. In October 1995, Network Solutions received a letter from a company called Online Classifieds Inc. stating that control of the Sex.com domain name was to be turned over to Cohen. The writer of the letter is listed as Sharyn Dimmick.
Dimmick, who was Kremen's roommate until April 1995, did not know Cohen, says Kremen's lawyer Pamela Urueta of San Francisco-based Kerr & Wagstaffe LLP.
Network Solutions obliged and transferred control of the domain name to Cohen. Following the transfer, Online Classifieds Inc. informed Network Solutions that all correspondence would have to take place via mail or telephone -- because Online Classifieds Inc. did not have Internet access, Urueta says. Online company, no Internet access.
In defiance of those two orders [by Judge Ware], Cohen did not place $25 million in the court's bank and did transfer money to accounts outside of the United States, says Urueta. She adds that Cohen has been sending money to banks in Luxembourg and other such countries for some time in order to avoid seizure of his assets. Cohen's lawyer confirms that the $25 million was not placed, and that money was transferred after the court order.
6/1/06: Great Filing From Stephen Michael Cohen In Jail
