Sex.com Case Finally 'Over'

Spad writes "The Register is reporting that Stephen Michael Cohen has, unsurprisingly, lost his appeal against the $65m in costs awarded to Gary Kremen for defrauding him out of the sex.com domain name almost 6 years ago. However, Cohen is currently a fugitive from justice in Mexico, with his assets in various offshore accounts, making it very difficult for Mr Kremen to claim his money. Kremen is now pursuing a $100m suit against VeriSign for signing over the domain in the first place, which he is expected to win." See our previous story for more background.

Comments

Verisign in big trouble

[Anonymous Coward]

If they do loose this one others will follow. I read recently they let Al Jazerra's domain go to a US citizen using a forged fax.

Re:Verisign in big trouble

[Organic_Info]

"can't be as bad as what it was being used for"

What providing a different point of view?

I watched a BBC documenty about Al Jazerra filmed during the Iraq conflict. While their slant may be towards their regions audience I found them to be quite imapartial. Sure they showed pictures of captured/dead coalition soldiers (God rest their souls) that western audiences found disagreeable - but at the end of the day they showed no censorship in favour of coalition or Iraq sides**.

I'd much prefer to see both sides of the story than be force fed the propagander of a single side - ours or theirs.

**Al Jazerra stopped reporting any Iraq news for a day as the the Iraq government wanted two of their reporters removing for showing coalition progress in to Baghdad - the Iraq government relented and asked Al Jazerra back.

Re:Verisign in big trouble

[Otter]

I watched a BBC documenty about Al Jazerra filmed during the Iraq conflict. While their slant may be towards their regions audience I found them to be quite imapartial.

Not that I'm qualified to express an opinion on this one way or the other but -- how on earth can you determine them to be "quite impartial" on the basis of a BBC documentary about them? Presumably anything from the BBC is utterly objective and impartial?

Incidentally, al-Jazeera's old head was on the payroll of Iraqi intelligence, for what that's worth...

re:verisign in big trouble

[ed.han]

disclaimer: IANAL.

my guess however is that the plaintiff(s) will argue that verisign has a history of this type of incident (e.g., creating a "pattern of behavior") which does not adequately safeguard the commodity for which they are charging significant monies.

you're likely right that verisign's defense will take that tack, but that's a little too predictable and is likely a strategy that will die under the testimony of aggrieved parties. this has clearly happened enough that there are a number of people w/ an axe to grind, and who kept documentation of their dealings with verisign during the process.

come to think of it, i would expect to see a massive class-action suit against verisign, which verisign would be moronic to avoid: the ability to collectively settle, once and for all, will probably result in a payout of some kind, and in the process, grant them immunity to further such suits (a la the tobacco companies settlement).

now, if the government were to get involved, it gets more interesting: no knowing which side they'll come in on...of course, the realist in me keeps thinking:

"i'm from the government; i'm here to help!"

[guffaws of laughter]

ed

Re:Verisign in big trouble

[onion2k]

Incidentally, al-Jazeera's old head was on the payroll of Iraqi intelligence, for what that's worth...

The head of Fox News is George Bush's cousin. What of it?

Re:Verisign in big trouble

[Organic_Info]

I was merely passing on some information I thought relevant and I persoanlly thought that during the documentary they appeared impartial. Someone else watching the same documentary may have thought different.

The documentary was a fly on the wall thing so they could have used editing to influence the perception.

In general the BBC are impartial and don't tend to sensationalise news - why well similar to Al Jazerra they don't just cater for the UK/Arab audience. Remember not all the Arab states liked the Saddam regime so the news can not be completly biased towards them/it.

Incidentally, al-Jazeera's old head was on the payroll of Iraqi intelligence, for what that's worth...

I didn't know that...but its not suprising. People of power within any organisations being the pockets of security services/governments is pretty much the norm the world over.

Re:Verisign in big trouble

[Atrahasis]

While the BBC may have been impartial in the past, legislation in the works will give the police powers to shut them down/take them over in the event of "an emergency". Trouble is, THEY get to decide what an emergency is.

Write to your MP.

Re:verisign in big trouble

[zedmelon]

Very true.

Verisign will definitely incorporate a "we were just as fooled as you were by all this" argument into their defense strategy. I doubt it will hold up at all, and I'm hoping it doesn't. Why register a domain name if you can't count on keeping it? There has to be a level of trust to which you can hold a business-transaction partner accountable.

From grandparent:
It's interesting that Verisign is being charged w/ a higher degree of liability...
Yes, especially since none of Verisign's business involves anything to do with security.

Look at his name carefully

[hobsonchoice]

They should try searching in Utah

Stephen Michael Cohen

Re:Look at his name carefully

[inaeldi]

I'm sorry, but that's just not funny.

They put him to an end?

[onion2k]

"We are pleased to put a successful end to Mr. Cohen," said Richard J. Idell, a lawyer representing Kremen

Thats a heck of a price to pay.

Re:They put him to an end?

[Angry White Guy]

Man, now that's justice!

If only we could do the same thing to spammers, instead of suing them for $1000.00 per UCE.

Re:They put him to an end?

[The_K4]

No, but they might release the money if they present a death cirtificate. :) "Everything's legal in Mexico, it's the american way."

Re:They put him to an end?

[rblancarte]

The Bounty Hunters are the best part of this whole story. Personally, I think this story just got good.

RonB

Why don't we just annex all those offshore islands

[Anonymous Coward]

Shit, if we can invade Iraq just for it's oil, it's high time the US got off its ass, reacquired some offshore property and get this money back under a lawful system where it can be taxed and/or garnished.

Wow this is pretty cool

[Scalli0n]

This is actually pretty cool, if you read the related articles, this guy who 'snatched' the domain has gotten in gunfights, has bounty-hunters on him, and is a fugitive.

Sounds like something from a crappy sci-fi film, but in real life!

and extending the 'crappy sci-fi movie' parrallell, you can see what a bad movie it would be...2 guys fighting over a porn site.

Re:Wow this is pretty cool

[EvilTwinSkippy]

Only it the screen reads (with the last link blinking):

Department of Defense:
<p>Top Secret

Or:

EvilGenius Incorporated
<p>
Press F9 for secret plot<br>
to rule the world, and F5 for<br>
idiotic vulnerability in my next<br>
superweapon

Or maybe:

The Swiss Bank
<p>
Please enter the account number<br>
you wish to loot money from:<br>
<br>
Please enter the amount, and use the<br>
US standard decimal point, and not the<br>
European comma. While you are at it, ignore<br>
the fact the this system is in English<br>
and not in French or German

Re:Wow this is pretty cool

[Aceticon]

Hello, my name is Stephen Michael Cohen

You stole my sex

Prepare to die!!

End of the internet?

[Tickenest]

Man, this story just keeps getting funnier. At the end of the article, VeriSign claims in its court filings that if it loses this case and sets a precedent for others who have been defrauded out of their domains, it'll be "the end of the Internet". Anyone wanna set up a Paypal account to collect donations to stave off the end of the Internet?

Re:End of the internet?

[LorneReams]

Yeah, like god forbid they actually do their fucking jobs. Boo hoo, poor VeriSign. Maybe this will teach them to be more diligent in their dealing in the future. That can only HELP the internet, not end it.

Re:End of the internet?

[Dark Paladin]

[tongue_in_cheek]

I think Verisign is suddenly realizing that "Oh - you mean we, as the people who hold onto the domain names, actually have a responsibility to protect our clients against fraud? I mean - what's up with that? Do you go after a bank if somebody writes a whole lot of checks in your name and only offers them a social security card as ID but no picture identification?

"What? You do? Well, that's just UnAmerican - if businesses are held up to a standard of laws - what? They usually are? Well, shit on me! Who knew!

"Obviously, this means the end of the Internet, then. Who ever took responsibility for what happened on the Internet?"
[/tongue_in_cheek]

Re:End of the internet?

[Ryosen]

Not even a social security card. The correct analogy would be a forged check. It's fraud, plain and simple and, yes, the bank would have a legal responsibility.

What galls me is that Verisign has successfully implanted into the justice system the belief that a domain name is not physical property. This, to me at least, is an asinine assertion devised only to alleviate themselves of professional liability.

While they apparently have no legal responsibility, there is still the professional responsibility of verifying a claim to transfer of ownership. Verisign's inaction encourages fraud, plain and simple, and it is corporate irresponsibility such as this that leads to draconian government regulation of public assets, such as the Internet. If business is not willing to regulate itself responibly, government will step in and do it for them. Invariably, as has happened in the past, the two never have the same agenda.

The loss of Verisign would not bring about the end of the Internet any more than the loss of MGM would bring about the end of Hollywood or United Airlines would eliminate the travel industry.

It's time that corporations be held accountable for their actions or, as is the case here, inactions.

[/rant]

Re:End of the internet?

[malia8888]

Verisign had a fiduciary duty to protect Mr. Kremen from theft of his property. They didn't do their jobs and they should pay.

They aren't guilty of theft like Steven Michael Cohen. Verisign is guilty of not protecting the domain name which in this case is very valuable property.

This is like a bank giving away the money of a customer to someone who fraudulently obtains access to their account.

Just by the premise that Verisign accepts people's money to protect and secure a domain name is proof in itself that domains are valuable. If they weren't valuable companies and individuals wouldn't be paying hard, cold cash to assure that the domain doesn't slip away from them.

Verisign would be better off compensating Mr. Kremen than sending a message to all their customers that they are not trustworthy.

Re:End of the internet?

[telstar]

"it'll be the end of the Internet"

• Can't we just ask Al Gore to make a new one?

Re:End of the internet?

[dissy]

> I cannot believe for one second that the domain - even over the course of 6
> years - would've made even close to $65m! Maybe close to $1m, but even that's
> probably pushing it! This is rediculous.

Actually that is what he pointed out (proved?) in court.
sex.com would bring in $500,000 per MONTH.

So he made 1 mil per 2 months, or 6 mil per year.

Assuming of course that number didnt decrease over the years (which we know it would, but according to the RIAA/MPAA it would double each year, and the courts seem to believe that BS, so... assuming its $500,000 for all 6 years afterwards) it works out to 36 million dollars over the 6 years.

Nomrally if you can prove bad faith, you can be rewarded 3x for impunitive damages. He is basically trying to get twice, not three times, the damages.
(Ok, i dont know if thats what hes asking for, or what the lawyers are just trying for.. but you know what i mean)

He is being ripped off basically, and should get around $108 million, not $65 million, assuming he wins.

Domain names

[nepheles]

This goes to show just how messed-up the current domain-ownership system is. For property, there is a tightly-controlled system of deeds, and clearly defined ownership. It is almost impossible to acquire ownership of land without the consent of the owner. This is how it should be

Many domains, however, are more valuable than land. And there are far too many cases such as this with disputed ownership and other such claims. A rethink of the system is necessary. It does nobody any good for people such as this to be able to abuse the system.

Re:Domain names

[worst_name_ever]

It is almost impossible to acquire ownership of land without the consent of the owner.

Unless you have, like, tanks and stuff.

Re:Domain names

[EvilTwinSkippy]

Having just bought a house, it is VERY comforting to know the amount of paperwork that goes into a title transfer.

Of course, you run into the issue of recognizing a string of characters as property. A plot of land doesn't move. I can't type it out a new plot of land. I can go out and jump up and down on it.

A string of characters is a thought. At the very most it's like a trademark. Frankly I could fold up shop as FUBAR.COM and start life over again as NUBI.COM, and through the miracle of search engines, poeple would find me again.

And man oh man, if "domains" start to be property, people will start suing for using their "domains" in disparaging ways. Frankly, I think the whole domain name system is silly. If you are looking for "Realistic" speakers, and try to find them on realistic.com, you are in for quite a suprise. I've learned to trust only the search engines.

Re:Domain names

[aug24]

The problem here is that this 'land-equiv' can be created and can also become useless (who's going to want walmart.com if Walmart is sold to Tesco?).

The disputes tend mostly to be quite reasonable. If I have a company called Fred, based in France and you have a company called Fred based in the US, who gets fred.com? (If you lot would only use .co.us like you should've in the first place, most of this stuff wouldn't be a problem!)

In this case though, the problem is that there are complete morons working at Verisign who passed over a domain based on a blatantly forged letter, then would'nt transfer it back when their error was pointed out.

That's like a public notary accepting a badly forged will without checking with the deceased. No, hang on, I'll change that: accepting a badly forged contract of sale for a house without checking with the current owner.

As I see it, this is entirely Verisign's fault, and they are currently trying to argue that domains aren't property precisely to avoid the responsibility they have to administrate domains competently

J.

Re:Domain names

[swillden]

For property, there is a tightly-controlled system of deeds, and clearly defined ownership. It is almost impossible to acquire ownership of land without the consent of the owner.

This is not true.

There are any number of ways that the ownership of land can end up in dispute; my father-in-law tried to buy a house a few years ago and ended up just losing the entire purchase amount, and not getting the house, because it turned out that the seller didn't have a clear title. During a refinance of my house last year (which I have "owned" for over 10 years now) it was suddenly discovered that a creditor of the former owner had a $30,000 lien on it! And, actually, residential real estate is the *least* likely to have problems. Commercial property is often stickier, and unimproved land can be really bad.

The reason you can buy a house or other real estate with some degree of confidence isn't because the state does such an amazingly good job with managing the deeds, it's because when you buy a house you pay $300 to a "title insurance company". The first time I bought a house, I thought "Man, what a way to print money... $300 bucks and all they have to do for it is go to the county courthouse and look up the title."

In fact, when you pay the title insurance company you're buying an insurance policy: they're committing to defend your title and ensure that you either (a) keep the land or (b) get your money back, even if (b) means they have to cough it up. Where my father-in-law went wrong was that he chose not to use a title company (his choice, since he was paying cash), and that's also why commercial and unimproved real estate also often go wrong.

How should this translate into the domain name space? That's hard to say. The title company has an advantage when deciding on the price of your premium -- they have a pretty good idea of how much the house is worth, and while that value may double in a decade it won't grow by a factor of a million. In the case of domain names, most of them are pretty much worthless, but some of them end up being really valuable, and they're all treated the same. Maybe that's what's needed: the domain name equivalent of a property value assessor, so that the equivalent of a title company can provide insurance with a reasonable premium.

Re:Domain names

[kin_korn_karn]

your sig kicks ass.

Link

[Scalli0n]

I'm somewhat dissapointed that /. didn't provide a direct hyperlink to the site in question on the main page...

Bounty?

[Greyfox]

What's the bounty on the guy? The story says that bounty hunters have been involved in several gun fights already, but with unemployment at an all-time high I bet there'd be no end of people willing to hunt the guy down like a dog if the price is right.

Re:Bounty?

[Angry White Guy]

Bounties are usually like 2 to 10 percent of what the guy owes, although that usally only applies to bail bonds. If it were me, I'd bump the ante up to a cool ten million, as long as I could actually get at least $20 million from him. But that means that he'd have to be brought back alive...

Re:Bounty?

[TheDredd]

I don't think this guy's got that $ 100000000

If he did he could buy himself out of situations instead of shooting
That's what those rich folks do al the time

Re:Bounty?

[b_sirrobin]

It looks like the bounty is a measly $50,000.


I might be crazy, but I'm not crazy enough to get in a gun fight with Mexican police for a chance at $50,000.

Re:Bounty?

[Nick of NSTime]

I've been in gunfights with Mexican police over a $4 bottle of tequila.

Re:Bounty?

[Art Tatum]

I might be crazy, but I'm not crazy enough to get in a gun fight with Mexican police for a chance at $50,000.

Hey, doesn't that sound like a great idea for a reality TV show?

007 must be involved somehow

[AtariAmarok]

With all the international intrigue, this sounds like a plot for a new film:

"James Bond: Imminent Domain"

which has a working title

"Live and Let Domain-Sqaut"

(The title "The Spy who SEX.COM'ed me" has been rejected")

Re:007 must be involved somehow

[Alsee]

And the Bond girls' names will be right at home:
Honey Rider
Pussy Galore
Plenty O'Toole
Mary Goodnight
Holly Goodhead
Octopussy
Xenia Onatopp

-

If not property right, then what?

[cybaea]

The core of Verisign's defence seems to be that domain names are not property rights. From the BBC article on the same ruling:

Forcing Verisign to accept blame for transferring the domain name in the first place could prove equally difficult.

Verisign maintains that domain names are not legal property and as such it cannot be held accountable for giving it away.

If it loses, as legal experts expect, Verisign would face a huge legal bill and fines of up to £100m.

Two questions: what excatly am I buying when I buy a domain name from Verisign and why do "legal experts" think they'll loose that battle -- presumably they have an extensive user agreement that clears them of responsibility for all and any wrongdoings?

Confused.

Re:If not property right, then what?

[sahonen]

Well, signs are legal property as well... If someone steals your sign, you can get them arrested, though I doubt the police would look very hard. Though sex.com is more like the hollywood sign... If someone stole the hollywood sign, someone would get mad in a hurry. =D

Sex.com offender

[barcodez]

Will Stephen Michael Cohen be added to a sex.com offenders list?

Why sue Cohen?

[NeB_Zero]

Why sue Cohen? I mean, yes it was wrong of him to try and defraud VeriSign, but isn't it really VeriSign's fault for not VeriFying the transfer? Let VeriSign sue Cohen for attempt to defraud AFTER they discover that the transfer was not sanctioned. If VeriSign would have provided a little more customer service, Kremen wouldn't be out any money, and Cohen would not be hunted. Just a thought.

Re:Why sue Cohen?

[LordKaT]

While he defrauded VeriSign, sex.com was a legitimate business, bringing in $500,000/month in advertising revenue alone. He, literally, destroyed a business. You go after both VeriSign and him, not just VeriSign.

--LordKaT

Re:ffs its just a domain !

[foofboy]

The big deal is, to quote the article
"[sex.com] is worth $500,000 a month just in advertising space"

In other words...

[seanmeister]

... he lost his sex appeal.

ba-dum-bum. :-|

bounty hunters

[More Trouble]

From http://reward.sex.com/
Offer To Pay Reward Is Withdrawn

Dated June 26, 2001 at 2:00 PM PDT.

The offer to pay a reward for information leading to the arrest of Stephen Cohen is hereby withdrawn. In other words, no reward is available.

Please help

[BigBir3d]

If I read this right:

With the case finally put to rest however, Mr Kremen faces his toughest battle - forcing VeriSign to accept blame for transferring the domain without checking in the first place. He is expected to win although VeriSign is sticking to its defence that a domain name cannot legally be held to be property and as such it cannot be held to account for giving the sex.com away to someone else.

If VeriSign's defense is that they sell something that can not be defined as property, then how can they sell it if they don't actually own anything?

Re:Please help

[tbonium]

If VeriSign's defense is that they sell something that can not be defined as property, then how can they sell it if they don't actually own anything?

It's a voucher for a service, not property of value. Much like you go to the gas station and buy a ticket for the car-wash. The face-value of the ticket is worthless, and it expires in time. But, punch that number into the machine and your car is washed. How many times have you tried to redeem the 1/100th of 1 cent in coupons from the Saturday paper?

Re:Please help

[Chasqui]

...you go to the gas station and buy a ticket for the car-wash. The face-value of the ticket is worthless...
But when you go to punch in the code number and it does not work because the gas station has given your code away, you have been defrauded. Not for the value of the ticket - for the value of the car-wash.

Case over.

[MasonMcD]

mmmmmm. Somebody got a cigarette?

downanddirty.sex?

[EChris]

So when do y'all think the .sex TLD will come out? Or would that make sex sites too easy to censor? Or is that a good thing for the pr0n business, being easy to block by parental units, avoiding costly court cases?

sex.com would be such a moot issue if there was a .sex top level domain, in my opinion.

Chris

Never again

[Eol1]

Not sure how closely you follow Al Jazerra and Middle Eastern politics, but unbiased non-pro western reporting by Al Jazerra is a thing of the past.

Before the war, they were a semi-independent media agency, the only major one in the Middle East. Shortly after the war (maybe two weeks back, don't remember the exact date of the annoucement), the head of Al Jazerra was sacked by the Qatar government and replaced with a Qatar government appointed individual. This was clearly done (and semi officially side channeled in diplomatic / intel circle's) to appease the west's concern with non pro western reporting by a major international news outlet.

The days of fair non western partial reporting of major middle eastern events by Al Jazerra are over.

SEX.COM - i used to work for a pr0n company...

[ryan303]

I used to work for these 2 guys that paid Cohen to put their banners on sex.com. The reason this domain is so sought after is becasue it rakes in somthing like a 200,000$ a day just on referal sign-up traffic. You had to pay Cohen 10k-20k A DAY just to have your pr0n banner on the front of sex.com's site. So with no overhead, just one html page that needs to be served, its a genius business model. I actually got to meet Cohen, and he is not someone you wanna mess with. Right when he walked in our office you could tell, he was ready to beat the crap outta anyone who looked at him wrong. This was back in 1999, Unfortunately, the original owner will probably not see a dime from Cohen.

You might say...

[tomcio.s]

It CAME to conclusion...

I know. Sad. I just couldn't resist.

To moderator: The above joke is so lame it deserves to be modded down.

This is not still the end, so far as I can tell.

[werdna]

The article quoted in the story was posted in December -- all of this stuff REALLY isn't news. In August of 2002, the Ninth Circuit finally got fully fed up with Cohen, who continued to have lawyers work his case while abusing litigation process and with his fugitive status. Cohen's lawyers petitioned the Supreme Court to take up that decision -- the dismissal of Cohen's appeal, but retained the questions of the Kremen lawsuit as against all the remaining defendants.

On June 9th, the Supreme Court denied certiorari (that is, refused to take up the appeal of Dismissal of Cohen from the appeal under the fugitive disentitlement doctrine).

When I last checked, the main issues on appeal devolved to a question certified by the 9th circuit to the California Supreme Court on the question whether California law permitted a cause of action for "conversion" with respect to intangible contract rights, such as a domain name. (In an opinion by which Judge Kozinski wrote BOTH the prevailing opinion AND the dissent. Does anyone know the status of that portion of the case?

So, while Mr. Cohen is a ghost (both legally and fugitively), all of the issues in the case remain, and are likely to be litigated for so long as we breathe -- at least it would seem. NSI/Varisign has been, alas, too cavalier and arbitrary in their management of domain name reassignment and disputes, creating a great deal of trouble for those unfamiliar with how they operate -- even those who irrevocably lose control of a domain name. Holding them accountable might change some of their "policies," possibly for good or bad. That will be the only likely legacy of sex.com.

Better Title

[FutureShoks]

"Sex.com case finally reaches climax" would have been a much better title for this story.

Won't be sorry if Versign loses

[whoever57]

My own experience is that Verisign broke their own procedures and re-configured my the primary/secondary nameservers for my company's domain name.

We set up website hosting through a third party. I intended to keep control of the DNS. However, the website hosting firm put in a request to Versign to move the nameservers to the hosting company's servers from my nameservers.

Versign sent an email to the correct address to request approval for the change, stating that if we did nothing, the change would NOT go ahead.

Yet it did. Versign made the change! I spent the rest of the day shouting at them on the phone trying to get them to change it back before the scheduled update. They refused.

I sent an email to their "investigations" department. Strangely, I heard NOTHING back.

I will NEVER register a domain name through them again!