Profits from sex site gone, defendant says

first_imgSAN JOSE – A man who siphoned millions of dollars from a pornography Web site and fled to Mexico cried poor Monday and asked a judge to erase the $65 million he owes the rightful owner of Sex.com. Stephen Michael Cohen was released from prison in December so he could surrender assets to Gary Kremen, the online entrepreneur who registered the domain name in 1994. But Cohen told U.S. District Court Judge James Ware that he’s jobless and broke. Cohen also said the court deliberately lost important documents he filed detailing his financial plight. Cohen said he’s called the FBI in hopes of recovering the records. “We’re far from ending this case,” the mustachioed 59-year-old said as he appeared dressed in faded jeans, a shabby sweat shirt and a ski jacket. Ware ordered the defendant to cooperate with plaintiff’s attorneys, who plan to question Cohen this week in hopes of discovering a hidden bank account, stash of jewelry or other valuable investment. In the late 1990s, Cohen misappropriated Sex.com, one of the world’s most popular domain names, a federal judge ruled in 2000. He went on the lam in 2001, was extradited from Tijuana to California in 2005, then jailed for 14 months for contempt of court. Monday was his first public appearance since returning from Mexico. Since leaving prison, he said, he’s been living with friends, an ex-wife and others. He has a mailing address and an attorney in Utah, though on Monday the court allowed him to represent himself. Cohen filed paperwork Monday stating that he owns no valuable assets. Even his cardiac pills are worth less than $250, the court-ordered minimum for assets that must be surrendered, he said. Cohen said he has no money in any bank – and that one account in Mexico had a negative balance of 90 pesos. “I have been unable to locate my personal property and it is my belief that all my personal property was either stolen or trashed by unknown persons,” Cohen wrote in a status report. “I own no stocks, bonds, securities, jewelry and I have no trusts, real estate and or insurance of any kind.” Kremen, who lives in Rancho Santa Fe and also founded the popular online dating site Match.com, did not attend the hearing. Kremen’s attorney, Richard J. Idell, said the only asset Cohen has surrendered was a modest house in San Diego – stripped of furniture and plumbing before Kremen took possession. While Kremen does not expect to recover $65 million, Idell said, the case has helped the law evolve in the digital age. The Ninth U.S. Circuit Court of Appeals ruled in 2003 that Internet domain names had the same rights to protection against conversion as other intangibles under California law. Judge Alex Kozinksi said registering domain names was no different than “staking a claim to a plot of land at the title office.” “We always knew domain names have had value from a business standpoint because people have paid millions of dollars for them,” Idell told The Associated Press. In the early ’90s, Cohen served time in federal prison after he was convicted of bankruptcy fraud in San Diego. After his release, he mailed a letter on forged letterhead to domain-name registry Network Solutions Inc., saying Kremen’s company, Online Classifieds Inc., had fired Kremen and was going to close Sex.com. Cohen told NSI he typed the missive instead of sending e-mail because Online Classifieds did not have an Internet connection. Despite the obvious illogic, NSI transferred the name to Cohen, who began collecting money from porn sites that advertised on Sex.com. He may have collected funds until as late as November 2000, when a judge issued a preliminary injunction requiring Cohen to return the name to Kremen.160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!last_img read more