The Sex.Com Chronicles, by Charles Carreon

For the sake of ornament and illumination.

Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:44 am

“JUST WAIT, IT’S ONLY THE BEGINNING.”

“Just wait,” she said, “it’s only the beginning.” The lady telling me this was no ordinary 40ish 5’4” San Diego blonde with a bob haircut. She was Betsy Hartwig, an Assistant Attorney General for the San Diego office of the California Department of Justice. She was the prosecutor who convicted Cohen of bankruptcy fraud and related crimes back in 1992. We were eating cold sandwiches and coleslaw from paper cups in a deli down the street from Beth Ballerini’s office during the lunch break after Cohen’s morning session.

I really wanted her to open another prosecution on Cohen, this time for the theft of Sex.Com. But the Constitution requires that crimes be tried in the vicinity in which they are committed, and the theft was perpetrated in the Orange County office of Midcom Corporation. So Besty didn’t see how her office could get jurisdiction over it. In retrospect, I am sure she did not want to endure any more stress-induced lifespan shortening of the sort that occurs when you spend your time chasing Cohen.

I had obtained the transcripts of Cohen’s criminal trial and had a law clerk summarize them for me before I met Betsy. The transcript proved that Cohen had impersonated lawyer Frank Butler, and using that false identity, had represented a couple of clients named Polvadore in a bankruptcy proceeding. During that representation, he misappropriated money from the debtor-in-possession fund. He also advised his clients to hide their Rolls Royce rather than turn it over to the trustee, and aided their commission of other little improprieties. An IRS agent testified that despite many hours invested in reviewing financial records, the government still couldn’t figure out Cohen’s entire scheme, but some substantial sums were missing. The jury convicted Cohen of Bankruptcy Fraud, Making False Statements and Obstruction of Justice. Judge Judith Keep refused to allow him release pending sentencing and on January 27, 1992, sentenced him to 46 months. Cohen called her “a cunt” on the record, and appealed his conviction. He won his appeal as to one count of the conviction, and was remanded for resentencing. However, Judge Keep imposed the same sentence as she had the first time.

Cohen didn’t waste his time in prison, though. His fine mind was still appreciated by those who knew him. His friends Bonnie Hite and Jim Powell came to see him when they needed legal advice about getting out of a time-share condo deal. Cohen kept his legal skills sharp suing his wife and her lawyer in a RICO case, and filed some prisoner lawsuits against the Bureau of Prisons to get better treatment.

Cohen also made friends in prison with noted securities defrauder Marshall Zolp, the inventor of the famous self-chilling beer can. Never heard of it? That’s because the feds put an end to Zolp’s efforts to promote this non-existent, but highly-desired beverage container, after he scammed several million from investors. After he got out of prison, during a casual phone call Cohen introduced Zolp, who was still in prison, to Bonnie Hite, another of the Sporting Houses directors. When Zolp got out a few months later, he and Hite quickly married and moved to Portland, Oregon. The marriage ended in a few months, but Zolp and Cohen appear to have worked together to create a couple of companies, Sporting Houses Management, and Gighlieri Fine Arts. Perhaps best described as an “investment vehicle,” Sporting Houses, which ended up holding the registration for Sex.Com, was originally organized to gather investments and fund development of an offshore pleasure island Cohen called Camp Wanaleia, pronounced “Wanna-lay-’ya.” Jim Powell was also a Sporting Houses Director, and most meetings were held at Midcom, Barbara Cepinko’s company in Orange County. Cohen got an address for Sporting Houses in Nevada, and the company gathered about $300,000 from investors. Bank records I got from a Las Vegas branch of Wells Fargo showed Cohen in total control of the cash, which all went to him or one of his companies, Omnitec. Needless to say, Camp Wanaleiya, which was going to employ hundreds of prostitutes of the highest calibre, making them available to the most discerning connoisseurs of sensual pleasure, went nowhere.

Gighlieri Fine Arts was built around the most evanescent asset I have ever glimpsed; the slender side of an option to buy all of Lorenzo Gighlieri’s entire artistic ouevre. Gighlieri is perhaps the premier creator of tabletop bronzes for the golf and boardroom set. Picture classical forms, nicely rendered, smoothly polished, at home in a paneled den, next to some photos of young guys in old fashioned football uniforms. With a luxury car salesman as its CEO, this venture also evaporated. According to Bonnie, Zolp eventually got in trouble with his Probation officer for failing to report, and fled to Tiajuana, Mexico to live with Cohen. By the time I got on the scene in 1999, Zolp’s email address was Zolp@Sex.com. His street address was in Tortola, British Virgin Islands.

Betsy took in this news with gentle interest. I probed to see if I could get her to prosecute Cohen for stealing Sex.Com. She said she was talking to a couple of investigators about checking into Cohen’s current doings, but I got the feeling I was working on a long shot. I had little time to worry about it, because I had to get back to the afternoon session.
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:45 am

“SO FAR, SO GOOD”

In the French punk movie, “Hate,” one kid tells another a joke. A guy falls out the window of a high apartment building. As he’s falling past each successive floor, he tells himself “So far, so good, so far, so good...” When I came back from lunch to resume Cohen’s deposition, I felt like I had fallen off the roof of a 20-story building, and had just passed the 12th floor. Somewhere during the next 12 floors, preferably within the next four, I needed to reverse the force of my downward plunge.

Before lunch, I’d tried my usual approach of starting without documents, to avoid giving the witness a place to rest their eyes to avoid your probing stare. Questions answered in a vacuum, without dates and names and documentary references, are often more honest. But Cohen had given up nothing in two hours of wordplay, and the pavement was getting closer. I had to start using documents to slow my descent. I started with one that was bad for Gary, the Delaware incorporation papers for Online Classifieds, Inc., that Joel Dichter had formed when he was Gary’s lawyer. Dorband had taken control of Dichter’s strategy, but I figured it would help to get Cohen to admit that the incorporation was not fraudulent. I thrust the document at him suddenly, accompanied by a vague, sneering question. Dorband saw the danger of the tactic, which is meant to provoke the witness to speak carelessly in response. Dorband immediately began running interception.

CARREON: I have marked as Exhibit 1... a statement... a designation by foreign corporation. It appears to be signed by my client, Gary Kremen. Have you seen that before?

COHEN: Yes.

CARREON: What difference does that... document make to you?

DORBAND: Objection. Vague, ambiguous.

CARREON: Does it make any difference in this lawsuit?

DORBAND: Objection. Calls for a legal conclusion, also.

CARREON: To your knowledge.

DORBAND: If you have -- it would be an impermissible opinion.

CARREON: Do you --

DORBAND: If you have an opinion.

COHEN: If I have an opinion?

CARREON: Yeah, do you have an opinion?

COHEN: My opinion is that the attorneys of Gary Kremen tried to perpetrate a fraud upon the court.

CARREON: How does that document prove it?

COHEN: This is where they tried to back-date the corporation Online Classifieds, back to the date of 1994.

CARREON: Where do you see that attempt to back-date?

COHEN: Taking the reading of the original complaint plus this document plus the other documents.

CARREON: Where do you see on that document any attempt to back-date anything?

DORBAND: I believe that mischaracterizes his testimony.

CARREON: Do you see anything on that document that shows an attempt by my client to back-date anything? Look right on that document, don’t look any place. Don’t look anyplace else.

COHEN: I’ll stick with my last answer.

CARREON: And your last answer is what?

COHEN: Taking all the papers into consideration, that was of my opinion, not of a legal opinion.

CARREON: So you admit there’s nothing on this document at all here which backdates anything?

DORBAND: Objection. Mischaracterizes his testimony.


Okay, I’m falling a little more slowly now, and I’m ready to attack the main issue. I grabbed the corner of the most crucial document, the forged letter itself, and twirled it like a playing card toward Cohen while simultaneously asking him:

CARREON: Here’s what I’ve marked as Exhibit 2. Where did you get that? From the tooth fairy?


Dorband iced me down:

DORBAND: Would you please give the witness the opportunity to read the document, please?

COHEN: Would you read it to me, please?

CARREON: I’ll give it to your counsel.

COHEN: I’m sorry.

CARREON: Where did you get it? From the tooth fairy?

DORBAND: Objection, if you’re going to continue to badger the witness like this we’re going to terminate the witness -- terminate the deposition.


While Bob may have wanted to kill his client on occasion, I don’t think this was one of those moments. The little slip lightened the moment anyway. I started again:

CARREON: Where did you get that document?

COHEN: I got it from Vito Franco.

CARREON: How did he get it?

COHEN: He got it from Sharyn Dimmick.

CARREON: Where did he meet Sharyn Dimmick to get this?

COHEN: Her address in San Francisco.

CARREON: Does Mr. Franco have a criminal record?

COHEN: No, he does not. Or did not.

CARREON: Does he now?

COHEN: No.

CARREON: Now, where did you meet him?

COHEN: Where did I originally meet him?

CARREON: Yeah.

COHEN: Through a friend.

CARREON: And where?

COHEN: I think in Los Angeles is where I actually met him.

CARREON: When?

COHEN: It’s been so many years. 20-some-odd years ago. 20, 25 years ago.

***

CARREON: When was the last time you saw Vito Franco?

COHEN: The last time I saw him?

CARREON: Yes sir.

COHEN: In November of 1999.

CARREON: What was that occasion?

COHEN: Sitting in a jacuzzi.

CARREON: Where was that?

COHEN: Tijuana, Mexico.

CARREON: Does he work there?

COHEN: At that time, yes.

CARREON: Well, does he work there now?

COHEN: No.

CARREON: He worked there then?

COHEN: Yes.

CARREON: With what?

COHEN: Sandman.

CARREON: What does he do?

COHEN: When?

CARREON: Well, what did he do back when -- you know, during the work day before he sat in the jacuzzi?

COHEN: He was building out the brand-new offices for Sandman.

CARREON: What’s his area of expertise?

COHEN: He -- background on him?

CARREON: Yes, please.

COHEN: He is an ex-police officer. He was a movie producer.

CARREON: With which police agency?

COHEN: I’m not sure. I think it was somewhere in Hawaii. He was -- that’s before he moved to California. He is a movie producer, distinguished, and he was also -- he also did building.


At this point, I was close to gold, but somehow got off track. When I reread the deposition, I’m not sure why. Maybe I was just afraid to move too fast. At any rate, for an intervening 70 pages of transcript we engaged in sparring matches, in which Cohen used poor recollection, diversion, the Fifth Amendment, and a private confidentiality agreement to evade, deflect and block meaningful questioning. I was about three floors from the pavement when I returned to the crucial line of questioning:

CARREON: All right. Let’s go back to the Sharyn Dimmick document. So Vito Franco gave this document to you, Exhibit number 2?

COHEN: That is correct.

CARREON: What did he tell you about it when he gave it to you?

COHEN: She signed it.

CARREON: She signed it. Did you send him to get her to sign it?

COHEN: Yes.

CARREON: Why...did you send him to get her to sign it?

COHEN: She agreed to transfer the domain name. Vito and I drove up to San Francisco, and Vito got it and he handed it to me.

CARREON: Well let’s put it this way. Did you ever see Sharyn Dimmick’s name on any document that purported to show that she was somebody with respect to Online Classified, Inc.?

COHEN: Personally?

CARREON: Yeah.

COHEN: No.

CARREON: Did Vito Franco?

COHEN: I don’t know.

CARREON: Was there any other person involved in the production of [the letter]? And I’m not referring to Sharyn Dimmick, you know. I made it pretty clear that I don’t believe Sharyn Dimmick signed it. So besides yourself and Mr. Vito Franco was there anyone else that was involved in producing this document?

COHEN: No.

CARREON: Where was it typed?

COHEN: On the computer system that Vito had.


At this point, my heart stopped in its chest. I couldn’t believe I was getting this admission. He typed it! As the questioning progressed, I began to feel like I was in a dream. I wanted to pinch myself, because I couldn’t believe the beauty of the things I was hearing. I was afraid that Dorband was going to set Cohen’s chair on fire, or that Cohen himself would realize he was hanging himself. My headlong plummet had completely ceased. I was beginning to float upward as if in a dream. The dream continued:

CARREON: Did Mr. Franco tell you that Online Classifieds, Inc. had its own stationery and it did not look like this?

COHEN: No.

CARREON: Did Mr. Vito Franco tell you that he had generated this stationery on his computer?

COHEN: Yes.

CARREON: Did Mr. Vito Franco tell you why Sharyn Dimmick wasn’t able to type her own letter?

COHEN: No.

CARREON: You had never spoken to Ms. Dimmick yourself?

COHEN: Not to my knowledge.

CARREON: You have never spoken to anyone who represented themselves to be Ms. Dimmick?

COHEN: Not to my knowledge.

CARREON: You do not think it suspicious that Mr. Franco found it necessary to create the letterhead for the letter to be written on?

COHEN: No.

CARREON: You did not think it suspicious that a company that has someone called a president did not have its own stationery?

COHEN: No.

CARREON: Who drafted the text of the letter?

COHEN: The text of the letter?

CARREON: Yes sir.

COHEN: Vito.

CARREON: Did you help him?

COHEN: I may have.

CARREON: This is dated October 15, 1995. When was it prepared?

COHEN: I don’t recall.

CARREON: Was it prepared close to that date? Long before?

COHEN: I don’t remember when he actually talked to her before we drove up, so I don’t know what date it was -- that it was -- I know that he had asked me some questions about what should we put into the letter, and I responded to that.

CARREON: Had he interviewed Ms. Dimmick?

COHEN: Yes.


By now, it was clear that from any ordinary viewpoint, the letter was a forgery. Only in Cohen’s world do we rely on documents signed by people we haven’t met, printed on our home computer, using letterhead created for that very purpose. Franco, the guy who got the letter signed, would obviously be an important witness. So I asked about him:

CARREON: He located Sharyn Dimmick by what method?

COHEN: I don’t know how he located her. I honestly don’t know.

CARREON: Mr. Franco is still an employee of Sandman Internacional?

COHEN: No.

CARREON: Is he his own freelance person?

COHEN: No.

CARREON: Who does he work for?

COHEN: He doesn’t.

CARREON: He’s just chilling, huh?

COHEN: You could say that.

CARREON: Well, he was in a jacuzzi. I figured. Okay. Where is he? How can I get in touch with Mr. Franco?

COHEN: He’s in heaven.

CARREON: He’s in heaven? He’s in heaven?

COHEN: He’s in heaven.

CARREON: Wait. Well, we know that you and I have got a little bit of paperwork to do before we get in. So where can I find him short of there?

COHEN: He passed away.

CARREON: He did?

COHEN: Yes. He just recently passed away.

CARREON: I see. Where are his records?

COHEN: I don’t know.

CARREON: I’m not going to pass away, am I?

COHEN: I hope not.


I added that last question because it just seemed that anyone who had any relevant knowledge about this case ended up dead. Earlier, I had asked Cohen about the French Connection and the Ashton-Tate lawsuit against himself and John Cook. Since then, John Cook had died. Not only that, Cook’s mother had died when she was served with the lawsuit papers by Ashton-Tate’s lawyers. Right on the spot. Cohen also told two different courts on two different occasions that Frank Butler, the attorney, had a heart attack. Cohen even stored some of his financial records with his father, an accountant, also deceased. It was more than coincidence that people who had important things to say about Cohen’s business dealings seemed to be unavailable. Cohen’s witness list was comprised, in equal numbers, of expatriates, foreign nationals, and folks on whom the ticker had just run out. So I continued digging in the graveyard of Cohen’s memories:

CARREON: When did he die?

COHEN: He died -- he died when I was in Comdex in Las Vegas this last, I think it was October. He was supposed to call me -- sat in the jacuzzi the night before when I called his house, because I was upset because he didn’t call me, and then I found out that he had passed away.

CARREON: So you -- he died in Tijuana? Where did he die in Tijuana?

COHEN: He was a very private individual and I didn’t realize that he was as sick as he was, and Vito never told me -- when I was incarcerated, Vito had suffered a heart attack that I wasn’t aware of. And Vito used to go to the hospital, and I thought he was getting blood transfusions. And after he died I found out that they weren’t blood transfusions, they were kidney dialysis, and he went into the hospital for his kidney dialysis in Los Angeles. I believe it was Cedars.

CARREON: Cedars-Sinai?

COHEN: Yeah. And he told them he didn’t feel good, from what his kids told me, and he stood up and passed out and died.

CARREON: And that was in October of 1999?

COHEN: I believe so.


Well, Cohen might have believed so, but according to the responses to the subpoenas I sent to Cedars-Sinai, no such person had ever been a patient. But on February 3, 2000, I just dug for more details from Cohen about this invented person.

CARREON: What did he do for you?

COHEN: What did Vito do for me? Vito did all the work. Vito ran and worked in several of the companies back in that day and age.

CARREON: Did he do a lot of private investigating type stuff, hunting people up and --

COHEN: Yes. Yes.


Along with the forged letter, Cohen had submitted a second document with NSI to change the registration of Sex.Com into the name of Sporting Houses Management. In this document, filed online with NSI, Cohen pulled a classic “spoofing” trick. He filled out the form in Kremen’s name, because as the administrative contact, Kremen had the authority to change the registration. But he changed Kremen’s telephone number and email address to his own phone number and a distinctive email address: steve@liberty.com. The liberty.com name was owned by his friend Stephen Grande, married to Barbara Cepinko of Midcom. I wanted to get Cohen to admit that combining information like this had to be done for a fraudulent purpose, but he just wouldn’t go there. Maybe he was beginning to realize he’d given me too much rope already.

CARREON: [I’m going to] ask you to take a look at that document and ask if you’ve ever seen it before and when you saw it?

COHEN: I produced this.

CARREON: You produced that document?

COHEN: Yes, I produced that document.

CARREON: So you typed Gary Kremen’s name on there?

COHEN: That’s correct.

CARREON: Why did you do that?

COHEN: Because the letter authorized me to do it.

CARREON: Now, why didn’t you talk to Gary Kremen?

COHEN: What was the purpose in talking to Gary Kremen?

CARREON: You knew that Gary Kremen was the systems administrator. He was the only person authorized to transfer this domain name.

COHEN: Says who?

CARREON: He was the only person authorized to transfer it according to --

COHEN: According to who?


This last bit of denial didn’t matter much, though. He had lifted the veil quite enough. Maybe he felt the fraud had been declared legitimate for so long that he no longer saw any risk in discussing how the letter came into existence. He admitted he had never met Sharyn Dimmick, even though the letter said they had talked many times. He had written the letter on his own computer using a word processing program. The only person who had ever “met” Sharyn Dimmick was an old, dead friend of his. When he announced the news of Vito’s death, he chided me for showing no respect for the dead. I told him “Mr. Cohen, I refuse to feel sadness at the death of your witnesses.”

At his deposition, Cohen didn’t say that Vito had paid anything for the name, or Dimmick’s signature. Later, before summary judgment, he shifted to the position that he had paid $1,000 for it, but that he had no receipt for the payment and such exchanges would merely be small amounts between himself and Vito, a friendship that couldn’t be burdened with paltry matters like accounting for four-figure sums.

There it was, elegantly simple. The letter was a forgery, Cohen had no reason to believe that it was legitimate, and it was the operative cause for the transfer of Sex.Com. My entire downward momentum had reversed. I was weightless, floating upwards past the balconies. As I passed the rooftop, I kept rising higher. So far, so good.
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:48 am

“I’LL LET THE PANZERS OUT AND I’LL CUT OFF YOUR TOES”

The last we saw him, Judge Ware was sitting on the bench in his black robe, with his face as handsome as an oiled mahogany carving, giving me a short reprieve to depose Cohen and see if I could prove that NSI had deliberately helped Cohen steal Sex.Com.

The first rule you have to learn about litigation and trying cases is this one, “nothing gets in except through the mouth of a witness.” That’s right, no witness, no evidence. You can have a stack of documents 500 feet high, and unless they are “official documents,” like court records, they are all inadmissible hearsay until a witness testifies that they wrote them, or read them, or relied on them, or in some way did something that makes them admissible. So don’t go to court with a note or a letter. Go to court with a witness with the letter in his hand.

I had a lot of NSI documents and a lot of reason to believe that NSI had been so sloppy in transferring the domain name that it went beyond mere negligence, and rose to the level of recklessness, perhaps even disclosing the intention to help a wrongdoer steal the domain name. But why would a Judge believe what I had to say about NSI? I was the lawyer for the people who were suing them. It was time to get some mileage out of my rent-a-nerd.

Ellen Rony is obsessively precise. This characteristic pays off with an expert, who is hired for only two reasons -- to say the things you want them to say, and to stand up under cross-examination when the other guy tries to get them to admit that they’re wrong, or didn’t read all the relevant documents, or that some other experts disagree with them, or that they’re not sure, or that all the money they are being paid to testify has affected their testimony. A precise person finds it easy to pleasantly disagree, which leads to greater clarity of opinion, rather than mere hair-splitting, as the other guy would have it. Precision also provides an excellent blind for a bald denial. Which is the little curtain behind which the clever expert withdraws when all else fails.

In addition to being precise, Ellen had another good quality. She really thought NSI had screwed up. Ever since she’d learned about the theft of Sex.Com, she’d been disturbed by NSI’s behavior. She was particularly surprised that NSI seemed totally comfortable having a blatant thief own the domain name, because she was well-acquainted with Phil Sbarbaro, the “house counsel” for NSI who had rebuffed my attempts to settle the case on easy terms. “Phil,” as she called him, had clearly impressed her, because she described him and his suits in that honey tone women unconsciously adopt when describing powerful men. From her description, which was admittedly brief, I imagined Phil to be in his mid-40’s, the kind of lawyer who favors custom-tailored banker-type suits, has a rather close-cut salt and pepper hairstyle, smiles charmingly, extends his hand ingratiatingly, looks the speaker in the eye and responds to all attention like the captain of industry he is. To me, he was just one more obstacle to getting Sex.Com, so she could think whatever she wanted to about him. And little did he know it, but Phil was about to get his tit in a wringer.

Ellen and I got together over a weekend, discussed the way NSI had transferred the domain name, and put together a lengthy declaration, must have been 15 pages, where she swore under oath that the forged letter was the most obvious fraud imaginable, and should have raised red flags for NSI. The letter, she noted, contained several absurd statements, including the idea that a company called “Online Classifieds” wouldn’t have an Internet connection, that “Sex.Com” would be given away for free by a company involved in the Internet business, and that somebody giving away a domain name would simply sign a letter approving the transfer, and let the other party handle it with NSI. She then analyzed, with reference to four specific criteria, exactly how NSI had failed to follow its own policies, in particular by failing to contact Gary Kremen before transferring the domain name to a new registrant.

Apparently, Ellen’s declaration landed with a resounding thump on Sbarbaro’s desk, bypassing his urbane superego, due to the shock of having Ellen Rony, the author of The Domain Name Handbook, that is to say, in Phil-Sbarbaro-speak that mousy little hobbyist who called herself a “scribe” and presumed to document the “history of the Internet” as if anyone owned the Internet besides NSI, that poor woman whose mind had been manipulated by Charles Carreon’s words and Gary Kremen’s money, in other words, that woman who, who... who the hell did she think she was?

I can see it now. He calls his associate Kevin Golden on the office intercom. Golden appears, with his Irish choirboy looks and his notepad. Sbarbaro is already dialing Ellen’s number. He points Golden to a chair and hands him the declaration of Ellen Rony. Golden hasn’t fully appreciated the significance of this. Or maybe he hasn’t read it at all. Doesn’t matter, the phone’s ringing. Answering machine. He leaves a message, telling Ellen to call him. Intense conversation follows between Sbarbaro and Golden. Golden feels defensive because he was unaware of the problem being so serious. Sbarbaro is over-reacting. Golden hasn’t often seen him like this. They keep talking until a while later when Ellen calls back.

Phil puts her on the speaker phone. He feels like Frank Sinatra, hearing that some mug has just ratted on his best friend. He’s going to play it cool, but with plenty of steel. He starts out by telling her how disappointed he is, that he thought she was a better friend than that, that NSI has such an important influence on the Internet, and that what she has done bodes ill for future collaboration. All that easy access to NSI documentation and information that she’s had, including the link to her website, all that is put in jeopardy by this ill-considered action. Do you know anything about this Charles Carreon? He’s insane, he tells her, echoing the words of David Dolkas who told the court in alarm, “Carreon’s conduct must be stopped.”

And this is where you have to cheer for Ellen. She’s thinking, “look, Phil, I’m not a god-damned pet canary that lives on crumbs. If you wanted to hire me as a consultant, you could have sent me a check a long time ago”. But she doesn’t say this, instead she tells him that she’s sorry he’s upset, but she thinks NSI made a huge mistake here, and they ought to fix it. She may have even said a good word about me.

Well, leaning back into his chair and smiling at Golden to show him how a guy handles this, he tells her that well, Ellen, hate to break it to you but you’re not really an expert about NSI policies. He tells her he’s going to have her “disqualified” as an expert, and have her declaration “stricken.” Ouch, that’s gotta hurt!

And that’s not all. If her declaration isn’t stricken, he’ll have to take her deposition. (Gasp!) And when he does, he tells her, he’s going to “let the Panzers out, and I’m going to cut off your toes.” He’s satisfied with himself when he makes this statement. He can feel her wince as her nether digits are removed. She’s not Jewish, but nobody likes Panzers, the feared World War II tanks that Rommel drove to victory in North Africa, mounted with the dread 88 mm. cannon that could blow a Sherman tank wide open while facing no risk of harm to itself. Just a little bit of history out of respect for Phil, since he is an ex-military man and I bet he still has his dress whites pressed and ready to go.

Well, you can imagine that Ellen was on the phone to me pretty quick after that happened. Me, I was crazy, livid, and not the least because he said I was crazy. I’m sensitive about that stuff, and it really got my blood going. So what did I do? Like any lawyer who is already mad, and wants to get even, I hit the books. Pretty soon I had it in hand, the Erickson case from the Ninth Circuit Court of Appeals, which clearly holds that it is improper to attempt to influence or coerce the other side’s expert witness, or even to communicate with them directly rather than through the office of the lawyer who retained them. Thus armed with certain foreknowledge of his wrongdoing, and wanting to see if he would stick his foot in it any further until it became unretractable, I sent Phil a short letter, rebuking him for threatening my expert with “Nazi imagery,” and “threats of dismemberment.”

Phil’s response was most gratifying. He wrote back that he didn’t need my permission to call his old friend Ellen Rony, and that he was entitled to tell her anything he wanted. He did not deny having used Nazi imagery or threats of dismemberment, which under the circumstances, being something that an ordinary person would certainly deny if it were untrue, constitutes a “tacit admission” under the Federal Rules of Evidence. Then, and only then, did I write him the letter telling him about the Erickson case. His next letter was full-speed in reverse. It was so delicious I should have framed it. He said he was sorry, said he routinely did that sort of thing when he was a federal prosecutor, and offered to pay the fees and costs resulting from this “ex-parte contact” with my expert witness, which he grudgingly conceded was apparently technically unethical. Gary still hasn’t gotten a penny from Phil Sbarbaro for the assault on Ellen, but I am sure he will ultimately spend enormous sums in an unsuccessful effort to force Sbarbaro to fulfill this promise. Nor has this captain of industry shown the small speck of gentility necessary to send an apology to Ellen, who apparently, is no longer his friend.
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:48 am

WE FOUGHT THE LAW AND THE LAW WON

In the Internet business, At the peak of the boom, NSI was city hall, as in, “you can’t fight City Hall.” Reading the history of NSI’s judicial victories is about as uplifting as re-reading the Dredd-Scott decision. (You’ll recall that was the case where the United States Supreme Court held that a man was property, if he was a slave in his state of origin, even when he crossed over into a state where slavery was illegal.) The NSI cases evoke the same sense of the courts bending to the winds of powerful interests. By accepting NSI’s version of the facts without exposing them to scrutiny, the courts helped NSI build fortresses of judicially-reinforced ignorance. From reading the opinions, it is apparent that the judiciary collaborated with NSI to allow the wool to be pulled over its eyes. How could this happen?

The history of NSI may give some clues. How did it get going? How did it gain so much power? What interests does it really represent? So now for the quick history of the Internet that will soon be learned in the cradle from the mouths of Internet Barbie and Virtual-War G.I. Joe.

In the beginning there was DARPA and ARPA, and their mission was to provide a redundant network for communication among defense and educational computer installations. By redundant we mean that even if one link in the system breaks down, the entire system continues to function. What is amazing is that these scientists managed to collaborate to create the system. Under the benevolent aegis of defense spending, unimpeded by the concerns of crass commercialism, the engineers designed communication protocols based on the UNIX computer language that enabled many different kinds of computers running different kinds of software to communicate over the phone lines.

In essence, the early Internet pioneers put universal communication functionality at the top of their priority list. The most important thing was for all of the computers to be able to talk to each other. Historically, the Internet was foreshadowed by the legend of the Tower of Babel. This early public works project was made possible only because human beings possessed a common language. According to Hebraic historians, utilizing this common language, the nations of the earth attempted to build a stairway to heaven. Jehovah became wroth with this demonstration of arrogance, and rather than burning the tower down as he might have on another day, struck on a more devious solution. Jehovah “confused their speech.” He smote them with the curse of varying languages. The builders suddenly found themselves unable to communicate, and as a result, abandoned their plan to ascend to the heavens by means of a ladder.

Even if we can’t talk to each other, the Internet pioneers decided, our machines can! But the common language developed by the engineers had a disadvantage -- it was numerically-based, cryptic and engineer-like. Sure, an engineer can rattle off an IP address (that’s “Internet Protocol” address) like his newborn’s birthday, but the rest of us have trouble remembering our phone numbers. So if I wanted my computer to call your computer, I would have to input all of these digits.

Along comes John Postel, the patron saint of the Internet, who certainly looked like a Deadhead, and worked for the University of Southern California Information Sciences Institute. While doing contract work for the U.S. government, Postel came up with a clever idea. Since anything arbitrary can equal any other arbitrary thing in the world of mathematics, why not equate numerical IP addresses with arbitrary strings of letters? Since any string of letters can equate to any string of numbers, all you need is a database that interrelates the strings of letters with the strings of numbers and automatically routes messages to the appropriate computer. And thus was born the age of the Dot-Com.

All IP addresses, decreed St. Postel, would end with a three-letter suffix, like .Gov, .Net, .Org, and most importantly to our story, .Com. To the left of the Dot, the user could put anything they wanted, up to a limited number of spaces. (This space has grown so much now, that domain names can practically be a paragraph long.)

Domain names, you might expect, would be a natural-born hit, a marriage of necessity and style. It was sort of bohemian, if you think about it. Bohemians started naming their cars to personalize the smog-belching carriages that rule and enable our lives. Now we could personalize our computers, and with more than mere sentimental effect. Naming your car is something you stop doing when you get your first real job (although the trend resurges among soccer moms, whose Suburbans proudly bear names like “Great White Beast,” inevitably chosen by the micro-Viking progeny of a true trophy blonde).

But a name for your computer is not just a sentimental tag attached to a mechanistic object. It is a grubstake in the new economy. It is a homestead on the information frontier. It is a doorway to a community of knowledge, information and entertainment that is so compelling in its current, high-speed incarnation, that broadband users, who get more information faster, spend 28% more time at their computers than dial-up users. Dial-up now has market penetration roughly equivalent to that of television in the late 1950’s. Meanwhile, the demographic profile of the average Internet broadband user is identical to the demographic of the dial-up user five years ago. I couldn’t have rattled off this stuff three years ago, and by the time you read it, the numbers will have changed. And yet it was all there in potential form in the early 1990’s, a glimmer in John Postel’s eye.

When Postel invented them in 1984, domain names were adopted only by a tiny group of engineers spread around the country. They started emailing each other about their typical geeky topics, one of which was the future structure of the Internet. For about ten years it was basically managed by volunteers. In 1994, Postel wrote an email to some friends who were also helping to run the system, laying out the plan for an agency to administer the registration of domain names. Postel and his friends created an entity known as IANA, the Internet Assigned Names and Numbers Authority.

IANA operates out of a building in Marina Del Rey, California, and hosts a website at IANA.org; however, it does not have any corporate or governmental existence that I’ve been able to discern from my research. In response to a lawsuit seeking to compel IANA to create a “.Web” top level domain name, Postel filed a declaration stating that IANA was merely a “function,” performed under contract for a security agency of the United States Department of Defense. Apparently, at one time, IANA had control over all of the domain names. Later, IANA transferred responsibility for managing the four main top-level domain names (.Com, .Net, .Gov and .Org) to the International Corporation for Assigned Names and Numbers (“ICANN.”)

Meanwhile, the cash for funding the registration program came to be administered through the National Science Foundation, which put the domain name registration function out for bid to data processing companies. The contract was just for a few million bucks, so in May 1993 it went to NSI, a small company in Herndon, Virginia.

The National Science Foundation paid NSI to register domain names for free. In December, 1994, seven months after Gary registered Sex.Com, the NSF recommended that users start paying to operate the system. In May, 1995, NSI was bought lock, stock and barrel for $4.8 Million, by SAIC, Science Applications International Corp., a privately held San Diego company with a Board of Directors peopled by defense establishment magnates, including former Secretaries of Defense Melvin Laird and William Perry, former NSA chief Bobby Inman, and former CIA Directors Robert Gates and John Deutch. On September 14, 1995, NSI announced it would start charging $5 per domain name registration.

The cash cow started producing immediately. Between September 1995 and March 1996, NSI took in $20 Million in registration fees. The arrow just headed straight up from there, like an X-15 pilot in the movie, The Right Stuff. Boy, did NSI have it. Fueled with the power of absolute monopoly over a desirable resource, NSI went from being a cheap date to a supermodel in two short years, turning into a stock market darling at the beginning of the tech-IPO craze. NSI proudly described its glowing success in a July 1997 stock prospectus:

“Net registrations within the TLDs maintained by the Company increased by 233% from approximately 246,000 domain names registered at March 31, 1996 to approximately 818,000 domain names registered at March 31, 1997. The Company believes that commercial enterprises and individual Internet users worldwide are increasingly recognizing the .com TLD as a desirable address for commercial presence on the Internet. *** [T]he Company believes that the potential for continued growth of domain name registrations by commercial entities and services related to those registrations is substantial. Net revenue from Internet domain name registration subscriptions accounted for 76.5% of the Company’s net revenue for the three months ended March 31, 1997.”

The day NSI went public, at the opening bell on September 26, 1997, the market was drooling, and the first trade closed at $25/share, 40% above the $18/share offering price. By the end of the day, NSI had a market cap of $382.5 Million, and SAIC had sold enough stock to harvest a $9 Million profit, while keeping a 28% interest in the company. A little champagne was consumed in San Diego that night. The fruit of the Internet, born in the soil of DARPA, the Defense Advanced Research Project Agency, fell quite close to the tree.

Eventually, administration of the government contract with NSI passed from the National Science Foundation to the United States Department of Commerce and ICANN. A period of conflict between Commerce and NSI took place during 1999, with NSI taking the position that it “owned” the right to register all .Com domain names in perpetuity. NSI also claimed it owned the entire database of five million .Com registrations that it had registered during the period of its government-created monopoly. In late 1999, NSI gave up its death grip on the .Com franchise and database when it agreed with ICANN to allow the creation of additional registrars who could compete in the registration of .Com and other domain names. However, above all of the registrars, NSI continued to hold the privileged position of being both a registry and a registrar.

There is only one domain name registry, and it is NSI. There are now many registrars, but they all must register their domain names with NSI, the world’s only registry. For this service, NSI charges $6. Thus, if you register a domain name with any other registrar, $6 of what you pay goes to NSI. Meanwhile, NSI collects the $6 plus a premium that has steadily declined from around $30 for every name that it registers directly through its NSI.Com registration portal.

The agreement with ICANN in 1999 also provided that NSI would have to choose between being the registry and being a registrar by 2001. However, for those who read the papers closely, it was disclosed in 2001 that NSI had managed to renegotiate the agreement, allowing it to continue operating as both the registry and a registrar until 2005. Since being acquired in March 2000 by Verisign Corporation, NSI and its corporate parent are probably destined for a merger with Microsoft. (Anyone hear the opening strains of Terminator II?) For all of these reasons and more, I took to calling NSI the “stainless steel saint.” Every lawyer knows that some companies are more fun to sue than others. NSI was no fun at all.

NSI’s counsel of record, Dave Dolkas of Gray, Cary, Ware & Friedenrich, had the kind of self-assurance that told you this man had no question where his next meal was coming from. Dolkas was tall, dark, handsome, and well-accustomed to winning. He wore his good quality suits very nicely, maintained unflappable dignity in the face of punk tactics, and seemed to know exactly how little work he needed to do in order to get out of a case for NSI. He relied on precedent, legion in his favor, which he recited in a matter-of-fact, almost bored tone. Without getting excited, he would ask the simple question, “Why are we being sued here?” This tactic has worked so well both with the public and the courts, that Ellen Rony entitled her chapter on NSI in the Domain Name Handbook, “NSI: Caught in the Crossfire.”

NSI was caught in the crossfire in a number of cases. That is the primary problem with the body of law that was created when NSI responded with a coordinated strategy to a series of helter-skelter lawsuits attempting to compel it to do all kinds of stuff. These cases were often litigated by plaintiffs who exercised little forethought and not much staying power, so NSI racked up a series of victories. In NSI’s repertoire of favorable precedents that they plied before the courts like a string of get-out-of-jail-free cards, are many instances of bad facts making bad law. For example, back when they had the registrar monopoly, they were sued for refusing to dot-com the word “fuck.” Guess when they won that case? When it became “moot,” because other registrars had been created that were ready, willing, and able to register Fuck.Com or anything else you could think of. The meaning of that case, to Dolkas, would be that NSI always wins. To me, it says that if you stall the process long enough, you can thwart it. But which meaning would the court infer?

NSI’s opening brief told Judge Ware that the entire process of registering a domain name, or transferring an existing domain name, was so automated that it was almost automatic. In essence they argued that Cohen’s letter would have passed in front of a minimum wage employee recruited from a technical college in Alexandria, Virginia, who would have accepted such a transfer as a matter of course and performed the change of registration as directed therein by the original registrant, Online Classifieds, Inc.

NSI retreated from this position in later filings, when I pointed out that Cohen had faxed the letter directly to David Graves, an individual who was far from minimum wage in the NSI hierarchy. In fact, Graves was the person regularly designated to testify on NSI’s behalf in litigation. Additionally, at Cohen’s deposition that took place after NSI filed its initial moving papers for summary judgment, Cohen testified he had spoken directly with David Graves, who had essentially told him what to put into the forged letter:

CARREON: Did you have any communication over the phone with anyone at NSI?

COHEN: Yes.

CARREON: Who were those people? Pertaining to this transfer right here.

COHEN: There would only be one of the -- Dave Gray (meaning David Graves).

CARREON: And what did you talk to Mr. Gray about?

COHEN: Mr. Gray asked me to send him a copy of the documentation I had for the transfer.

CARREON: And this was all you were able to send him, this -- Exhibit 2?

COHEN: That’s correct. Unless there was a cover sheet, which I don’t remember, and there may very well have been.


As a result of this additional revelation, I made a motion to Judge Ware requesting to take the deposition of David Graves. Judge Ware denied the motion two months after granting summary judgment. Other motions I made while NSI’s motion for summary judgment was pending, like the one protesting Phil Sbarbaro’s improper contact with Ellen Rony, were also ignored until after NSI was safely out of the case.

NSI’s exit from the case became final on May 8, 2000, nearly six years to the day after Gary registered Sex.Com, on May 9, 1994. Judge Ware’s order granting NSI’s motion for summary judgment recorded the date in the first line of the factual recitation. Judge Ware concluded that Kremen had no contract with NSI, making no mention of my argument that, by agreeing to become one of the registrants of domain names, Kremen had contributed to the growth of a user base that had concrete value to NSI, which it exploited specifically in its IPO stock offering by boasting about the number of registrants in its database. Judge Ware also concluded that Kremen was not a “third party beneficiary,” that is to say, someone entitled to make a claim under the contract between the National Science Foundation and NSI, pursuant to which NSI became the registrant of domain names in the first place. Since NSI was paid millions of dollars to register domain names by the NSF, it looked to me a lot like a situation where the NSF had sort of crowed out, “drinks are on the house,” allowing anybody and everybody who wanted to register a domain name to have one for free. So it would seem that, in order to maintain quality control, anybody could complain about the quality of his drink. For purposes of quality control, it makes more sense to give registrants like Kremen the power to sue NSI, since as a practical matter bureaucracies that grant contracts to companies like NSI rarely police them effectively. And in this case they certainly did not.

Then Judge Ware got around to the big important argument. Was it possible to nail NSI for conversion? Judge Ware said no, concluding that there is “very simply no evidence establishing that a domain name, including Sex.Com, is ‘merged in or identified with’ a document or other tangible object.” He acknowledged that “California law does recognize ‘conversion of intangibles represented by documents, such as bonds, notes, bills of exchange, stock certificates, and warehouse receipts.’” But he adopted NSI’s argument that “a domain name is a form of intangible property which cannot serve as a basis for a conversion claim.”

Wasn’t the registration agreement at least as much of a “document” as a warehouse receipt? The registration agreement gave the administrative contact sole authority to control registration of the domain name just like a warehouse receipt entitles the holder to claim the warehoused goods. When Gary printed out the online registration agreement and mailed it to NSI via certified mail, he emphasized the importance of this document. And the online list of names and numbers known as the Domain Name Server Tables is an electronic document.

Electronic documents are old hat under the Federal Rules of Evidence, which recognize all systems of symbol recordation, from clay tablets to palmtop advertising, as legally entitled to the name of “document.” Smoke signals are probably out. But the registration agreement and the DNS Tables are, respectively, the deed and the land office records of the world of cyber real-estate. If a claim check for a parking lot or a dry cleaner is good enough, surely an online, printable registration record satisfies the document requirement.

Perhaps to avoid dallying with this uncomfortable notion, Judge Ware’s opinion then launched into a litany of justifications for keeping to a conservative course of action, noting that Kremen’s claim “invites abandoning the traditional strictures of conversion to encompass forms of intangible property never contemplated in its formation.” Well, I’ll agree that when the first common law judge held the stable liable for conversion when the wrong fellow rode off on the wrong horse, he wasn’t thinking about Internet domain names. But the basic obligation that the stable operator breached when he gave the horse to the wrong rider is the same one that NSI breached when it let Cohen steal Sex.Com. Judge Ware was really saying that a law that has long been good enough for the stable hand or the warehouseman is too harsh for NSI, an enormous corporation awash in Internet money thanks to a tax-payer funded monopoly. He said, “The Court finds it inherently unjust to place NSI in this untenable position by virtue of performing a purely ministerial function.”

Judge Ware then gave an economic argument in favor of his decision: “Furthermore, the threat of litigation threatens to stifle the registration system by requiring further regulations by NSI and potential increases in fees.” Where he got that information, I’ll never know. There were no facts presented to support that conclusion. The Judge clearly had not paid any attention to NSI’s fees, which had skyrocketed far beyond the basic charge originally authorized. NSI is currently the most costly provider of domain name registration services, adding on oodles and oodles of extras whenever possible above the basic $6 registration fee, which of course, it also collects. And in any event, the “security costs too much” concept just doesn’t make any sense to me, when the essential service NSI provides is keeping accurate records of domain name ownership. That’s the bare, central task. It’s like saying we don’t have enough money to train nurses how to draw blood with clean needles. That’s what they are doing. They should do it perfectly every time.

Trying to avoid “creating the proverbial slippery slope,” Judge Ware buttressed his decision with the language of judicial restraint: “The Court is compelled to uphold this distinction rather than contort the cause of action to encompass property never contemplated.” But this was not true judicial restraint -- in fact its very opposite. The trend of California law has always been to use the tort of conversion to deter the theft of property, whether tangible or intangible, so long as the property could be said to be “merged with a document.” Only by ignoring the evidence and refusing to acknowledge that the registration agreement is a document of title, was Judge Ware able to avoid the effect of this rule.

When judges declare themselves powerless to act, you can bet they’ll be passing the buck to our elected representatives, in lines like this: “The Court leaves it to the legislature to fashion an appropriate statutory scheme to protect dormant domain names unprotected by trademark law.” But the reference to trademark law and “dormant” names is irrelevant to the case of Sex.Com. Even if Gary had activated a Sex.Com website on the Internet, that wouldn’t have given him trademark rights. Indeed, Judge Ware so ruled six months later, when he denied Cohen’s claim of trademark protection and granted Gary’s motion for summary adjudication. And even if the website had been heavily-used, that wouldn’t have given rise to a conversion claim, either, since the theft of “eyeballs,” as dot-commers refer to web-surfer traffic, would only be the loss of business goodwill, which is clearly not subject to conversion. So what’s all that about?

It’s all about avoiding any analysis of my claim for conspiracy to convert. Remember that one? Where I alleged that Cohen and NSI had collaborated to help Cohen steal the name? Well, I had found some evidence of that, when Cohen testified that he personally talked to David Graves, who told him what needed to be put in the forged letter in order to arrange a transfer without contacting Kremen. I had that testimony, but of course I needed to question Graves. I noticed his deposition and filed a motion with Judge Ware to compel NSI to produce him. I told the Court in my motion that David Graves had received the fax directly from Cohen, and that Cohen had previously talked to Graves to find out what information he should put in the forged letter. I never got to take Dave’s deposition, because Judge Ware’s opinion neatly undercut the necessity of looking at whether Cohen and Graves conspired to convert the name. Indeed, even if they did, under Judge Ware’s ruling, it wasn’t important.

The judge’s arguments in support of the ruling -- avoiding imposing liability for a routine function, not increasing the costs of registration, and leaving the issue to the legislature -- don’t justify the denial of Gary’s claim for conspiracy to convert. Liability for conspiring with Cohen would not result from the performance of a routine function. Theft is not routine. Holding NSI liable for agreeing to accept a forgery would not create any “slippery slope,” at least in the way we usually consider these things. It would fairly impose liability for an out-and-out theft. Judge Ware’s opinion for NSI is most notable for its failure to discuss electronic documents and the unexamined contents of the Cohen-Graves communications. However, that hardly makes it unique in the annals of legal history.
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:49 am

LAWSUIT!

My mentor Arnie Schwartz told me I would never be a trial lawyer until I was arguing to the jury, and I knew they were laughing at me, and I kept arguing anyway. I’ve had that experience. But I say you’re not a real lawyer until you’ve been unfairly sued for a large sum of money. I passed that milestone on February 15, 2000. It began with Bob Dorband taking control of my fax machine. It got that intense look it gets when it’s been possessed by the adversary, and out it came, a complaint filed in Portland Federal Court entitled Stephen M. Cohen v. Charles Carreon and Gary Kremen. The last pages came out of the fax machine. When I got to the prayer for relief, where Cohen claimed $50 Million in damages, it was a relief. The amount was so outlandish. If you say you’re going to kill me by shooting me with a .22, it’s believable, and it’s scary. If you say you’re going to kill me by dropping the Empire State Building on my head, it’s laughable. So I laughed.

I continued laughing as I read the allegations. Cohen alleged that Kremen and I had conspired, years before we ever met, to arrange the theft of the Sex.Com domain name. Then we had encouraged Cohen to steal it and develop the website to its present profitable state. Now, in the last stages of the plot, we were suing to acquire control of the fully developed asset.

I immediately knew the genesis of Cohen’s thinking. Kremen’s original business plan was a two-page document. The first page was just a scrawl of notes in Gary’s awkward hand. The second page showed initials, among them “CC,” next to some percentages. So Cohen concluded I was CC, had known Kremen since 1994, and as we say in Oregon, had been “lying in the weeds” for five years, waiting to bushwhack him. Or more likely, Dorband concluded there was enough evidence to claim the allegations were made in good faith, and planned to use the suit to drive a wedge between Gary and myself. If I wanted out, but just wasn’t saying it, this lawsuit was my exit vehicle. I could claim a conflict of interest and kiss Kremen goodbye, with my legal dignity intact. And that would get rid of the first lawyer who had really tried to move the ball.

Because the story was bogus, I wasn’t worried about liability, as long as I got my defense from the Oregon Professional Liability Fund (the “PLF”). The PLF insures me for legal malpractice, but Cohen’s claim wasn’t for malpractice. He was suing me for representing Gary Kremen, and for calling him a liar. He was alleging that I had “exceeded the bounds of zealous advocacy,” and strayed into defamation. While truth is a defense to defamation, insurance defense lawyers always hate it when they ask you a question like, “Did you say he was a thief?” and you say, “Yes.” Right away they think you were injudicious or something. I thought lawyers were supposed to call things by their true names. Liar, thief -- if the shoe fits, make ‘em wear it!

But throw me a frickin’ bone here! I was deprived of some important elements of a proper legal education. Most lawyers learn how to behave from watching their lawyer dads, or while hanging out with their lawyer uncles. I learned from watching 70s TV shows like “Judd for the Defense,” and “The Young Lawyers” (they had cool cars, sweet little blonde hippie chicks in trouble for clients, and sparred in court with conservative judges who nevertheless had a streak of fairness). If I had only once in my life been to a golf course, or a tennis court, or an athletic club frequented by lawyers and their families, I would have realized that a lawyer is not expected to be a fiery advocate in search of justice. A lawyer must cultivate a careful manner, and in all things, particularly public speech, refrain from the sort of bluntness that attracts attention.

So yes, my press release said that Cohen stole Sex.Com. And the PLF agreed to cover my defense. They assigned Portland attorney Susan Eggum to be my lawyer. I had learned about her recently after she had resolved a scandalous case involving unconscionable tactics used by attorneys hired by the PLF. She was receiving kudos in the media for her ethics and savvy. In Portland law, she was hot.

I met her in April, 2000. Susan was crisp, trim, with short black hair and a manner both attentive and extremely efficient. An air of sharpness and clarity surrounded her, but maybe it was just the Portland sunlight coming through the window of her office. We discussed the case, and I knew I was in good hands. She accepted my statements at face value, expressed sympathy for my situation, discussed strategy, and had me out of her office in less than an hour.

This type of crisp efficiency makes some women good lawyers. A man would have interviewed me for two hours, and then taken me out to a long working lunch where we could swap war stories. Women seem more interested in cutting to the chase. They don’t vibe to the drama and the hype, and tend to look at all legal tasks as chores. Maybe it’s this matter-of-fact attitude that makes women better at multi-tasking. Have you ever seen a woman simultaneously juggling a baby on her hip while sorting laundry, heating a baby bottle, telling the kids not to track mud into the kitchen, and all the while keeping an ear on the Oprah show? The art of doing all of these things is not doing them at once, but rather doing them in sequence really close together. When you put that kind of attention to lawyering, you get a final product like a meal that comes to the table with all of the ingredients prepared properly and presented at the right time. It is logical that nature would select for women with nervous systems well adapted to multi-tasking, since nature hamstrings them with the care of infants while making no countervailing provision for extra time to accomplish all the household tasks that also fall to her lot.

Men, on the other hand, enjoy cooperating with a group of other men to accomplish a single goal, such as chasing down a giraffe on foot for five days and stabbing it to death with sharpened poles. Or getting together a pack of dogs and chasing bears up trees, where you can shoot them with arrows. Given half a chance, men will paint their faces with blood and howl at the moon to announce their conquest over the foe. When this type of mentality is applied without additional refinement to the practice of law, you get a lot of guys trying to hammer every peg, whatever the shape, into the same damn hole. You get narrow issues pursued with monomaniacal zeal and a lack of comprehensive strategy. You get people who are sure of their case, and lose because they never bothered to think that the jury just might agree with the other guy’s view. You get a lack of empathy and a lack of insight.

This difference in temperaments has traditionally been resolved in the law by means of the lawyer/legal-secretary relationship. These relationships can be quite lovely and charming, sometimes to the chagrin of the lawyer’s spouse, who sees less of him than the secretary, and instead of presenting him with the rewards of work well done, gives him bills, kids to put through college, and a mortgage. Fortunately, lawyers are masters of concealment, so spouses are spared the pain of knowing how deeply these relationships go and how much of a bond develops. When I worked in L.A., I often referred to my secretary Victoria inadvertently as my wife, and referred to my wife Tara as my secretary. Indeed, it is not uncommon to meet a retired lawyer and his second wife, and discover that she was once his secretary, and that the young woman who put him through law school is no longer on the scene.

A good legal secretary has several of the qualities of the ideal girlfriend. She always listens to everything her boss says. She thinks he is charming, witty, urbane, and whatever nebbishy characteristics he has, are agreeable and endearing. She corrects his spelling, straightens his tie, and reminds him not to be late for court and appointments. She makes excuses for him and can provide convenient alibis on occasion, although only a rogue or a coward shifts his mistakes to his secretary. If, in addition, your secretary is also attractive, such that you have a living adornment sitting in your office to inspire the envious whispered admiration of other lawyers, it can be kind of like having a facsimile of a happy relationship. And it can be tremendously productive.

My wife is my legal secretary, and she has many of the characteristics of the perfect girlfriend. What I particularly like is the way she listens to me eagerly when I’m yelling about how we’ll get those blankety-blanks, watches approvingly as I smash my fist into my palm to demonstrate how severe justice will be visited upon the wrongdoers, and then hands me my dictaphone with a tape already in it and says, “Do you want to do it now?” This kind of relationship is stimulating on many levels, and when you’ve married your secretary, a strange thing happens. She begins to thrive on sexual harassment.
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:49 am

THE HAIL OF LEAD

As I mentioned earlier, Gary liked the fact that I carried around the “Art of War.” This book confronts the most difficult problem for a military strategist -- how to make people fight. Sun Tzu was well aware that soldiers are mostly just peasants in uniform, who don’t really want to get up one morning, march off to distant lands, leaving their wives, children and crops behind unattended, so that they can risk life and limb while trying to kill other peasants and burn down their villages, all for the apparent benefit of a lord who lives in a castle. Thus, Sun Tzu’s book is full of strategies about how to get people to fight, how to move them into a position where they have no choice, and how to give them the courage that is necessary to win. Soldiers lose courage when there are no victories, and lose resolve when the war drags on too long. As Sun Tzu says in one chapter, “I have heard of some campaigns that were clumsy and swift, but I have not heard of any campaigns that were lengthy and skillful.”

One evening in Gary’s apartment I was reading to him aloud from another strategy classic, Clausewitz’s “On War.” I came to a section where Clausewitz explained that, in order to induce surrender, it is necessary that every day bring the opponent news of a new defeat, and that there be no end in sight to the daily drumbeat of failure. Gary quickly seized this idea, and translated it into “Every day has got to be a bad day for Cohen.”

I coined the term “hail of lead” to describe a process of sustained attrition dedicated to two purposes. First, to build a favorable record of legal victories with the discovery judge. Second, to keep Bob Dorband so busy he couldn’t do discovery against us. To accomplish these goals, I deployed every weapon available in the discovery vault -- document demands, depositions, interrogatories and requests for admissions. Still, I needed Cohen’s help to make the strategy effective because when a party complies with discovery, it’s not as good a weapon, since there’s nothing to see the judge about. But if a party is non-compliant, like Cohen, and you can keep hauling his lawyer in front of the judge repeatedly, you can build a record of noncompliance, and even get the case dismissed. But the process is labor-intensive.

Victory in discovery is a multi-step process: first you send out the demand for discovery, second you follow-up with a series of letters and phone calls to show that the other guy isn’t responding, and third, you file a motion with the judge to compel them to comply with your demand. That’s like breaching the walls of the castle. Then there are three more steps, analogous to storming the breach, overwhelming the defenders, and securing control. The opposing party tries to plug the breach by filing an opposition, where he explains that his client is acting totally reasonable in refusing to respond to this ridiculous discovery demand. You go mano-a-mano now, writing and filing a reply brief to rebut these opposing contentions. Finally, you get to the hearing and ask the judge to declare you the victor. Since the rules of discovery are pretty liberal, you should almost always win. If you can’t get good at this game, give up civil law, because the good documents don’t come easy. In fact, give up trial law altogether, because unless the other guy is a total bumbler, you’re going to discover nothing that he doesn’t want you to. But if you get good at it, you will have the power to make every day a bad day for the other guy.

Now for the other purpose of the hail of lead: to keep Cohen out of our business. There were witnesses we didn’t want Cohen to contact, documents we didn’t want him to see. Most of these witnesses and documents pertained to the time period after Gary registered the name in May 1994, and before he filed suit in 1998.

When Gary registered Sex.Com, it was almost a lark. The sort of thing one nerd would say to another: “Guess what I did today? I registered Sex.Com with the Internic.” Standard response: “Good move, dude.” Net dollars earned: zero. It was that sort of thing. Gary didn’t see Sex.Com as a moneymaker in 1994, or he would have put it to work. How did Gary plan to make money in those days? He was one of many Stanford MBAs angling for venture capital in the boardrooms and computer labs of the Bay Area, where a saleable idea could garner millions in investment dollars. Using Online Classifieds, Inc. as his business moniker, Gary registered domain names for things other than sex, like Autos.com, Classifiedads.com, Jobs.com, and that sort of thing. Gary paid $2,000 to buy Match.com to create a dating site. An article in Forbes, the so-called “capitalist tool,” gave Gary a full write-up, showcasing him as a wunderkind whose bright idea could turn the profitless Internet into a cash proposition: present the classified ads section of your daily newspaper as an online product, and take bread right out of the mouths of Hearst Corporation and Rupert Murdoch. In 1994, this kind of bold idea launched careers.

Gary’s career had been launched. Online Classifieds, Inc. morphed into Electric Classifieds, Inc. With his Stanford degree and high-tech friends like Kevin Kunzelman and Peng Ong, Gary was able to garner venture capital financing from big names like Ron Posner, even roping in Aaron Alter of the famous Wilson, Sonsini law firm to do the corporate paperwork.

Electric Classifieds, Inc., the new corporation, took all of the assets of the old Online Classifieds, Inc. Kremen was for a time CEO of Electric Classifieds, Inc., and he directed the registration of new domain names, sometimes using fanciful corporate identities of non-existent companies as the name of the registrant. Dorband extracted this little nugget from Kevin Kunzelman at a deposition. Kevin, a former Electric Classifieds executive, didn’t intend to give Cohen any ammunition by saying this, but it definitely didn’t help our case. You see, Cohen argued, the business of registering speculative domain names was what Electric Classifieds was all about -- if it acquired all of Online Classifieds’ property, then it must have acquired Sex.Com. If Electric Classifieds had acquired Sex.Com, then Kremen could not sue for the loss of something he didn’t own. Certainly Electric Classifieds had shown no interest in filing suit, and was, effectively, defunct. It had changed its name to “Instant Objects,” and remained a California corporation with former CEO Mark Elchinoff as its Director. And the statute of limitations as to Electric Classifieds, Inc. had long since run. By this analysis, Cohen should get off scot-free.

There was only one way to avoid the problem, and that would be to contact all the upper-ups who had been involved with Electric Classifieds, Inc., and get them to swear that Gary had not given the company Sex.Com, but rather that it had remained his personal property. Of course, you can imagine this was a very delicate process. While Gary was absolutely certain he had not given Sex.Com to Electric Classifieds, we had only one declaration under oath to that effect, signed by his old friend Peng Ong. Peng, as Gary never tired of mentioning, was a billionaire, and had signed the declaration even before I got involved in the case. But the rest were wildcards. I mean, how do you go up to someone and say, “Hey could you swear under oath that I didn’t give you something worth millions of dollars?” The finest and most moral of persons might wonder at your motivation in asking such a question, and if even one demurred and said, “I better talk to my lawyer about that,” you might find your whole proposition going to hell in a handbasket.

We needed to nail down the ECI insiders, but not rile them up. And we sure didn’t want Cohen taking their depositions. He noticed the depositions of a Wilson, Sonsini attorney, and Peng Ong. Cohen teased that he knew Mark Elchinoff did not like Kremen. Indeed, Elchinoff and Kremen were not on good terms, and Gary didn’t want to ask him for a declaration. I had to give Gary the opportunity to contact the ECI insiders in the meantime, and keep Dorband from taking their depositions.

We made the field of battle so hostile for Cohen that he could only respond to our attacks. With the hail of lead we kept Dorband running for cover all the time. Gary took up the concept with a vengeance. It could be utilized at every turn. We sent out pointed discovery demands, followed up on them tenaciously, and always filed motions to compel. We sent out press releases, talked to reporters, dug up court records to expose more of Cohen’s criminal past, and contacted anyone who might hate Cohen to obtain their assistance. “I want more lead!” became Gary’s unvarying demand for action, not theory, for execution, not plans. In his mind, he was astride a fierce war-horse, spurring it from one gun-emplacement to the next, saber held high, urging each crew to fire a full load straight at the enemy ranks. Wreathed in the smoke of battle, rocked by each thunderous cannonade, Gary smiled with glee. He knew he had them on the run. That was a good time to fire more lead! And whenever the silence of the guns reminded Gary that Cohen might be enjoying a moment of peace, he’d rouse us to fire another volley with his one-word imperative -- “Lead!”
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:49 am

VICTORY IN THE NORTHWEST

In Spring, 2000, I had fought defensive discovery battles with Dorband, opposed NSI’s summary judgment motion, defended Gary’s deposition, served offensive discovery on Cohen, and was trying to get Rich Diestel up to speed on the case. But I had been unable to conduct discovery, because Dorband had run out the discovery clock with his decoy depositions. I had filed a motion to reopen discovery, but until it was granted, which didn’t happen until May 5th, I had to find new ways to hurl lead at Cohen. On March 7, 2000, I filed three complaints in Portland District Court naming Gary as an “intervenor” in cases Cohen had filed against Voice Media, Ron Levi’s company, and two other porn operators, Myriad Corporation and National A-1 Enterprises. The Portland Federal courthouse is an amazing new monolith notable for polished granite, stainless steel and water sculptures adorning the pillars with continuous rivulets flowing behind panes of glass. It is beautiful but austere, and although adorned with inspiring maxims of justice, is resolutely devoid of warmth. There is no law library for the use of attorneys, which strikes me as an oversight, as if the judges had forgotten that lawyers traditionally use books to prepare their cases. The law library in the Multnomah County Circuit Court, just up the street, is always jammed.

I’d only handled one case in the Portland Federal Courthouse -- a heroin case in front of Judge Redden. The detective who directed the search of my client’s house was a big dark-skinned Latino who wore a suit, cowboy boots, and a ponytail about as long as mine. He had a powerful manner, and had talked my client into allowing a search of his house; however, the heroin had been seized from a detached shed in the back yard. I moved to suppress the heroin on the grounds that my client had given consent to search the house, but not the shed. At the suppression hearing I needed to establish that any search outside of the house was beyond the scope of my client’s consent, so I asked each of the detectives whether they had the right to dig in the backyard. Each one responded they didn’t think so. Finally, the third time I asked the question, Judge Redden squinted and looked over at me asking, “What was dug up in the backyard?” I chimed back, “Oh, nothing, Your Honor. I was just asking it as a sort of ‘Supreme Court Question’ in order to illustrate the rule of law.”

Judge Redden’s wizened features transformed themselves into a mask of sudden distaste, as if he had bitten down on a worm and wasn’t pleased about it. “Just stick to the facts,” he said, “and don’t get into anything” -- here he paused as if he didn’t often speak the word -- “metaphysical.” Nevertheless, he understood the legal problem, and amazingly, so did the prosecutor, who cut us a deal for 27 months. Hell of a lot better than the seven years my client was looking at.

Gary often described me as a guerrilla fighter. When we went to Portland, we each met with our insurance defense lawyers about the Cohen v. Carreon and Kremen lawsuit. I went and saw Susan Eggum, and Gary met with his lawyer, Steve Kraemer. Later Gary told me what he told Kraemer. “I told him that he and his firm were like the American army. The American army is good for a lot of things. They can win a lot of battles. But a guerilla is the best fighter for other types of battles. Mao was a guerrilla fighter, and Charles is like Mao. And I think he’s perfect for the job.” Gary had a way of saying things that made me feel all mushy inside.

Early on when I began work on the case, I had suggested to Gary that we could do something clever with all of those other lawsuits that Cohen was filing against people, claiming that their adult websites infringed on his “trademark” in Sex.Com. With discovery shut down in the main action, it was time to open up another front in the war. Cohen had filed nine of these lawsuits in Portland Federal Court, and three of them were still pending. Cohen was deliberately racking up these litigation victories in order to announce to the world that, since he was winning trademark lawsuits in federal court, he must have a trademark in Sex.Com. An excellent strategy, because Cohen often sued the weak and defenseless, far from their homes in a venue convenient to his own lawyers -- Portland, home of the Duboff firm.

Lawsuits generally must be filed in one of two places: where the defendant lives, or where the wrongful act occurred. Because the Internet is everywhere, it has made it a lot easier to file lawsuits a long ways from where defendants live. Since a trademark infringement on the Internet is visible around the world and in all fifty states, plaintiffs have concluded that lawsuits for Internet trademark infringement can be filed anywhere. For years collection lawyers in California would sue on debts outside of the county where the defendant lived, making it likely that defendants would simply default. The practice was outlawed by the California legislature in the Unruh Act. Similarly, Cohen won most of his Portland lawsuits by default, and even those who contested these cases rarely did so vigorously, so he was continuing to rack up victories.

It was not helpful to our case that Cohen was collecting these trademark judgments with such ease. I told Gary he had a right to intervene in those lawsuits, because under Rule 23 of the Federal Rules of Civil Procedure, a plaintiff may intervene in a lawsuit if they are so situated that, as a practical matter, their rights will be affected by any judgment entered in the case. It seemed obvious to me that every time Cohen got a court judgment saying he had a trademark in Sex.Com, it weakened Gary’s claim. Still, I had never filed a suit in intervention, and didn’t know anyone who had. In California, intervention is mainly used to attack voter initiatives, like that crazy anti-Mexican law that required nurses and teachers to rat out their patients and students to the Immigration and Naturalization Service if they discovered that they were “illegal aliens.” In a case like that, “illegal aliens” are unlikely to file suit, so the nurses association might start the lawsuit. The teachers would then be allowed to intervene, because as a practical matter, their rights would be affected if the law is put into effect. Finally, the right-wing cranks want to get in on the act, so the Citizens for Safe Borders may be allowed to intervene in support of the constitutionality of the law. As a practical matter, the judge faced with a proposed intervention must ask, “Does the proposed intervenor have an interest in the outcome of this case?”

Usually, the intervening plaintiff wants to intervene and do something. But I wanted to intervene and halt Cohen’s lawsuits so they would not proceed to judgment until after we won Kremen’s lawsuit against Cohen. So I was requesting a “stay,” the magic word that describes a case that is neither dismissed nor allowed to proceed, but remains in suspense pending the outcome of another case. The argument for a stay was simple. The only person with a right to sue over rights deriving from Sex.Com was Gary Kremen. It wasn’t fair to allow Cohen to sue people over the trademark to Sex.Com if he was not the true owner. Furthermore, there is the important “judicial economy” argument, which is basically, “judge, why spend all this time figuring out whether Cohen has a trademark? All you have to do is wait till we win this case down here in San Jose, and you’re not going to have to decide anything, because this case is going to go away.” Finally, there is the argument that the courts shouldn’t come up with different results about the same topics. The Portland courts shouldn’t be issuing judgments in Cohen’s favor when a California court might find Cohen had no right to even file such a lawsuit. This is called “avoiding the risk of inconsistent adjudications.”

Judge John Jelderks, a magistrate judge in Portland, ended up hearing the matter as to all three cases. He set a hearing for April 5, 2000, in one of those huge Portland federal courtrooms, even more impressive than the lobby, with walls as high and thick as a castle, windows like slits set close to the ceiling, and enough milled, joined, sanded and polished wood to account for vast tracts of missing rain forest. We hooked up with Mike Essler and Jim Buchal, lawyers for Levy and Myriad, respectively, who were defending against two of Cohen’s lawsuits. When we went to the hearing, Gary was wearing one of the innumerable dowdy sweatshirts that comprise the entirety of his wardrobe above the waist, and strutting like a Hapsburg grenadier looking for a fight. He amused himself by telling Bob Dorband he was going to sue him.

I had assured Gary that I knew how this would be handled, Oregon-style. All the judges who had these cases on their dockets were going to get together and talk about it over coffee. Then they would send all the cases to one guy, and let him or her decide them. We had a good case for allowing intervention, but I hadn’t predicted victory. So in that atmosphere of uncertainty and hope that seems to kick up like a high wind when you get too many lawyers together, we listened closely as Judge Jelderks told us what he had to say. Indeed, he told us, the judges to whom these cases were assigned, (who were all Article III judges) had gotten together, and to their surprise, discovered that virtually every judge had one of these Sex.Com cases, and none of them had known about the other ones. I got the impression that this was like each judge discovering there was a bedbug in his bed. The Article III judges had passed all the cases to Judge Jelderks to resolve.

After hearing arguments from Bob Dorband that required the deft application of fallacious reasoning, and some counter-argument from me, as well as a plea from Mike Essler to just stay the case and not rule on whether we had a right to intervene, Judge Jelderks ruled that Gary had a right to intervene, and stayed the cases pending resolution of Kremen v. Cohen. This ruling was the beginning of some real anti-Cohen momentum, emanating from the right place -- the bench.

A few weeks later, Judge Janice Stewart, following Judge Jelderks’ lead, issued a lengthy opinion staying the Cohen v. Carreon and Kremen lawsuit. Judge Stewart’s opinion observed that Kremen was an Internet pioneer who registered the Sex.Com domain name and claimed that he would have made a “woman-friendly” website had it not been stolen by plaintiff Cohen. Judge Stewart came down heavily on the issue of judicial efficiency, finding that many of Cohen’s allegations would have to be resolved in Kremen v. Cohen anyway. Finally, she concluded there was some possibility that the action was filed “merely to annoy and harass Mr. Kremen and his attorney.” It was a sweep. Cohen was no longer able to use the Portland Federal courthouse as a staging base. I got out the trumpets and flags, and broadcast the victory in an email to all the lawyers on Gary’s team using a bold subject line, all in caps -- “VICTORY IN THE NORTHWEST!”
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:50 am

THE SUBPOENA POWER

Several times Gary had told me something scary. “When discovery is reopened, I want to serve a hundred subpoenas.” Generally, serving a hundred subpoenas could be seen as abusive, excessive, and just plain crazy. Particularly if you’re subpoenaing banks and other financial institutions to obtain financial records. You stir up an entire hornet’s nest. Banks have subpoena departments with lawyers and paralegals in them, and outside lawyers too. The records you’re going after belong to their customers, who make money for them, unlike lawyers who heckle them with subpoenas for financial records. Banks have no reason to like you, no reason to be nice to you, and no desire to give you anything but what the law absolutely requires. If they don’t comply, you have to get the judge to compel them to, and that ordinarily requires filing one motion per subpoena, so if you had a hundred non-complying witnesses, you might have to file a hundred motions. Reverting to our magic-metaphor, in a worst-case scenario, we’d have a hundred minor demons screaming to get out of their cages. Sort of like a prison riot in hell, where all the inmates have lawyers. Ugly.

Additionally, it’s very hard to get a court to order a bank to produce financial records except in cases where the lawyer is trying to collect a judgment. Cohen, of course, was different. I could subpoena his financial records and succeed in getting them. And why is that? Well, let’s return to that classical tactical blunder, filing the counter-claim against Kremen. In the counter-claim, Cohen alleged he had suffered $9 Million in damage due to Kremen’s statement to Wired Magazine that he had stolen Sex.Com. When someone says they have lost profits, and they’re going to have to prove it in court, you need to get financial documents to show how and why they lost the money. But Cohen was refusing to produce his tax returns, even though he had offered a couple of Schedule “C’s” as proof of his prior use of Sex.Com in his initial discovery disclosures. That was his second mistake. You can’t use a part of something as proof and then hide the rest, which is something to remember before you pull out a document. If page one of your document looks good, and page three looks bad, you’re probably best off avoiding this whole document, or at least not using it to prove your case. Since Cohen had put his financial income in issue, I doggedly harped on his refusal to produce tax returns, working it like a lever to pry open the door of financial secrecy. And when Judge Ware reopened discovery in May, 2000, I bent to the task of preparing and serving over a hundred subpoenas in less than ninety days, many to Cohen’s banks.

Serving subpoenas is an occupation with a dark past. In the old days, getting served with a subpoena was a very bad thing, because you could end up missing more than time off work. Witnesses didn’t even get witness fees, much less respect. Subpoena is a Latin word combining the prefix “sub” meaning “under,” and “poena,” meaning “pain.” Under pain of what? You might think it meant “under pain of law,” thus giving you the alternative of either showing up or suffering pain. But this is not what it meant.

Pain was not an alternative. Rather, it was part of the methodology of interrogation. Many of the early courts were ecclesiastical courts, run by Jesuit or Dominican or Benedictine priests prosecuting crimes like witchcraft, heresy, blasphemy, and bestiality. In cases like these, with souls at stake, capital punishment after a proper confession was the prosecutor’s idea of a good plea bargain. Certainly it was inarguably preferable to being burned alive, dunked to death, or slammed into an iron maiden until your feet turned to jelly. These were big cases. Witnesses were sinful, ever since their parents did it in the Garden of Eden, and Satan was everywhere, conspiring with witches to frustrate God’s plan. Accordingly, no one could be trusted who had not been tortured, at least a little.

The levels of torture administered were three. For women and the weak-hearted, it was generally deemed sufficient to take them on a guided tour of the torture chamber, allowing them to walk across the blood-spattered floors, look at the implements that glowed red-hot in the torturer’s forge, and hear the cries of foolish souls who refused to admit their wrongs or attempted to hide the misdeeds of others. The second stage of torture was the use of the “strappado,” a leather strap that would be tied around the wrists behind the back, and used to raise the witness several feet above the floor. The witness would then be dropped and stopped a few feet short of the floor, dislocating the shoulder. Questioning would then be conducted. When an adequate witness statement was obtained, the physician would put the arms back in the sockets, and the witness would be good as new, unless they had a torn rotator cuff or some trivial injury like that. Finally, the third stage of torture was the real deal, the breaking of bones, the searing of flesh, the rack, the thumbscrew, and all the other instruments of persuasion that the medieval mind could devise. So the subpoena has an unpleasant origin, and the word still reeks of coercion. Which reminds me of a story I once heard about interrogation techniques.

It seems that during the Clinton era, the President, who was fond of contests of skill, decided to determine by means of a contest, which was the greatest police agency in the world: the CIA, the FBI, or the LAPD. Three identical rabbits were released into three identical wooded areas, and each police agency was told to bring the rabbit into custody. The FBI surrounded the wooded area with armoured vehicles, fired automatic weapons and incendiary grenades for several hours, while keeping vigilant watch over the wooded area to make sure that nothing escaped. All small floppy things attempting to escape the conflagration were forced back into the flames. After the wooded area had been reduced to fine ash, they declared the rabbit terminated.

The CIA hired operatives in their wooded area, conducting clandestine interviews of rocks, trees, other vegetation and numerous friendly forms of wildlife. After months of networking, the operatives established contact with the rabbit, who turned out to be a double agent working for the CIA. When Clinton was informed of this fact, the investigation was terminated.

The LAPD, deploying their forces from a nearby doughnut shop, surrounded the wooded area with SWAT vehicles and squad cars. Wearing flak jackets and paramilitary gear, and accompanied by uniformed officers, the LAPD operatives entered into the wooded area with a show of overwhelming force. All animals encountered were called “asshole,” and forced to kneel on the grass. The sounds of scuffling, beating, squealing, howling and barking issued from the wooded area for several hours. After some time, a squad of uniformed officers emerged from the wooded area, dragging a handcuffed, hog-tied bear, missing patches of fur and hanging its defeated head, while muttering sullenly, “Okay, I’m a rabbit, I’m a rabbit...” So they might’ve been wrong, but a bear is a big, dangerous animal, and they got him off the streets.

Well, Gary’s one hundred subpoenas might have yielded no more benefit than the efforts of the three elite police agencies. Indeed, fully half of the time our private investigators and process servers discovered nothing more than just how many Internet companies concealed their locations with fake addresses and maildrops. But I was about to unveil a secret weapon. It was a supercomputer that had recently been shipped in from Asia. It stood over five feet tall, had natural language programming, a sweet telephone voice, and long black hair down to her knees. She was my daughter, Ana, the subpoena clerk.
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:50 am

ROMANCING THE WITNESSES

I told you about my wife, the perfect legal secretary. We’ve been married since August 2, 1974, when we tied the knot in front of a Tempe, Arizona justice of the peace with Tara wearing leather lederhosen, and me in a funky t-shirt. We had three kids, Josh, Maria and Ana. Daddy was already in law school by the time Ana got to talking, so she has grown up in an environment where law students and lawyers come tramping in and out of the house, carrying their bottles of beer and stacks of paper. Our kids remember hilarious family moments in our bright blue Santa Monica kitchen, when hopped-up poet-lawyers brandished knives, tequila bottles, and hastily-crafted rhymes to the sounds of punk rock. All three kids logged scores of weekend hours in Los Angeles high-rise law offices, pretending to be receptionists, copy assistants, and secretaries, while consuming the abundance of traditional West-L.A. takeout food -- awesome lox, bagel and cream cheese brunches, trays of cold sandwiches, and gourmet pizza loaded with everything but anchovies. So spending weekends with daddy cranking out legal paper wasn’t really so bad. It gave them an idea of what work is like in the big wide world.

Of the three, Ana was the only teacher’s pet. Only due to her do I know how nice it is to have a really great parent-teacher conference in grade school. I certainly had none in my own childhood, and the first two followed my lead, much to Tara’s chagrin. Her mom was an elementary school principal. The difference between the two older kids and Ana, at least with respect to school deportment, was so notable that when Ana finally entered Ashland High in Oregon, the teachers asked her, disbelieving, whether she was really related to Maria and Josh. These two young pioneers had cut a swath through the school that has never been forgotten. Josh brought the baggy pants craze to Ashland, resulting in the expenditure of innumerable unnecessary yards of cloth, the sort of waste that drives Oregonians crazy. Maria takes her Mexican heritage so seriously that when one of her schoolmates, a proto-Nazi whose father was the head of the local college’s criminology department, started talking trash about Mexicans and “poor people,” she felled him with a clean right cross, while, interestingly, her teacher made no move to stop her. She was called to the principal’s office and issued a criminal citation by a police officer that was summoned to the scene. The slight flush of pride that filled her face when she told me the story abruptly turned to pallor when I reprimanded her in the sternest tones, telling her I was deeply disappointed. She had acted like a Nazi herself, I told her, attacking a person physically for mere words. She got the point, and ultimately delivered an apology to the young man. Maria performed the terms of her juvenile probation bravely, and the incident became a part of local legend, cementing her position in the community as a notorious bad girl.

So how was Ana different? Oh, how about saintly? Until the age of 19, which you’ll note is after the matters addressed in this book, her mouth could safely have been used as a butter storage device. She got herself into Stanford as a President’s Scholar, the only school she bothered to apply to, by wowing them with her unique resume. What’s on that resume? Well, no high school grades, that’s for sure, because this kid is a middle school dropout. She went to high school for a couple of months, until she decided her siblings were right, but decided to express it a little differently, leaving under her own power. She had done the same in middle school when she concluded her teachers were trivializing the important business of learning. She was particularly shocked when she was criticized for doing more than a project required.

After we moved up to Oregon in 1993 from L.A., Ana hadn’t been in middle school more than three weeks before she came up with a great alternative to public education. She asked if she could go on a six-week meditation retreat at the Tibetan-Buddhist temple just up the road from our house. The retreat started every day at 7:00 a.m. and ended at 9:00 p.m. She would be the only middle schooler on the retreat, since everyone else was an adult and most probably over 30, except for the instructors- some handsome young Tibetan boys who had mastered the art of “psychic heat.” I’m really not supposed to tell much more because this is esoteric knowledge that is cloaked behind a veil of secrecy. I never even got to see the little tiny skimpy mini-skirt type uniforms people wear when they train in generating the psychic heat. These skimpy uniforms are intended to make you cold, which isn’t difficult when the retreat takes place in an unheated barn-like structure in the dead of winter in the Siskiyou mountains of southern Oregon.

Well, I always thought Ana had been studying too hard, and this seemed like just the sort of break she needed. In all seriousness, I told her that she could go to the retreat, and that I would wake her up every morning in time to get there, but she had to promise that when she got enlightened, she would enlighten me first, before all the other beings whom she would thereafter bless with Buddha wisdom. She took the deal, and I performed my part getting her there on time every day. She turned out to be the star performer at the event, inspiring the rest with feats of flexibility and endurance in performing difficult exercises that left others in tears. When the six weeks had ended, Ana had grown four inches, and was barely beginning to work up a sweat on this meditation stuff. She had a radiant smile, a firm step, and a long black whip-like braid that reached the middle of her thighs. This kid was on.

After the retreat was over, her return to school was brief. Somehow those middle school teachers didn’t impress her when they came up with assignments such as writing a paper on five things you hope to do, giving as an example “to grow beautiful nails.” So it wasn’t long before she was back at home again, keeping an expanded meditation schedule and plenty of hours with the computer studying Princeton Review high school materials on CD Rom. I bought her a 12-hour series of videotapes on how to become a superstar student, and she absorbed their contents avidly. Tara and I could help her with some of the work, but after Algebra, we weren’t much help with the computer-generated math problems.

People projected a nun-like character on Ana, and she didn’t consider it a compliment years later when everyone thought it so natural that she be working in a library. Still, her bookish ways were notable, and extended to the Tibetan language. She studied with a monk at the temple, and also with Alan Wallace, the well known author and speaker on the subject of Tibetan Buddhism.

From Thanksgiving 1999 until March 2000, Ana studied at the Rangjung Yeshe Institute in Kathmandu, Nepal. Tara had a good time watching over her and reprising her role of twenty years earlier, as an international hippie with the considerable advantage of a functioning debit card. The girls originally planned to stay around six months, which got shortened to three when they decided they wanted better food, air and healthcare than is available in Kathmandu.

From my end, the hectic work schedule was wearing me out, and working so close to Gary was turning me into a wraith. I needed help with the paperwork. The filing was massive, and I couldn’t blame the other side either. I was generating the paper blizzard. Keeping the books for litigation costs was a headache. Hiring temps for a couple of hours at a time wasn’t cutting it. I needed my woman back. Tara and Ana didn’t need much prompting, and on March 1, 2000, they returned in brightly-colored Mongolian garb, bringing paintings, statues, and best of all, themselves.

Tara soon had the books under control, accounts reconciled, and the bills sent out. She next turned her hand to the filing, and corralled the paper blizzard in colored binders on a shelf with document lists, exhibit tabs, etcetera, exactly like they do in the big L.A. firms, because that’s where Tara had worked. She has a rigorous code of professional discipline that sums up like this: “Your work will be done perfectly, whether you like it or not.” She regards my methods of organization as the flailings of an amateur. She brought order to the case.

Ana started off as a cabin girl on our little litigation frigate, and was quickly promoted to handle the subpoena gun. The gun analogy is apt because the whole goal of subpoena serving is simply to hand the witness the subpoena. You only have to do it once. It’s like chucking a harpoon into a whale. After the hook is set, they gotta come. Witnesses trying to avoid being served have engaged in every conceivable evasive maneuver. If you want to learn the meaning of avoidance, be a process server.

Filling out a subpoena is a detail job. In addition to the case name and number, you have to state the name and address of the witness, describe the documents you want them to produce, and state a time and place for production. To find current addresses, Ana used online searches and private investigators. Gary composed a most extensive list of documents, the infamous “Attachment A.” For the place of production, usually lawyers designate the office of a court reporter, but that’s expensive. I decided Kinko’s was a good enough place for the witnesses to produce documents. It was easy, I told Ana, to find a Kinko’s within a few miles of virtually any witness, using the Kinko’s website store-locator. All of this information was integrated into the subpoena by a mind that had no prior experience with banks, private investigators, paralegals or clerks. The subpoenas appeared in her hands, and I signed them. Then she fired them off.

It was a classic example of the old saw in action: “On the Internet, no one knows you’re a dog.” In the Sex.Com litigation, no one knew Ana was a newly-minted “subpoena clerk.” She soon was expert at generating a subpoena to anyone, for anything, and knew the process servers by first name. Her faxes flew fast and far, and were discussed with all seriousness. Soon she was skilled at getting those witnesses tagged. Then came the job of reeling them in.

Tight follow-up on every subpoena we served was an absolute necessity. A shamefully large number of people will simply blow off a subpoena. Ana would call each witness, and with her delicate voice, follow up earnestly and simply. Her first big success was Washington Mutual in San Diego, where she befriended the document paralegal to such an extent that the young lady started calling her for legal advice.

Washington Mutual was where Cohen got his home loan. When you’ve got a lot of money, you’ve got to do something with it, and Stephen Michael Cohen was no exception. With some of his Sex.Com profits, he bought a house in San Diego County, in a development called Rancho Santa Fe. When you apply for a home loan, you put your best foot forward in terms of assets, income, and corporate ownership, etcetera. In Cohen’s case, this meant providing a list of bank and securities accounts, and declaring his ownership of “Omnitec, dba SEX.COM,” a company whose bank accounts were also revealed in the loan file. The loan file showed Cohen bought the house for $3.1 Million. He paid $500,000 down, and borrowed the rest from WaMu on the strength of his other assets -- bank and securities accounts held in his own name, and the names of Omnitec, Sand Man International, Ocean Fund International, and other companies. Cohen had come far since he walked out of prison in 1995.

As soon as Ana got fresh records, she copied them for me and faxed and emailed them to Gary. Usually, they’d come faxed back a few hours later, marked with numerous jabbing arrows pointing to circled account numbers, directing us to “subpoena this!” “Follow the money,” Gary would chant, echoing Deep Throat. Armed with Gary’s prime directive -- if it’s relevant, subpoena it, cost be damned -- we knocked on door after door, tracking down Cohen’s financial trail.

The Washington Mutual loan file was like a map directing us to the important places to subpoena. It told us what doors to knock on, and generally indicated the amount of funds likely to be found in each of the accounts. There were accounts at Citibank, Charles Schwab, and Royal Alliance. The biggest ones at the San Diego Wells Fargo Bank, where Omnitec dba Sex.Com had accounts. Within days of receiving the Washington Mutual records, Ana was faxing new subpoenas to a half dozen private investigators to serve on Cohen’s other banks.

Ana could get a lot of records on her own, but there were a lot of hard cases out there in the witness world, and those people got passed on to Sue Whatley, an amply appointed tall, blonde, Oregon lawyer with a husky voice made more so by continued application of Salem menthol tobacco smoke. Sue’s demeanor is languid in the extreme. Her eyes often do not open more than half way, preferring to look downward. She has a degree in music, can entertain at the piano all night, and a gentle laugh tinged with amused cynical delight. She was the Mata Hari of the subpoena team.

Sue’s gift was inveigling her way into the minds and hearts of the witnesses. Talking with recalcitrants, smoothing the way with personal interchanges, and easy, playful emails. Her communications are peppered with personality. She sought to accomplish by wile and seduction what could not be accomplished straightforwardly, and often succeeded. Watching her working the witnesses was like watching someone reeling in a big deep-sea fish. You couldn’t always tell which way it was going to go, watching the correspondence and hearing the updates, but then often enough she’d get the documents. One of her big scores was Steve Ramusevic, the accountant for Sporting Houses who gave us copies of the original stock certificates, board of directors information, tax returns, and correspondence concerning the attempted purchase of a Nevada brothel as phase one of the Camp Wanaleiya project. Sue smoothed communications with banks, who had their own lawyers and wanted to talk to a lawyer. What she couldn’t cajole, seduce or wheedle out of the witnesses, it fell to me to obtain.

I was the last link in the chain. By the time a witness was dealing with me, romance had clearly failed, and there was only one way left to go -- to Kinko’s, where I would be happy to have the documents copied at my expense, or to court, where one would be beaten briskly about the head and shoulders with an expensive club.

And little by little, all through the summer and into the Fall of year 2000, the documents began to pour in from state agencies, banks, accountants, courts, telecommunications providers, securities brokerages and law offices, an insane flow of records that began to fill binders, which began to fill shelves. The meaning-to-volume ratio of these documents was not necessarily very high. There might be only two or three pages of useful information out of several hundred, if you were just looking at what you could prove with them in the case. The people in my office were becoming Cohen connoisseurs, beginning to appreciate the nuances and twists of his various deceptions. Each successful subpoena foray expanded an ever-widening circle of inquiry that was creating a three dimensional view of Steve Cohen’s long-time pursuit of deceptive business activity, in various states, under various business names. This was the gift we received from the witnesses for all of our labor in romancing them. We got to see the full picture of Stephen Michael Cohen, a picture more clear and detailed than anyone had ever seen.

The biggest danger from studying Cohen so intensely was that you might lose heart in your ability to defeat him. After all, studying the record, you could see he had come out on top again and again. If you thought too long about it, you might hypnotize yourself into defeat, so I made a rule for everyone in our office, that no one could say anything admiring about Cohen. No one should ever speak of his schemes with wonder or amazement, but we should always remind ourselves that he was a thief, a liar, and a conman, and that we would defeat him. It was a joyless inoculation, but a necessary one. One must not fall prey to the enemy’s glamour, although one is free to learn from it.
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:51 am

“SOME CAT IN THE ISLANDS”

As the entire business world briefly knew in June 1999, Sir William Douglas, speaking as Chairman of the Board, announced that Ocean Fund International was offering to buy the entire Caesar’s Palace operation of seven hotel-casinos for $3.6 Billion. Craig Bicknell reported this development in the June 15, 1999 edition of Wired News in an article entitled “Sex.Com’s Pipe Dream.” In his article, Bicknell established that the owners of Caesar’s Palace said the offer came out of left field, and weren’t taking it seriously. Bicknell traced the origin of the offer to an attorney in Salt Lake City named O. Bob Meredith, who said he worked part-time for Ocean Fund, but “couldn’t say who sent the message,” because “my Alzheimer’s is acting up.” Elsewhere in news reports, Meredith denied acquaintance with Sir William, referring to him as “some cat in the Islands.”

One year later, I still didn’t know if Sir William was Ocean Fund’s Chairman. And Gary didn’t let me forget it. I needed to work with this crazy aspect of the case. To unravel Cohen’s web of fairytales, I had to show each one to be an invention, for which no evidence existed. And how do you expose a lie? My favorite method is to assume the lie is true, and then push for proof of other things that must therefore also be true.

For months, Gary and I only speculated about the identity of Sir William Douglas. Then, in December, 1999, in his relentless drift net searches of the Internet, Kremen pulled up an odd fish. An article in a London newspaper indicating that Sir William Douglas did exist, and in fact was the retired Chief Justice of the Island of Barbados. Further, that a London tabloid had published a retraction of a prior article reporting that Sir William was associated with Ocean Fund and Sex.Com. Apparently, Sir William had threatened to sue for libel. Thus, it seemed unlikely he had anything to do with Ocean Fund.

But put that aside. To expose the lie, let’s assume Sir William really was the Chairman of the Board of Ocean Fund. He would be a “party witness,” and Ocean Fund, as his employer, would be required to produce him for deposition. So I served Bob Dorband with a notice of deposition in December, 1999, which he studiously ignored, choosing instead to dispatch his flotilla of decoys. Discovery closed in the beginning of 2000, and when it was reopened in May of 2000, I filed a motion to compel Sir William’s deposition.

The motion was extremely simple. I told Judge Trumbull that Douglas appeared to be an officer of one of the defendant corporations, had made statements concerning the profitability of Sex.Com and Cohen’s role in managing the website, and thus Ocean Fund should be required to produce him. In response, Bob Dorband filed a similarly brief opposition supported by a one-line sworn statement by Stephen Michael Cohen that Douglas was not an officer of the corporation.

In my reply brief, I focused my fire exclusively on Cohen’s veracity. Drawing richly from files which I had recently obtained from the Bankruptcy Courts in Los Angeles and Denver, I made the most of the surprising whoppers that Cohen had told the Court in those proceedings. The core argument in my reply brief read like this:

“Cohen’s declaration simply cannot be believed. His record as a liar stretches back too far and he will say anything that he believes will buy him time to carry on his criminal shenanigans. Mr. Cohen once submitted a declaration in United States Bankruptcy Court in Colorado stating that he had suffered a major heart attack, in an unsuccessful effort to get his personal bankruptcy reinstated . . . . On a second occasion, in August, 1988, Cohen impersonated a lawyer named ‘Frank Butler,’ and... filed a declaration [stating] that ‘Frank Butler’ had suffered a major heart attack on September 4, 1988, and had thus missed a filing deadline.”

My reply brief contrasted Cohen’s deposition testimony with statements made in his declaration and the further statements attributed to him by Sir William in the Ocean Fund press releases. At deposition, Cohen said he hardly knew Sir William at all. This conflicted with Douglas’ statement in the Ocean Fund press release: “Stephen and I have an excellent and longstanding working relationship.” I was wearing a grin as I finished up the brief:

“Cohen... has failed to carry his burden of showing that Douglas is anything other than what the press releases say he is: President and Chairman of the Board.”

When Judge Trumbull held her hearing on the motion, Bob Dorband played it cool, as if I should admit I was chasing a phantom. Shrugging and frowning in my direction, he argued I was just trying to send Ocean Fund on a wild goose chase, and knew full well that Sir William Douglas had nothing to do with the company. At times like this, the law seems not only to generate irony, but actually to be fueled by it. There was Bob, arguing I knew Douglas had nothing to do with the company, without saying his own client had generated a phony press release. And there was I, who in truth believed that Douglas had nothing to do with Ocean Fund, earnestly contending that he was its CEO.

Judges sometimes appreciate, and comment upon, the ironic postures the advocates strike when vying for strategic advantage, but Judge Trumbull didn’t. She just looked at the evidence before her, which showed Douglas to be the CEO of Ocean Fund. The only person contradicting it was someone the evidence showed to be a bald-faced liar who filed false declarations with nary a second thought. She ordered Ocean Fund to either produce Douglas or to provide me with official corporate documents, sufficient to establish that Douglas had nothing to do with Ocean Fund.

Well, by this point, I was confident that Cohen would provide us with a document that would obviate the necessity of producing Sir William for deposition. It was just too easy. And on June 28, 2000, in came the fax. There were three pages, purporting to be the official corporate minutes of YNATA, Ltd., successor corporation to Ocean Fund, stating that on June 21, 2000, the company resolved “that Sir William Douglas is not an Officer or Director or in any way involved with YNATA Ltd. . . . that the Director and Officers of the Corporation hereby represent that they have no contact whatsoever with Sir William Douglas....” The document was entitled “Joint Action of the Directors and Officers” of YNATA, and had four signatures: “Derek Taylor, President; Fernando Rodriguez, Director and Senior Vice-President; Roman Caso, Secretary and Vice-President; and Stephen M. Cohen, Vice-President.” The fax also included another document, called “Action of the Sole Shareholder Without a Meeting,” bearing the signature of “Rodolfo Gomez-Aguila,” appointing Fernando Rodriguez as the Sole Director of the corporation. Rodriguez, in turn, had appointed all of the officers who made the resolution that the company had nothing to do with Sir William Douglas. It was a document set up like a shell game, a sort of automatic-buck-passing device with lots of moving parts. “Ah,” I thought, “more nonexistent people to depose!”

Gary was not particularly pleased when I announced that my solution to the shell game was to notice the depositions of all these imaginary Latinos plus the token Anglo, Derek Taylor, to prove that they did not exist either. Gary disagreed. He wanted to attack the corporate documents by presenting them to Judge Trumbull with the argument that they were “obvious forgeries.” Problem was, they weren’t. The corporate setup seemed convoluted, and the resolution of the Douglas deposition crisis a little too convenient, but I saw nothing in it that would cause Judge Trumbull to immediately conclude that the documents were forgeries. Although it frustrated Gary immensely, the only solution I saw was to call Cohen’s bluff again. That didn’t happen for another couple of weeks, when Cohen showed up to give another three days of deposition, after having been legally dragged, hog-tied and complaining, back to Beth Ballerini’s office on Kettner Boulevard.

And what of the real Sir William? I located his phone number in France through a British private investigator with Caribbean experience. I called Sir William twice, but he never picked up the phone. Further research showed that Sir William was the kind of judge Cohen would have to respect -- as Chief Judge of Barbados, Sir William had refused Britain’s request to extradite Ronnie Biggs, the perpetrator of The Great Train Robbery of 1963, in which Biggs and his accomplices made off with $7.2 million pounds. A big lie leaves lots of room for nuance.
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