Sex site thief sentenced
April 4, 2001: 3:35 p.m. ET defendant guilty of stealing domain name, ending five-year case
graphic graphic
NEW YORK (CNNfn) - A federal judge has ordered porn Web site operator Stephen Cohen to pay $65 million in damages to the owner of the domain name, from whom he fraudulently obtained the rights.

The verdict, the biggest ever in a cyber-squatting case, calls for Cohen to pay online entrepreneur Gary Kremen $40 million in compensatory damages and an additional $25 million in punitive damages.

U.S. District Judge James Ware found Cohen liable for fraud and forgery in the five-year battle over, awarding Kremen damages for lost profit.

graphic plaintiff wins $65 million, largest verdict ever in a cyber-squatting case.
Ware's order, handed down late Tuesday, also ordered that a warrant issued for Cohen's arrest remain in effect until he surrenders all of his property to the court.

Cohen, who has previously served time in federal prison for bankruptcy fraud and impersonating an attorney, lives in Tijuana, Mexico, and has shielded his multimillion-dollar fortune, stashing it in offshore accounts, lawyers said.

Kremen said he plans to remove most of the outright pornography from the site and transition it to more mainstream content.

"If you take someone else's property, you simply have to give it back, no matter what kind of property it is," Kremen attorney James Wagstaffe said.

The fight over began five years ago. After successfully launching the online dating service, Kremen turned his entrepreneurial attention to He hadn't developed a Web site to accompany the nomenclature immediately after registering it. The domain name had sat empty. While Kremen was busy developing his online dating service and registering, Cohen finished his bankruptcy fraud term in February 1995, and left federal prison.

In October 1995, Network Solutions, the company which registers the rights to Internet domain names, received a letter from a company called Online Classifieds Inc. stating that control of the domain name was to be turned over to Cohen. The writer of the letter is listed as Sharyn Dimmick. Dimmick, who was Kremen's roommate until April 1995, did not know Cohen, says Kremen's lawyer Pamela Urueta of San Francisco-based Kerr & Wagstaffe LLP.

Network Solutions obliged and transferred control of the domain name to Cohen.

Following the transfer, Online Classifieds Inc. informed Network Solutions that all correspondence would have to take place via mail or telephone -- because Online Classifieds Inc. did not have Internet access, Urueta says. Cohen commenced developing the Web site and turned it in to a multimillion-dollar venture.

Kremen learned from a friend that was operating as a pornographic Web site, he says. Attorneys were called, a lawsuit was filed, and the most bizarre domain name battle in the Internet's short history began.

Lawyers said the case was important in that it was a simple test of whether the protections extended to physical property can also be applied to intangible assets such as Internet domain names.

-- from staff and wire reports graphic