RealTime IT News

Sex.com Hijacker Appeals to the Supreme Court

In yet another odd twist to an even stranger case, Stephen Michael Cohen, who was convicted of stealing the Web site Sex.com and later went on the lam, is appealing to the U.S. Supreme Court to hear his case.

Cohen is fighting to overturn several lower court judgments, which found him guilty stealing the domain name Sex.com by fraudulent means and ordered him to pay $65 million in damages.

Experts don't expect the U.S. Supreme Court to consider the case, which so far has been rejected by two lower courts, one of which said said Cohen stashed illegal financial gains in secret offshore accounts.

Cohen admitted to forging documents that he said authorized the transfer of the Sex.com domain from Gary Kremen. Cohen said these documents were sent to Verisign in an effort to have the company transfer the domain to him.

Cohen contends that he owned the trademark to Sex.com prior to Kremen's formal move to register the site; through a variety of admittedly fraudulent means, he then tried to maintain his control of the domain, which is reported to garner as much as a half million dollars a month by selling space on it to other pornographic Web sites.

But a court eventually told Cohen to hand the domain over to Kremen and to pay him $65 million in damages. Cohen appealed, and then failed to appear in court.

Kremen registered sex.com in 1994 through Network Solutions. At the time, Kremen was doing business as Online Classifieds, Inc.

After a period of a year while sex.com sat dormant, Cohen, who previously served time in federal prison for bankruptcy fraud and impersonating an attorney, decided to commandeer the potentially lucrative domain name and forged a letter written on Online Classified letterhead to Network Solutions [now called VeriSign] requesting transference of ownership.

For a fee of $1,000, Networks Solutions processed the domain name conversion and sex.com officially became Cohen's property.

According to reports, Cohen then launched an Internet pornography business based on the sex.com domain name, but by the time Kremen was aware of the theft, Network Solutions refused to change the registration back without a court order.

Kremen went to legal battle against Cohen and his numerous business entities, with an added appeal that Network Solutions should be responsible for negligence due to the fact that the registrar did not even attempt to verify the forged letter that served as the basis for the domain name conversion.

In September 2002, the U.S. Court of Appeals for the 9th Circuit approved a $65 million award in Kremen v. Cohen, setting the wheels in motion for Kremen to regain control of sex.com and collect a substantial judgment from Cohen, including $25 million in punitive damages.

But by that time Cohen had skipped off to Tijuana, Mexico and would not comply with the judgment's orders.

Cohen owned two large ranches through a company known as Montano Properties. In September 2001, Cohen filed bankruptcy and the ranches were handed over to Kremen as a partial payment. However, when Kremen took control of the properties he found that virtually everything on the ranches, including wiring, plumbing and toilets had been removed.

In court filings, Kremen said that Cohen "has duped this court into believing that their exists numerous hidden bank accounts and assets hidden outside the United States."

In a statement, Kremen's attorney Jim Wagstaffe said "we are convinced that the Supreme Court will agree that you can't appeal a judgment when you're on the lam. It defies reason to say that you can use the legal system to your benefit while, at the same time, you're thumbing your nose at law enforcement officials."

One outstanding issue in the case is whether Verisign bears any liability since it sanctioned the transfer of the domain name from Kremen to Cohen, without fully checking out the forged documents.

"VeriSign still awaits a ruling on their responsibility and corresponding financial accountability for unilaterally assisting in the theft of the lucrative Sex.Com domain name when they did not verify the domain name transfer request document," Kremen's company, Sex.com, said in a release.

"In August 2002, when the U.S. Court of Appeals agreed to expedite oral arguments in Sex.Com's appeal against NSI [Network Solutions, the former name of VeriSign], Judge Alex Kozinski expressed his surprise at NSI's disregard for an unmistakably forged letter." Sex.com went onto say: "If the Ninth Circuit recognizes a domain name as property that can be converted, VeriSign could be found liable and could face a financial burden as low as zero to as large as a percentage of their current market capitalization."

VeriSign was not immediately reachable for comment but has said repeatedly that it does not comment on ongoing litigation.

With additional reporting from Michael Singer