"Tangled Tale of the Pilfered Porn Site" from the Los
Angeles Times, March 26, 2001. © 2001
Los Angeles Times. Reprinted with permission.
Tangled Tale of the Pilfered Porn Site
March 26, 2001
* Courts: Stephen Cohen, one of the Internet's most successful
entrepreneurs, made his fortune by stealing the Sex.com site.
Los Angeles Times' Home Edition, Business, Page C-1
By JOSEPH MENN, TIMES STAFF WRITER
SAN FRANCISCO -- Stephen Michael Cohen is one of the most successful
entrepreneurs of the Internet Age, having raked in an estimated
$43 million in profit from advertising fees and monthly memberships
sold through the pornography site http://www.sex.com.
What makes the feat more impressive is that Cohen, a multiple
felon who once advertised swingers' sex parties in Orange County,
made his money by swiping the Sex.com site with a forged letter
to the agency that registers Internet names.
Within days, U.S. District Judge James Ware in San Jose is expected
to order Cohen to disgorge all his earnings from Sex.com. This
month, Ware ordered Cohen arrested on a contempt of court charge
in the civil case.
Neither of those rulings are likely to faze Cohen--who lives
in a Tijuana mansion--as he and his millions, which are stashed
in offshore bank accounts, are out of the reach of the U.S. justice
Cohen set up Sex.com as a sex supermarket, advertising referrals
to nude pictures of celebrities, teenage sex videos and other
hard-core porn offerings. The site became so popular that Cohen
grossed hundreds of millions in sales in five years, according
to court records.
Cohen's stint running Sex.com ended in November, when Ware returned
the Web address to Gary Kremen, the San Francisco engineer who
registered it in 1994.
"I expect to get my hands on nothing," Kremen said
of his long legal battle. "This isn't about business anymore.
It's the principle."
The tale, which includes a bizarre multibillion-dollar takeover
bid for Caesars Palace and a heist of records from a Kinko's store,
stems from the Web's Wild West atmosphere and the fact that sex
is a great business on the Internet.
Kremen has met Cohen only once, in San Diego when they discussed
a possible legal settlement last year. Over steaks and wine, Kremen
found a lot to like in the now-fugitive.
"Cohen is a brilliant businessman," Kremen said. "He's
so convincing that, after 20 minutes of talking to him, he had
me believing that I stole it from him."
Both men were quick to see the Internet's potential as an anonymous
meeting place for people seeking romance and sex.
For two decades Cohen had various business endeavors, with occasional
run-ins with the law.
Cohen's convictions include a 1977 suspended sentence for forgery,
grand theft and impersonation. In the 1980s, Cohen ran sex-related
computer bulletin boards under the name the French Connection.
But he won local notoriety for throwing sex parties for fee-paying
swingers in a tony Tustin neighborhood. After residents complained,
Orange County authorities went undercover to investigate and prosecuted
Cohen for misdemeanor zoning violations.
The 1990 case ended in a mistrial when authorities failed to
prove Cohen was running a business instead of, as he claimed,
a nonprofit club just covering expenses.
Two years later Cohen engineered a scheme to hide assets of an
acquaintance who filed for bankruptcy, and he lied to a judge
by claiming to be a lawyer handling the associate's case. Cohen
was convicted of forgery and fraud and sentenced to 46 months
in federal prison.
"Might he have character flaws? Sure," Cohen's attorney
Robert Dorband said of his client. "But I don't think he's
got an evil bone in his body." Cohen didn't respond to requests
for an interview.
Cohen Took Control of Site in 1995
When Cohen emerged from the penitentiary at Lompoc in 1995, the
Internet was gathering steam. He inquired about the status of
Sex.com and found it registered to Kremen's firm, Online Classifieds
According to Cohen's testimony, he drafted a letter on fake Online
Classifieds stationery, stating that Kremen had been fired from
that firm and transferring ownership of the domain name to him.
Then, Cohen said, he and a friend drove to the residence where
they believed Sharyn Dimmick, a former housemate of Kremen's,
lived. Cohen's friend returned with the letter signed by a "Sharon
Dimmick" on behalf of Online Classifieds.
Among the problems with Cohen's story: Dimmick's first name is
misspelled on the document as Sharon; she was not an employee
of Kremen's company; and she no longer lived at that address.
Dimmick testified that she had never heard of Cohen.
Nevertheless, Cohen sent the letter to Network Solutions Inc.,
which registers Internet addresses, which turned over control
of the Sex.com site to him in October 1995.
As for Kremen, he had an early interest in computers. He earned
a Stanford business degree, then founded a firm that sold anti-virus
His biggest hit was a system for online classified advertising
that became the popular Internet dating service Match.com.
In 1994, a year before online bookseller Amazon.com opened, Kremen
registered several Internet domain names, including Sex.com. Back
then registrations were freely doled out under a National Science
"I wasn't exactly sure what I was going to do with it,"
said Kremen, 37, who now works at a small San Francisco venture
capital firm. "Maybe a more adult version of Match.com."
But Kremen let Sex.com languish before Cohen seized the name
and set up a business. When Kremen contacted Network Solutions,
the firm threw up its hands and told Kremen to try his luck in
In 1998 Kremen scraped together enough money to sue Cohen. But
only after other companies that Kremen invested in began to pay
off was he able to turn up the heat with higher-priced lawyers.
By then, Cohen was flush with millions from Sex.com, and he was
able to fight back with a vengeance.
Cohen filed a defamation suit against Kremen, stalled requests
for documents and moved his money to companies in Mexico and the
British Virgin Islands, according to records in the 20-volume
"As soon as we get to a bank account, it's moved offshore,"
Kremen's attorney Pam Urueta said. "It's like trying to nail
a jellyfish to a wall."
Cohen's boldest stunt may have come in October, after bank records
were delivered to a Kinko's store for copying and mailing to Kremen's
According to Chula Vista police, someone matching Cohen's description
walked in, said there had been a change of plans, and walked out
with the documents.
This month, Ware ruled that Cohen, who failed to post a $25-million
bond, had a "demonstrated history of transferring assets
and evading the authority of this court."
How much money Sex.com has generated is one of the few issues
left for the judge to resolve.
Roles of Cohen, Kremen Reversed
Cohen's Virgin Islands-based Ocean Fund International once announced
that Sex.com had a profit of $95.5 million in a single quarter.
And another news release by Cohen's firm proclaimed that the
owner of the "world's largest pornographic site" was
making a $3.6-billion, all-cash offer for eight Caesars Palace
Wall Street dismissed the offer as laughable.
Kremen said he believes Cohen's testimony that he turned down
$48 million for Sex.com, a sum that would dwarf the record $7.5
million paid in 1999 for the domain name http://www.business.com.
Kremen's experts, using partial records, put Sex.com's five-year
profit at $43 million, more than half of what EBay has earned
Cohen's attorney Dorband conceded that he will lose the current
case but promised to appeal.
In the meantime, the roles of Kremen and Cohen have reversed.
Cohen, the longtime pornographer, says he is working on building
a fiber-optic Internet hub in Tijuana.
And engineer Kremen is enjoying the financial rewards of Sex.com,
as the hard-core porn site brings in $400,000 monthly from advertising.
"It is what it is," shrugs Kremen, noting that a large
percentage of Web profits derive from adult entertainment. "Porn
is the savior of the Net. It's the crazy granny in the closet
that no one talks about."
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