“That’s him! Ohmigod, ohmigod, ohmigod!”
We were cruising the streets of Tijuana in August 2005, looking for a man named Stephen Michael Cohen, a fugitive from American justice, a lifelong thief and a silver-tongued con artist so gifted that even his victims and the lawmen who have pursued him for 30 years admire him.
The man shouting in a high-pitched voice was one of those victims — Gary Kremen, a 42-year-old millionaire who, 11 years ago, had been the mark in a bold and elaborate scheme in which Cohen took from him the most valuable domain name on the Internet, Sex.com. Kremen has been pursuing Cohen for more than a decade, first trying to get his property back, then seeking to enforce a federal order that would return to him $65 million in lost proceeds from the website. In the process, Kremen spent almost everything he had — about $5 million — on lawyers.
Hands on the wheel, head swiveling, face reddening, Kremen kept on shouting as he swerved to the curb. “Get out of the car!” he screeched. “Get out! Go talk to him!”
Kremen’s eyes were wild. He hadn’t seen Cohen face-to-face in more than four years, not since the day they had first met, at a legal deposition, and failed to settle their differences. Kremen wanted a confrontation but clearly didn’t want any part of it himself. That was to be my job.
Across four lanes of Tijuana traffic, outside a black-glass office building and standing next to a soccer-mom-style Honda CR-V was a pasty guy in dumpy jeans and a Beverly Hills Polo Club T-shirt, carrying two cell phones on his hip. Cell phones, I already knew, were his weapon of choice.
“Steve Cohen?” I asked as I trotted up to him, notepad in one hand, the other outstretched. He seemed to flinch, and his eyes swept the street as he tentatively shook my hand. Walking into a cloud of his cologne, I studied the man who’d been avoiding me with elaborate lies. When we’d spoken a few days earlier, he’d claimed he was in Monte Carlo running a casino, extending credit to high rollers, getting his private Citation jet fueled up for a jaunt.
“Uh, what are you doing here?” he asked, struggling for composure. Cohen, 57, looked as unimpressive as a man can look and sounded very little like a canny international fugitive.
For the next 10 minutes I peppered him with questions, sure that I was safe because Kremen and a private investigator he had brought along were nearby in a Grand Cherokee. But then Cohen recovered and gradually nudged me into the building, guiding me into a cracked-leather chair in a dimly lit conference room in the office of his attorney, Gustavo Cortes Carbajal, known in Tijuana as El Sapo, the Toad.
The Toad’s hand gripped my shoulder, his pockmarked face inches from mine. “Mi casa es su casa,” he said. “Please don’t steal anything.” Cohen, the world-class thief, seemed to smirk too. The fear was gone, the color back in his face. The con man’s vaunted confidence returned, and his words poured out in a honeyed flood. “I don’t live here. I live in Europe,” he said. “I’m normally in Europe. Tell Kremen you saw me. No, I’d appreciate it if you didn’t. I don’t want my whereabouts known to him. The days between Kremen and me are totally over. Kremen spends his life on this. I don’t have the time and energy. If the Supreme Court rules in my favor, I’ll give you the exclusive.”
In the middle of his speech, I felt my cell phone vibrate with a text message from Kremen: cohen shooting in black building.
Jarred, confused and certain I’d hear nothing more of value from Cohen, I got out of there as fast as I could. Back in Kremen’s Jeep, I asked what the message was all about.
“Just fucking with you,” Kremen said.
When the history of the Internet is written, the taking of Sex.com will be one of its most entertaining chapters, not just because it was the biggest theft in Internet history but because the decadelong tragicomedy established a simple but vital legal principle: Internet domain names, unlike song titles but like songs, are property subject to conversion; in other words, they can be stolen. Open a property-law book. It’s in there.
That such an important precedent arose from a legal spit-ball fight between two social misfits like Cohen and Kremen is but one of the ironies here. Aside from the law and the vast sums involved, the real story is the human one, with all the complexity and confusion that color relationships. This was the greatest duel ever fought on the world’s newest lawless frontier, once upon a time out there in the ever-morphing ether of cyberspace, the ultimate morals-free zone.
Kremen and Cohen, white hat and black hat, turned out to be as similar as they are different, not just brilliant, pudgy nerds, not just multitasking, tech-obsessed, stay-up-all-night geeks with the ambition to make bags of money, but remorseless, opportunistic competitors determined not just to win but to delight in the other’s losing — and also get famous and laid in the process. “Cohen is someone just as twisted and smart as Gary,” says Sex.corn’s resident porn star, Kym Wilde, who began consulting for Kremen in 2001. “It’s what Gary admires and appreciates.”
In a phone call before we tracked him down in TJ, as the locals call his border-town home, Cohen had refused to talk about Sex.com at all. “In the circles I run in,” he said, claiming he’d invested in hotels and casinos, “sex doesn’t mix. I made millions in the sex business. I make more today. You move on.”
Of course, those are all lies. For 11 years Cohen and Kremen have been locked together as tightly as Holmes and Moriarty, or the Road Runner and Wile E. Coyote. In the struggle both men embraced with gusto, they not only came to define each other but nearly became the same person. Cohen grew to respect Kremen’s dogged pursuit of justice; Kremen couldn’t help but emulate Cohen’s ability to damn the consequences and go full speed ahead.
Yet one crucial difference remains: Kremen wants to win while playing by the rules. Cohen thinks flouting them makes life worth living.
Kremen doesn’t look the part, but he’s some kind of genius. Born in 1963, he grew up in Skokie, Illinois, “part geek,” he says, “but definitely a hell-raiser.” We’re sitting in a conference room in Sex.com’s vast, underpopulated office in San Francisco, after a staff meeting so full of techie jargon I’ve managed to understand only that the company sells clicks: When he wrested back control of the site in 2001, Kremen turned it into a Wal-Mart of porn, but the only products he offers are links. Each time a surfer clicks on one, the target website pays Sex .com a few cents from an escrow account. The amount the target agrees to pay, which is arrived at via a complex bidding system, determines how high on the page its link appears. When a customer types, say, “redhead blow job” on the Sex .com home page, the top position naturally costs the most. But don’t search for violence, kiddie porn or bestiality. Kremen is like Wal-Mart in that way, too. He lists only what’s relatively decent to look at. As a result he has gained an oxymoronic reputation as online porn’s Mr. Clean, who neither produces nor distributes the stuff himself.
Part of his story is that he has been one of the good guys since he learned his lesson as a kid. “I hung out with this group of stoner, heavy metal, break-into-the-school-and-trash-things people,” Kremen says. “We took all the money from the Coke machines. They called my parents, and they said, ‘Put him in the jail cell for 10 minutes.’ I became a good child.”
His father was a driver’s-ed instructor and ham radio operator; his mother taught accounting. It’s appropriate, then, that Kremen studied science and dreamed of money, but during his years of studying and working he also developed a pent-up desire for kink. This somewhat explains the presence of B&D star Wilde, who is not just a Sex.com consultant but also Kremen’s occasional chauffeur. Yet sex isn’t his priority: When Wilde was late picking us up from the Oakland airport, he banished her to the backseat for the trip back to San Francisco. He even ignored her when she flashed her breasts.
Skokie was a competitive environment for smart kids, and Kremen learned that he liked winning. He now lives in an 8,900- square-foot, six-bedroom San Diego mansion on three acres in the city’s exclusive Rancho Santa Fe community; the home once belonged to Cohen. It’s the first and so far the only significant asset Kremen has seized from “die bad guy,” as he calls his adversary. Framed and mounted on a wall in his home are the circuit boards that made up his first hand-built computer, which won him first prize in a seventh-grade science contest. It’s next to the popcorn machine and the red London phone booth, around the corner from the server room.
Something of a nervous man, Kremen sleeps in a small bedroom down the hall from the master suite; the bad guy’s room makes him uncomfortable, he says. But as a kind of taunt, he keeps all the legal papers relating to Cohen in the big bedroom’s huge walk-in closet.
Kremen always wanted to make money. “I missed out on 15 years of having fun, going to rock concerts, having girlfriends,” he says. “That’s why I had my little drug crisis.” After winning back Sex.com Kremen also got into crank, or methamphetamine, which led to indulgences with porn stars, too.
Kremen enrolled at Northwestern in 1981, and in the era of the yuppie he fit right in with his double major in electrical engineering and business and his after-school job. “He took it on himself to be the guy with the most job offers for the highest salaries,” says Steve Laico, who has been his best friend ever since. “He got all that.” But he wasn’t averse to fun. “I don’t want to call him a crazy genius, but that’s close,” says Philip van Munching, a brewery heir who was another friend. “If he owed you $10, he’d give you a check with a statement you vehemently disagreed with written above the endorsement line, so you’d have to endorse it. It wasn’t malicious. He was contentious for fun.”
After graduating, Kremen got a job with a government aerospace contractor, where he first encountered the earliest version of the Internet, then called Arpanet. He enrolled in Stanford business school, in Silicon Valley, to learn to be an entrepreneur, and he kept his nose to the grindstone. “I lost my virginity at a normal guy time,” he says, hesitating briefly before adding, “you know — 13 or 14. I had a girlfriend in college.” That’s right, just one. His final project was a study of bankruptcy.
Concurrently, a few hours’ drive south in Orange County, his future nemesis, Cohen, was moving up the criminal food chain, with a specialty in bankruptcy fraud.
Cohen grew up in Van Nuys, in the San 134 Fernando Valley outside Los Angeles. When he was little, his father, a successful accountant, left home, married his secretary and moved to Beverly Hills, where he drove a Rolls, inspiring admiration and envy in his son. “His mother was sweet, but he thought she was a real nutcase,” says Susan Boydston, the third of Cohen’s five ex-wives. “She kept the house spick-and-span, and he was a rebellious slob. He tuned her out at an early age. He felt he had only himself to count on, and everyone in his path would pay.” Cohen’s ex-wives aren’t the only bitter people left in his wake. By phone from her home in Las Vegas, his mother, Renee Cohen, says, “I don’t have anything to do with him. Sorry.”
Cohen started cutting corners young. When he bought his mother roses at 16, she thought she’d perhaps misjudged him until the florist’s charge showed up on her credit card. High school friends remember him as abrasive and cocky, always talking about sex but never getting any, a “strange duck” who sat in the back of class with “a perennial smirk, as if he knew what was going to happen and we didn’t.”
“His posture was slinky and dastardly,” says schoolmate Penny Campbell. “I know that sounds a little cartoonish, but he presented a Snidely Whiplash persona. Interesting how much a person’s body language can reveal, isn’t it?”
Not long ago the fugitive Cohen reconnected by phone with another school pal and told him about his holdings in Tijuana, “his shrimp farm, his titty bar, his ISR” Steve Fischler says. “Then I heard him say, ‘Get my jet ready.’” Cohen said it was a Citation. “Then another phone rings.” Fischler next overheard half a conversation in which Cohen appeared to approve a credit line for a casino gambler. But Cohen has had the same second-line conversation almost word-for-word with others — including me when he tried to convince me he was calling from Monte Carlo, where, he claimed, he was too busy running casinos to give an interview. He was in TJ at the time.
Cohen married young twice and had three kids. He was later jailed for failure to support his oldest, a daughter who later became a police officer. Her father had long since turned to crime. “When I was a kid, I was involved in a multimillion-dollar check-kiting scheme,” Cohen admitted to me that day in TJ. Through the mid-1970s he was constantly in legal trouble. His first arrest was for passing bad checks — all under $300, by the way. He avoided prison by pleading guilty, but while on probation he was arrested again, for stealing a car.
Charges of forgery, impersonation and grand theft followed, and in 1977 Cohen was sure he was going to jail. While awaiting sentencing, he met and married Boydston, because, she thinks now, he needed someone on the outside to protect his interests. She was in court the day his then lawyer won a venue change from L.A. County to Orange County, where Cohen lived. He was thrilled. He had a judge there “in his pocket,” Boydston says.
In the 1980s Cohen continued his life of cons. He used Boydston’s money to buy a house in a gated Orange County community and began moving in and out of businesses as fast as a three-card monte game. When the heat was on one, he’d open another: repossessions, key chains and gewgaws, computer time-shares, computer sales and import-exports; there was a liquor store, a limo service, a telephone-answering service and more — many with similar names incorporated in different states. Boydston learned later that she was listed as an officer of many of them, as were family members and friends. Evicted for nonpayment of rent, Cohen would vandalize the offices on his way out.
He had five passports, three driver’s licenses, locksmith and private investigator licenses, a plane, a sailboat, a Cadillac, a Porsche and that Rolls he’d always wanted, though it was never clear whether he owned, leased or had stolen the vehicles, and they seemed to have a habit of crashing or sinking or just disappearing — like the Rolls, which was registered in Boydston’s name. He convinced Boydston he worked with the CIA to explain his frequent trips to South and Central America, booked through his agency, Confidential Travel — all free and first-class, of course, scammed somehow with travel agent vouchers. He would actually go with friends such as Jack Brownfield, a convicted cocaine trafficker.
An electronics nut since childhood, Cohen forged documents in the garage on his own copying machine, wired his own phones and had seven lines in the bedroom where he worked all night and slept all morning behind a locked door. Cameras were trained on the door of the house for good reason. Aggrieved victims of his frauds, marshals, process servers and investigators regularly rang the bell. Boydston wasn’t allowed to answer the door or the phone. When a process server got past Boydston one day, Cohen pushed the woman down a spiral staircase and then started “slamming on me with his fists,” Boydston says.
Cohen’s lies were ceaseless and shameless. He told people he had studied at West Point and been an admiral, and he claimed to be one of the three Stephen M. Cohens on the California bar. He also borrowed his own lawyers’ names — making fake letterhead on his computer, often with the same telltale layout and typeface (he was lazy that way), with word-processing software he’d then return for a refund.
Yet despite all this, Cohen charmed powerful people — like lawyers and judges. “I don’t know what credentials he showed,” says Roger Agajanian, his first lawyer and still a friend, “but he even impersonated a judge in Colorado for several years. He let people off all the time.”
Cohen was sued and arrested so often that neither Agajanian nor Boydston could keep count, and he so frustrated his victims, creditors and the law by playing procedural games and hiding assets that they would eventually just give up.
Also during the 1980s Cohen discovered swinging, pressuring Boydston into wife swapping and group sex. By then she had learned he’d drained all her equity from the house and was perpetrating scams in her name. She finally divorced him in 1985 after he had sex with two of his answering-service operators in their bed. He had discovered computers, scamming to get one for free, of course, and using it to start a computer bulletin-board system for wife swappers called the French Connection. He would sit up all night, impersonating women (he posted under both Boydston’s name and that of his elder daughter) to lure men to pay a fee and join.
The company that owned the BBS was called Ynata, an acronym for “you’ll never amount to anything.” Some who know him think his mother used to say that to him and he’s been determined ever since to prove her wrong. Cohen calls it a private joke and told Boydston, who returned to her house in 1987 (though she moved into a separate bedroom), that he used it to mock his victims: When they came after him, all they’d find would amount to nothing.
When Boydston discovered that he was still using her name, this time in bankruptcy frauds, she finally had enough. She began going through his papers, hiding incriminating documents. Unbeknownst to her, she wasn’t the only one investigating him. Gary Jones, an Orange County sheriff, had been trying to get the goods on Cohen ever since he’d gotten a tip that Cohen was stealing luxury cars from owners who were behind on their payments. He then learned Cohen was also running a fake law firm out of the towing companies he used to steal the cars. The thief who stole them for Cohen turned against him — yet he still got off.
Then Jones heard about the Club. In July 1988 Cohen opened his own swingers club in a four-bedroom house cut up into crawl spaces and tunnels lined with mattresses. It was so successful that it became a neighborhood nuisance.
After the slew of complaints reached a crescendo, Jones arrived on the Club’s doorstep in 1989. Cohen was outraged and went on TV to plead for his free-speech rights. But then he telephoned Jones, pointedly mentioning the sheriff’s wife and children by name, and threatened to buy the deed to Jones’s house, “I came unglued,” Jones says. “He made it personal, so every time that guy sneezed, I knew.”
Jones finally charged him with zoning and fire-code violations, but the trial ended in a hung jury. Even before that, however, Cohen’s troubles had begun to mount: He was ordered out of Boydston’s house for
failure to pay the mortgage, was arrested for hitting one of his daughters and finally came under investigation for far more serious crimes than running a sex club. He’d flimflammed his way into a bankruptcy involving an elderly woman whose son had run up large debts. Cohen impersonated an attorney, created false documents and loans to hide what he’d done and then convinced his “client” to invest her hidden assets in his shrimp farm.
“They arrested him seven times,” says Boydston. Still, he was cocky and sure he’d never be convicted. When he learned one of the DA’s law clerks had failed her bar exam, he called and told her she’d passed, just to mess with her mind. Then Boydston went to the FBI with her evidence, and Cohen was on his way to federal prison for 46 months.
Once again, he married first. He met wife number four at the Club, where West Virginia-born Karon Poer was a member. Though she’d later say Cohen wore the same clothes for days, never brushed his teeth and was tight with money, she married him at a swingers convention in Las Vegas and moved into the house Cohen bought using Boydston’s money. Cohen promptly made Poer an officer of Ynata.
Poer soon came to agree with Cohen’s other ex-wives. “He never wanted to do anything legal,” she said. Cohen took tens of thousands of dollars in benefits she’d received on the death of a previous husband and invested it in his own name. As the law closed in on the bankruptcy fraud, Cohen’s father dropped dead. At the funeral his family told him to leave and stay away.
Cohen gave Poer the French Connection to run while he was inside. But when the BBS computers disappeared, allegedly stolen by his cronies, she also had enough and sued Cohen for divorce. Cohen countersued from prison, charging she’d stolen the French Connection from him. When he got out of jail in 1995, Cohen stalked her, Poer claimed, and flattened her tires.
When I reach her to ask about Cohen, Poer will say only, “You can kiss mah ass.”
Kremen spent a couple of years learning the ropes in Silicon Valley before he launched his first businesses in repackaging open-source, or free, software and then selling security programs for computers hooked up to the newborn Internet. He hardly had a personal life. “I dated a couple of girls, but I was working hard,” he says. “I wasn’t dysfunctional; I was just focused on other things.” He spent hours looking — mostly unsuccessfully — for dates in newspaper personals columns. And that led to an epiphany. “I wished there were a database you could sort through in order to find a person to marry. That’s the absolute stone-cold truth.” It didn’t exist, so he invented one.
In 1993, having noticed that more and more people had e-mail addresses, Kremen foresaw that classified advertising would eventually migrate to cyberspace, and he formed a company called Online Classifieds. He moved to San Francisco’s Haight district, hired a programmer and, in May 1994, shrewdly registered a batch of classifieds-style domain names — Jobs.com, Housing .com, Autos.com and Sex.com. Kremen also bought a defunct domain callcd Match .com for $2,500. He was going to start by selling romance. “I just have the vision,” he said. “Gonna raise venture capital.”
Kremen, then 32, raised $200,000, then another $2 million, then $7 million more. Two months after the launch of Match.com, when it claimed 7,000 members and a 10 percent weekly growth rate, he turned down an offer to merge with the company that became Excite.com. “I probably left $2 billion on the table there because of my ego,” he says. “I didn’t do it, because I wanted to be the CEO.” He had that title at Match.com.
Almost immediately, though, he was forced out by his investors, who didn’t think he was as good at managing businesses as he was at conceiving them. He stayed on long enough to see his stock vest and then left to develop an early form of ad- and spyware that he later sold to Microsoft for a stash of its stock. By the fall of 1995 Kremen was rubbing shoulders with some of the biggest names in the Internet business when a friend discovered, just days after it happened, that the Sex.com domain had somehow been transferred to Cohen.
Released from custody in February 1995, Cohen was determined not only to regain his footing in the cybersex business but to move to a higher level. In prison he’d met and befriended Marshall Zolp, a convicted con man, securities fraudster and expert in offshore money laundering. “Zolp was his professor,” says Luke Ford, a blogger known as the Matt Drudge of porn. “He took Cohen to school.” Back on the street, Cohen applied his new knowledge to his old interests in sex and scams.
In the early 1990s sexual images were shared over the Internet with no profits at stake. Computer programmers scanned photos from magazines and uploaded them for tech-savvy nerds to download for free. With the release of Netscape, in 1994, everything changed. The web turned as lawless as the Wild West. Fledgling entrepreneurs snatched up corporate domain names from a company called Network Solutions, which was charged with registering all legal claims to this new digital territory. Ransom was often the idea. Others saw the future in commercial porn.
By 1998 adult websites accounted for almost 70 percent of the $1.4 billion spent on online content. In 2003, when the market had grown to more than $5 billion, pornography still made up almost 60 percent of the total. In 1995 high school dropout Seth Warshavsky started the Internet Entertainment Group, an adult site that reportedly grossed $20 million in 1997, the year he marketed the renowned Pamela and Tommy Lee video.
The next year he marketed the infamous nude photos of Dr. Laura Schlessinger. He is now reportedly living in Thailand, on the run from various creditors.
Ron Levi, owner of Cyberotica.com, possibly the biggest early innovator, is credited with inventing pay-per-click advertising revenue in 1996, which charged for productive clicks rather than raw clicks. In the first six years of operation Levi paid out $250 million to webmasters for his advertising — and he was still a very rich man.
None of this was wasted on Cohen, who had been given a desk at a company called Midcom, a placement service for technology professionals, many with top-secret government clearance. It was owned by Barbara Cepinko, a Good Samaritan who took a chance on Cohen and would soon regret her kindness.
In the fall of 1995 Cohen launched his greatest scam. First he contacted Network Solutions, the industry administrator of domain names, and then followed up with a forged letter purportedly written by the president of Kremen’s company Online Classifieds. The letter claimed that, despite its name, Online Classifieds had no Internet access and slated that Kremen, a mere employee, had been fired. The company was therefore relinquishing its ownership of Sex.com and giving Cohen the right to take it. Cohen then forged an e-mail that gave his phone number as the one to call to confirm the transfer. With this flimsy pretext Network Solutions handed the prize to the con man.
A few weeks later Cohen incorporated Sporting Houses Management and assigned the company the rights to the domain. A few months later when he offered shares to the public through a San Diego brokerage that specialized in so-called pump-and-dump penny stocks, Sporting Houses announced plans to build Wanaleiya, an X-rated Disneyland cum Club Med, a brothel resort boasting 500 on-site hookers, golf, tennis, skeet, a race track and its own airport on 300 acres, including a whorehouse called Sheri’s Ranch, outside Las Vegas. For $7,000 a weekend, clients would have all they could eat, drink, smoke and screw. But after the owner of Sheri’s told the press it was not for sale and Nevada announced it would investigate the scheme, Wanaleiya fizzled. Meanwhile one of the banks that financed Midcom cut off its credit because, unbeknownst to her, Cepinko was named in the offering as an officer of Sporting Houses.
Early in 1996 Cohen struck again. This time he transferred the license for Sex .com to a new company he’d set up in the British Virgin Islands. Sir William Douglas was named as its chairman according to corporate documents, but Douglas had nothing to do with it. The real William Douglas was the chief justice of the Barbados Supreme Court; years before he had refused to extradite England’s great train robber Ronald Biggs, who had been on the run for 16 years.
When Network Solutions brushed off Kremen’s complaints about his stolen domain, Kremen let the matter slide for a few months, unsure if he wanted to be identified with online porn. By then Cohen had put up what’s known as a banner farm at Sex.com — a page of banner ads for porn purveyors who paid Sex.com to send surfers their way. He also posted articles such as “Adventures in Anal Erotica,” by Stephen M. Cohen.
Finally furious that his domain was enriching Cohen, Kremen found a young lawyer who agreed, in 1998, to file suit against Cohen and Network Solutions. Kremen says the adversaries spoke for the first time when Cohen called him that spring, claiming to be an attorney with the United States Patent and Trademark Office, and tried to scare Kremen off by saying he’d locked up the name.
In fact, Kremen couldn’t afford what he knew would be a huge legal undertaking, so it was a stroke of luck when Cohen started threatening some of the biggest names in online porn by filing infringement lawsuits against anyone using the word sex in a domain name. Kremen decided to find litigation partners who would pay for his lawyers in exchange for a share of any eventual winnings; he spammed the online porn world with e-mails seeking anyone who had been threatened by Cohen. Serge Birbrair, a Russian-born porn-traffic broker who bought clicks from small website operators and sold them in bulk to bigger ones via a domain called Sexia.com, had just been sued by Cohen.
“I knew the biggest sharks on the Internet,” says Birbrair, and he called the two biggest, Levi of Cybererotica .com and Warshavsky, who agreed to bankroll Kremen in exchange for 45 percent of Sex.com.
Kremen’s partnership of porn moguls soon fell apart. Warshavsky got in trouble with creditors and stopped paying his share of the legal bills. Levi then dropped out of the litigation too. But Kremen had found a new weapon: Charles Carreon, a burned-out Buddhist public defender with a ponytail. Carreon was smart, scrappy and well-spoken and considered himself a warrior in search of a just cause. He decided to portray Kremen as a woman-friendly good guy who had planned to turn Sex.com into an educational website and argued that the domain was a piece of property. If Carreon won the day, he would not only stop Network Solutions from disavowing its responsibility (the company claimed domain names were services like phone numbers, not property like a car), he might pave the way to Kremen recovering the profits Cohen had siphoned off.
In 1999 Carreon won a big round in Oregon, where he convinced a three-judge panel to stay all of Cohen’s trademark cases while he rewrote Kremen’s federal complaint. He resubmitted it almost four years to the day after Cohen had snatched Sex.com. The litigation kept the case alive, albeit on life support. Kremen had no money and had agreed to pay Carreon only if he won.
Meanwhile Cohen, who was making $750,000 a month from Sex.com and had almost no overhead, was revving up his lifestyle. By that time, Sex.com was making a fortune, so much that Cohen was able to hire one of the best-known trademark attorneys in the country, Leonard Duboff, a disgraced academic with a shady past. (Duboff declined to talk to playboy, calling questions about his past insulting.) Cohen also bought the mansion in Rancho Santa Fe and started moving his Sex.com proceeds offshore. He changed the name of his British Virgin Islands corporation to Ynata, began building a network that illegally sent microwave signals across the Mex-ico-California border and issued a press release claiming that he was taking over Caesars Palace.
Depressed, Kremen began taking crystal mcth, which turned out to be his drug of choice. He’d begun, like “a lot of software guys,” with caffeine, then moved on to cocaine, he says. “But you can’t program on coke because it makes you too jittery.” Then someone gave him his first hit of speed. “I didn’t touch drugs until I was 35,” he says, “when someone said, ‘Take this and you can stay up all night and have fun.’” Fun was not going to clubs and meeting good-looking women, though. It was sitting at the computer for three days straight. “Which is kind of pathetic, if you think about it,” Kremen says. “Speed is a coder’s drug.”
He also began having affairs with “women who thought I was a little Internet star,” he says. “I had no time for the long chase after good-looking women, but I wouldn’t throw away low-hanging fruit.” One catch was Ana Belinda, Carreon’s doe-eyed 19-year-old daughter, who’d come to San Francisco to help with the lawsuit.
Over the next year the case began to turn slowly in Kremen’s favor. When Cohen countersued for defamation, Carreon, a former insurance lawyer, had another brainstorm. If Kremen had homeowners insurance, his carrier, State Farm, would be obliged to defend him. Kremen did, State Farm agreed, and suddenly there were far more powerful lawyers and investigators in the fray, taking depositions and serving subpoenas to sniff out Cohen’s assets, perforating the corporate shells that had always protected him and analyzing how he moved his money around. “It was going to Liechtenstein in $100,000 chunks,” Carreon says.
Luckily for Kremen, some of his early investments began paying off at that point and he decided to, as he puts it, “liquidate the dot-com stock I had and put it all on red to beat this guy.” When Judge James Ware, who was hearing the federal case in San Jose, granted a motion dismissing the suit against Network Solutions, Kremen q hired Jim Wagstaffe, a noted appellate attorney, to mount an appeal. Wagstaffe had a crucial advantage: Unlike Carreon, he looked like the kind of lawyer a federal 4 judge might take seriously, and he could balance out Kremen, who admits he was, at the time, in his “drug-addled state.”
“Courts don’t traditionally respond well to eccentricity,” says Wagstaffe. “Gary was perceived as wacky, and the con man was seen as a businessman surrounded by men in suits. Plus he’s got Network Solutions on his side. You’re a judge. Who do you think is crazy?”
Kremen’s team knew where Cohen had hidden his money, but it wanted to keep Network Solutions in the case; it was the proverbial pot of gold. Wagstaffe proposed narrowing Kremen’s argument to a single issue that would give them a wedge to reopen the case against Network Solutions. So they did. In mid-2000 Wagstaffe replaced Carreon as the lead attorney and asked the court to issue a summary judgment declaring Cohen’s claim to Sex .com invalid because the letter Cohen had used to take it was an obvious forgery that couldn’t be authenticated and thus could not be introduced as evidence.
Cohen’s deposition, which followed that motion, was a revelation to Kremen. “I’m sitting there listening to this guy, and I knew about the criminal record,” Kremen says. As Cohen went on and on, Kremen realized “this guy’s a complete, total bullshitter. It’s all made up, and if I can just stay the course, he’s gonna lose. I’m gonna beat him. And then he panics.”
Cohen had fought like a legal demon to keep Kremen’s side from seeing certain of his bank records. When they were finally produced, in October 2000, he made his biggest mistake. He waltzed into the Kinko’s where they were being copied, claimed to be one of Kremen’s lawyers and, demonstrating the audacity that had brought him so far, walked out with them. When the documents finally appeared a few days later, 113 pages were missing. So Kremen’s lawyers asked if the Kinko’s had security cameras. Sure enough it did, and the tapes showed Cohen absconding with the records.
“You’d think he’d at least wear a hat or something,” Kremen says.
“That was it,” says Cohen’s lawyer Robert Dorband, who worked for Duboff. “I pretty much threw up my hands and said, ‘We’re in damage control.’”
Wagstaffe immediately made a second motion asking Ware to restrain Cohen from disposing of any of the assets they’d uncovered and ordering him to repatriate $25 million they could already prove had been sent offshore. A few days later Ware granted both of Kremen’s motions effective immediately.
On that victorious morning of November 27, 2000 Cohen was not in court. Kremen says that while he went into a courthouse bathroom to snort some celebratory coke, 138 the bad guy worked the phones and managed to send another $1.3 million out of the country before he hightailed it to Tijuana. A few months later a trial to determine damages was held in Cohen’s absence. When his lawyer claimed Cohen had failed to appear because he’d been put in jail in Mexico for trying to bring some of his ill-gotten gains back to America, Ware was outraged and issued an arrest order, citing Cohen for civil contempt. As a fugitive Cohen lost his right to present a defense. A month later Ware ruled that Cohen owed Kremen $65 million.
In the years since, as he appealed Ware’s rulings from Mexico, even taking his case to the U.S. Supreme Court and always sticking to his story that he’d been thrown into a Mexican jail for trying to repay Kremen, Cohen again resorted to playing lawyer, representing himself. And true to form, when the court finally seized his only significant asset in America, the Rancho Santa Fe mansion, Cohen filed a phony bankruptcy to disrupt the process; when that failed he had his lackeys vandalize the place. On September 10, 2001 a furious Ware ordered that the house be restored within a week. Seven days later Kremen moved in.
“I bought a building in San Francisco and had all these people doing heroin, squatting with me. Eventually it comes to my dull mind that I gotta clean this up.”
Alas, the Internet porn boom was over by then, and the dot-com bubble had burst. Though Kremen made $500,000 in each of the first few months he owned Sex.com, the revenue soon plunged. For a moment Cohen, who had founded Earthstation 5, a peer-to-peer file-trading network (a la Napster and Kazaa), seemed more prescient than Kremen, but the network was exposed as a fraud in The Washington Post and the geek community turned against it.
Depressed because he’d won so little so far and would have to fight like crazy to get anything else, more than a little boggled by his turn from litigant to porno clickmeister and still fielding regular taunting phone calls from Cohen, Kremen went a little crazy too. He offered a reward for Cohen’s capture but withdrew it after Cohen claimed it led to a shoot-out with bounty hunters in Tijuana.
Kremen’s lifestyle backslid then as well. “He had to date the porn star, you know?” says Margo Evashevski, his private investigator, speaking of Wilde, who ever so briefly passed through Kremen’s bed. “I did some dabbling and tasting in the world of porn,” Kremen says. “I went to that zone, checked out the dark side, had a litde fun and came back to the business side.” His drugging escalated again, and a year later his parents induced his sister to move in with him. She redecorated the mansion, and he kicked his drug addiction and got on an even keel.
“My customers are websites,” Kremen says, settling in front of one of his computers to give a lesson in online porn. Porn purveyors can log on to Sex.com and see what it costs to get a porn consumer’s attention: 18 cents for the home page, 3 cents “for the top listing on the pee page,” Kremen says. If people ask for child porn, Sex .corn’s software sends them to an anti-kiddie porn website. “No one says it’s pretty,” Kremen says, surfing to WiredPussy.com. “Water bondage? What the fuck! I don’t even know what that is.”
In January 2001 Kremen started his new life with a Fear and Loathing-like road trip with his lawyer to a Vegas online-porn trade show where he ate naked sushi and first encountered Cohen’s world. “I had fun,” he says, “but in a voyeuristic, out-of-my-league way.”
“Gary had zero friends,” says Carreon. “The next day he was God.”
For a moment he lost his mind again. “I bought a building in San Francisco and had all these people doing heroin, squatting with me,” Kremen says. One of them, a carpenter, offered to build a dungeon in the basement, and Kremen agreed. “I never got to use it,” he says sheepishly. “Not my style. Some other people did, though. Eventually it comes to my dull mind that I gotta clean this up. So I spend the next two years cleaning up.”
By then Kremen had learned enough to think he might indeed have a case against Network Solutions. After an appeals court reinstated that suit in 2003, he did some math, realized he might be able to win $120 million and decided to pursue it. The defendant must have realized it too, since the company (which has been sold several times and has few connections to what it was in 1995) settled in exchange for a confidentiality agreement and a sum, a knowledgeable source says, in the neighborhood of $15 million.
Kremen began to feel he was free from his own form of bondage. He actually laughed when Cohen called to offer him a share of Earthstation 5 in lieu of the $65 million he owed him (which with interest has now risen to $82 million). Kremen’s learned to laugh at himself, too. Asked if he’s come to love litigation — he sues so frequently now it seems like a hobby — he replies, “They don’t teach you about the use of law at Stanford business school.”
Kremen moved full-time to Rancho Santa Fe, where he didn’t know any drug addicts, and he came up with the idea that Sex .com would henceforth sell dirty searches to squeaky-clean search engines. “You type in, like, ‘lesbians,’ and it’s really our listing,” he says. “We’re doing a revenue share. I want a sustainable business that, at the end of the day, someone will buy. This is about ad sales. This has nothing to do with porn.”
With perfect timing, Kym Wilde serves lunch as he says this. She keeps her clothes on this time.
Last year Kremen turned his attention to Cohen’s hidden assets, and by the fall his latest push against the bad guy began to bear fruit. In San Jose Judge Ware issued a series of orders that let Kremen seize not just the U.S.-based hard assets Cohen had put in the names of his fifth ex-wife and several straw men, but even his mail, or at least whatever of it was directed to the postal drops Kremen’s team had managed to identify. His people also seized several computers that showed, among other things, that Cohen had hacked into Kremen’s voice mail more than 300 dmes.
Kremen’s lawyers subpoenaed and froze the bank accounts, domain names, e-mail accounts and credit cards of everyone close to Cohen, paralyzing their lives. A similar effort was under way in Mexico.
Still Cohen appeared to be no less powerful on the lam. His ISP sent bandwidth by microwaves from the U.S. to Mexico and provided Internet connectivity to, among other customers, the U.S. consulate and government buildings in Tijuana.
The pressure on Cohen’s associates worked, though. Just after Kremen sued them all to recover those assets, his fifth wife Rosa’s daughter Jhuliana was arrested while driving through a special easy-clearance lane at the border near TJ with 200-plus pounds of marijuana in her car. She was served with Kremen’s suit while she was in jail. Her mother was served at Jhuliana’s arraignment. Former drug dealer Jack Brownfield, who’d remained a friend and Cohen frontman, had begun negotiations on behalf of himself, Rosa and Jhuliana to give Kremen title to Cohen’s Mexican shrimp farm, his TJ strip club, his ISP and more.
At the end of October the hunt was still on when Kremen got a lucky break. A top officer with the U.S. Marshals Service’s Mexican cross-border unit had been following the case and trading information with Kremen’s team; even though civil contempt warrants aren’t a priority, someone in the government had at last taken an interest in Cohen. When one of Kremen’s lawyers told the marshal something he didn’t know, that Cohen had divorced Rosa, the marshal quietly took action.
Post-divorce, Cohen had fewer legal rights in Mexico and needed a different kind of visa to remain in TJ. Though he could have paid a lawyer $ 100 to get it for him, he characteristically chose to save the money and do it himself. When he arrived at the local immigration office for his appointment on October 27, Mexican officials arrested him and turned him over to agents of the U.S. Border Patrol, Immigration and Customs
Enforcement and the marshals, who walked him across the border at 2:45 that afternoon and locked him up in the same San Diego jail as his stepdaughter.
The next day, dressed in a green prison jumpsuit, Cohen was arraigned in a wood-paneled courtroom. With a “very amused, smug, shitty-ass, you-think-you-got-me grin,” says Evashevski, who was there with Kremen’s sister, Cohen surveyed the crowd, “staring us down, looking for Gary,” who, to his obvious disappointment, was in Illinois visiting his parents.
The next step would have been a hearing 10 days later, when the government would have had to prove its man was in fact Cohen. But over the objections of the judge and oblivious to the rolling eyes of his public defender, Cohen confirmed his identity, claimed poverty and asked for a court-appointed lawyer. Then, incredibly, the con man added that since he already had another lawyer trying to settle with Kremen, he wanted to be released on bail to facilitate their talks. The judge refused and ordered Cohen’s transfer to San Jose, where he would face a choice: Repatriate $25 million of the money he’d moved offshore before 2001 or, as Kremen’s attorney Tim Dillon puts it, “rot in jail.”
But no one was ready to declare victory yet. “Cohen never stops working you, ever,” says Wagstaffe. “He thinks if he keeps talking, eventually you’ll be persuaded. Gary’s a worrier, and Cohen plays on Gary’s insecurities.” And as Wagstaffe admits, “when Kremen dies, Cohen’s name will be in his obituary. They are linked for the ages.”
Kremen is well aware of this. Indeed, within hours of Cohen’s arrest, Kremen said he fully expected to pick up a ringing phone and find Cohen on the other end, calling from prison just to fuck with him. In Mexico Kremen’s team has uncovered about $5 million in real property in addition to the ISP, which it thinks is a $1 million business. Millions more are hidden in Europe, the Caribbean and Vanuatu, and Kremen hopes to get some, if not all, of it. “I tell him it’s going to happen with or without lube, so lie down and get it over with,” says Kremen. “I don’t think we’ll see $82 million, but a couple million’s better than a sharp stick in the eye. Don’t you agree?”
Still, Kremen’s not ready for his 11-year war with Cohen to end. “Clearly,” he says, “this story is not over.” I can’t help but think I hear relish, not dread, in his voice.