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 1:57 am

THE PIPELINE

Gary and I were attempting what Machiavelli called the most difficult of all endeavors -- “to change the established order of things.” Changing the established order is almost impossible, because those most able to change it are comfortable with the existing system and have no incentive to seek change. This is why Gary’s efforts to enlist pornographers to overthrow Cohen always came to naught. They were used to living with Cohen as the god of Sex.Com, and had no desire to destabilize an arrangement that worked for them.

Wagstaffe and I filed Gary’s motions for summary judgment and preliminary injunction in August 2000, hoping for a swift adjudication, but Judge Ware didn’t cooperate. As the days of autumn blew by, Judge Ware delayed the hearing several times, and Gary, his funds dwindling rapidly, suffered like one sentenced to hang at dawn. The same messenger -- time itself -- could bring good or bad news. It was only a question of which came first. The cock’s crow would sound when his money ran out. The reprieve would come when Judge Ware said, “the domain is yours.”

Only Gary knew when he would run out of money, but for me the date had effectively arrived in August 2000, when Gary refused to pay any more fees, and fell behind on reimbursing me for litigation costs. Seeking to assure my future security apart from Sex.Com, I took on a drug case for the Federal Public Defender, and did a one-week trial in Eugene with Peter Carini as co-counsel. It was a big case, involving twenty pounds of meth, three delivery charges and two conspiracy counts, and it sucked up a lot of my time. Gary was furious, but contained his anger, since he knew that Wagstaffe’s loyalty would not survive any suspension of fee-payments, and therefore even my divided loyalty was valuable. Fortunately, the outcome of the Wells Fargo document subpoena brought good news that watered all of our hopes.

One day in late September, I was down in the Bay Area with Gary when Tara called me on my cell phone. She sounded happy, which always makes me happy, but it was more than mere domestic pleasantry. She was calling with really good news. She and Ana had deciphered the money flow from Sex.Com, and there was a lot, like really a lot. I asked her if she meant a whole lot, and she said yes, a whole lot. She was proud and happy that for once I was right about a case being worth something. Tara said that she had emailed me the flowchart she and Ana created, showing multiple money streams flowing into Cohen’s bank accounts. Every month, one Jordan Levinson would transfer at least $400,000 from his account at Union Bank in Fort Lauderdale to Omnitec’s Anaheim Hills Wells Fargo account. Gary and I read the memo and perused the charts later at his Montgomery Street office. We were very impressed with the clarity of the eleven-page memo, but the raw numbers commanded our special attention. Some months, Levinson wired as much as a million dollars to Cohen’s Omnitec account.

When I realized Sex.Com produced $400,000 per month, my mind flared into white heat, like a mound of coals injected by a bellows with a flood of fresh oxygen. I was exultant -- I would get paid! Memo to all legal staff: We have to win. The discovery of the huge cash flow, while nothing like the astronomical numbers totted off in Sex.Com’s press releases, was still big money for lawyers. It was a tremendous relief to know that there was a large flow of cash coming from Sex.Com, because my bet was on the continuing value of the name as a source of endless profits. This was the fall of 2000, and bad news about the deflating “New Economy” was beginning to roll in, so I was glad that the optimism of my early days on the case had been justified.

The good news from the Wells Fargo documents came just in time to replenish our motivation to write persuasive reply briefs that would compel Judge Ware to grant our motions for summary judgment and preliminary injunction. Judge Ware had given us more time than we had wanted, but the Wells Fargo documents made us grateful for the delay. When you added in the Kinko’s document theft, which highlighted the importance of the Wells Fargo records, we had a lot of new ammunition. By forcing us to store up energy to attack with accumulated momentum, Judge Ware had given us an opportunity.

Sun Tzu compares a force attacking with momentum to a raging flood tossing boulders like pebbles. A good way to generate a raging flood is to build a dam, then break it. Judge Ware’s slow docket dammed up our forces. The Wells Fargo documents were the waters rising behind the dam. The videotape of Cohen stealing the Wells Fargo documents would serve as our dynamite, to break the dam most dramatically. When momentum is with them, says Sun Tzu, even cowards fight bravely, and when it is against them, even brave men run.

The Wells Fargo documents recharged my personal momentum and drew it into a single focus. Before seeing the money memo, my obsession had been naïve, based on conjecture and faith, like Moses before he reached the river Jordan. But when I glimpsed the vast river of cash actually flowing from Sex.Com, I turned from a mere believer in vague future riches to the possessor of actual, objective knowledge of just how rich I might become.

Thus, toward the end of October, in a mood of resolve and quiet optimism, Tara, Ana, Sue and I packed boxes filled with three-ring binders of documents into the Camry, and headed south on I-5 to the Bay Area. Fiercer than we looked, our little foursome comprised the core contingent of Gary’s troops. Sue knew Cohen’s lies virtually by heart. Her copies of his depositions were feathered with yellow stickies, cross-referencing lies that often lay three and four levels deep. Tara had devised a total document management system that contained every piece of relevant paper in a growing library of three-ring binders. Ana could put a hand to any banking document or other business record that she had subpoenaed from anyplace in the world. I was a functional madman, as obsessed as any paranoiac with unraveling a complex plot that wasactually a fantastic reality. I could use my encyclopedic knowledge of Cohen’s lifetime of crime to prove that virtually every transaction in which he had ever engaged was a fraud.

We were scheduled to spend three days, from Saturday morning until Monday evening, in Wagstaffe’s office overlooking the San Francisco Bay Bridge. Modern lawyers get a lot of work done by locking themselves away in a silent skyscraper with a crew of colleagues. On the weekends, elevated offices lack food, co-workers, and excuses for distraction. Instead of halls filled with lawyers and staff, you have silent carpeting, empty doorways, ubiquitous office machinery, and the galley slave of the modern legal attack-ship -- an overtime secretary chained to her computer. The bright expanse of the world is sealed outside floor-to-ceiling windows that don’t admit a breath of air. The outside world is for ordinary people, and as we look down from our glass cellblocks, the child heart within us palpitates silently, held hostage by an omnipotent taskmaster. Entombed in such vast, silent warrens, the spirits of many lawyers drudge, wraithlike, attending to tasks that one law professor called alternately evil and inconsequential. When the game is afoot, however, the endless carpeted hallways, ringed with glass cages, become the staging bases for professional warriors who delight in conquest. Peering into each paper-cluttered office, amid the spill of open law books and the drafts of briefs in process, a warrior sees a forge, glowing with heat, gritty with dust ground from the sharpened blades of deadly intellectual weapons.

Jim Wagstaffe’s young associates, Pam Urueta and Michael Von Lowenstein, were two fine young liberal lawyers who liked to go home at reasonable hours. Fortunate in their careers, perhaps innately gifted, wise in their choice of schools and bosses, I liked them, but unencumbered by the burdens of hoarding cash to raise children, they had developed a different orientation on the law. Huddling in Michael’s office, assuring us that their legal work was nearly complete, it was evident that Pam and Michael were only there because Gary was Wagstaffe’s client, Wagstaffe was their boss, and Wagstaffe was joining us in the skyscraper over the weekend.

So it was with pleasure that the Oregon crew welcomed the arrival of Gary Kremen, the pivot of our personal history. He took one look at what Pam and Michael had thus far produced, and was immediately, silently seething. This is the danger of showing a demanding client an early draft -- they may tend to think that the work is inadequate, their case is foundering, and victory is in doubt. Much worse is the effect when one has been claiming that the work is nearly complete, as Pam and Michael had been. But Gary reacted efficiently. After blasting off a few rumbling voice mails to Wagstaffe, warning that things were looking a little sketchy on the Pam and Michael front, Gary crashed out on the conference room floor for a solid nap.

Soon Gary’s snores were resounding ominously down the hall. In the dim light of a San Francisco morning filtering through the floor-to-ceiling windows, the rise and fall of his capacious abdomen gave him the appearance of an unconscious leviathan beached on a foreign shore. Michael and Pam obsessed over this problem. Proclaiming earnestly that he needed to go home and sleep in his own bed, they tried to leverage Gary’s strange behavior into an excuse to escape the office, or at least to get rid of Gary, who had disturbed their procrastinations. Sue, Ana and I, however, might have been keeping guard over the tomb of King Tutankhamen, the way we protected Gary’s prostrate form. He would not be wakened or moved. Eventually, he would rise from oblivion and command us. That was the order of things.

The young associates upped the ante, calling their boss. When Wagstaffe called me to ask about the situation, I assured him there was nothing unusual going on with Gary. He needed his sleep. He was bothering no one. So with Wagstaffe’s blessing, Gary slept on. Michael fumed. I suggested to Michael and Pam that they dedicate themselves to producing a better brief before Gary woke up. I could feel the love.

Shortly thereafter, Gary woke up and started cracking his whip. When Wagstaffe arrived, Pam and Michael realized that their fate was sealed. Only an excellent brief would secure their exit from our intellectual prison. Gradually, they assumed an outwardly docile manner, funneling their aggression into their writing, as is appropriate, and the work product continued improving. With Gary demanding that Pam and Michael add more facts to their arguments, Sue was able to feed them relevant quotes, demonstrating her total mastery of Cohen’s testimony as she consulted her well-thumbed, cross-indexed transcripts of Cohen’s numerous depositions. Eventually, Michael even woke up to the need to cite the McCord case, where the California Supreme Court authorized judges to enjoin the theft of intellectual property. I was comforted to know that this controlling precedent, later cited by Judge Ware in his own opinion, would be included in our briefs.

While Pam and Michael nailed down the legal issues presented by forged titles and invalid trademarks, I dug into the financial documents. In their money memo, Tara and Ana had neatly summarized the recurring monthly transfers of hundreds of thousands of dollars from Levinson in Florida to Omnitec in Anaheim Hills. When I studied the memo closely for the first time, however, I suddenly realized something that was obvious, but had escaped my attention as a crucial fact. Cohen drained the Omnitec account every month. All the money flowed out via wire transfer to numbered accounts in Luxembourg and other offshore money havens.

The legal implications of this fact had escaped me until that very moment. Gary wanted to recover more than just Sex.Com; he wanted to freeze Cohen’s bank accounts, seize the Rancho Santa Fe mansion, and also grab a little house on the Mexican border that Cohen had stolen from an unfortunate man named Godinez. That was a tall order, and seemed unachievable until I realized that Cohen drained the Omnitec account every month. Until then, I hadn’t seen the single fact that would convince the judge to grant such a variety of unusual requests.

I grabbed the binder of bank documents and walked down the hall to talk to Wagstaffe. As I walked through his office door, he looked up from his computer and smiled with strong teeth, and his silvery-red beard bristled with energy. I sat down, showed Wagstaffe my summary of the Omnitec bank records, and asked him if he thought it would strengthen the argument for an asset freeze. He understood exactly what I was saying. The Omnitec account was simply an offshore pipeline. We could focus on the pipeline to provide the one thing that had been missing from our factual record -- convincing proof that Cohen was putting the stolen Sex.Com money offshore, out of reach of the U.S. courts. The bank records showed that Cohen had been putting his ill-gotten gains beyond the reach of U.S. law for years. At least thirteen million dollars, I calculated, had already disappeared from the country through the Omnitec Wells Fargo Account.

From the birth of a legal inspiration to the drafting of an admissible declaration can be a bit of a distance. As the hours of the last day of our three-day weekend ticked by, my declaration became compendious. I wanted to give Judge Ware and his clerks one place to find all of our financial evidence. I wanted to dramatically emphasize how Cohen had risen from rags to riches with only two tools -- Sex.Com and his criminal imagination. Because a judge can only order restitution of funds that can be traced to an unlawful source, I needed to establish that all of Cohen’s post-prison wealth was traceable to his theft of Sex.Com.

Most of the documents I planned to attach to the declaration were as familiar as old friends, and I was excited to introduce each one in the proper dramatic order. The divorce papers Cohen filed from prison “in forma pauperis” proved that he was broke in prison, and presumably was still broke when he left in 1995. Photographs of the Rancho Santa Fe property depicting Cohen’s mansion, pool, tennis court, and playhouse -- showed how rich he’d become in the last four years. The bank record of Omnitec’s $500,000 down payment on Cohen’s Rancho Santa Fe house showed Cohen using Sex.Com money for his personal benefit. An unsigned tax return subpoenaed from Cohen’s accountants showing less than $40,000 income for 1998 -- showed that Cohen lied to both the courts and the IRS about his wealth. Omnitec bank records referring to “Sex.Com DBA Omnitec,” and a bank officer’s handwritten notation that “Steve Cohen is Omnitec,” proved that Cohen, Omnitec and Sex.Com were an indivisible trinity. Statements from Cohen’s securities accounts and bank accounts subpoenaed from around the nation showed that, aside from a few hundred-thousand dollars, almost all of the Sex.Com money was offshore, having been funneled through Omnitec to foreign banks. To the pipeline argument, my last exhibit was Cohen’s check on the Omnitec account for seminar fees at “The Offshore Institute.”

During several hours of our third day of all-out effort, Wagstaffe and Gary sat shoulder-to-shoulder, huddled over the form of the proposed order we would submit to Judge Ware for signature. I didn’t need to be involved, because Gary had taken my advice to make the order his “wish list,” and had written up one that would have made Santa Claus sweat. The way it turned out, if Judge Ware signed it, Gary would immediately assume total control over Sex.Com and virtually all of Cohen’s property subject to U.S. legal control. Cohen could fight all he wanted, but if that order got signed, it was equivalent to assassinating his entire case in a single blow. Based on Cohen’s own confessions about the Dimmick letter, and the damning evidence I was putting in my declaration, both Wagstaffe and I believed we had the evidence to justify such an order, but lawyers still like to proceed incrementally, and don’t like to look greedy in front of the judge, so we would both have asked the judge for less relief. Gary wouldn’t let us do it. The wish-list idea had stuck, and we were stuck with it.

So we had to convince Judge Ware to give us the asset freeze. From the legal doctrine viewpoint, the hard pull was that Gary was a private individual, and the main case on freezing bank accounts to prevent “a dissipation of assets” before judgment was a federal case that allowed the Republic of the Philippines to freeze deposed dictator Ferdinand Marcos’s bank accounts to recover millions he and Imelda stole from the government during his years as a U.S. puppet dictator. Getting Judge Ware to apply this precedent had initially struck me as a long shot, because in the Marcos case, the plaintiff was a nation impoverished by a fallen tyrant, seeking restitution of hundreds of millions in stolen tax dollars. Gary, on the other hand, had filed a registration form to establish his rights to six letters and a dot, waited three years to sue, allowing Cohen to build up a hoard of Sex.Com cash, and could be characterized as an opportunist seeking a windfall. Worst of all, since Sex.Com had been under Cohen’s control for five years at this point, without proof that he was doing something to hide his money from seizure after judgment, there was no reason to seize his assets. For example, no judge would freeze Ford’s assets on behalf of a plaintiff who sued them for incinerating his family in a defective vehicle, because all judges believe Ford will be around to pay the judgment, even if only from a bankrupt estate. Putting seizure of assets ahead of a finding of liability is, after all, a bit draconian -- a lot like making an accused wait in jail until their case comes up for tria -- and as you know, the rich rarely have to do that. Cohen, of course, would insist that he should enjoy the same legal presumption of reliability and honesty as Ford Motor Company. I could hear Dorband saying it now -- “Of course Mr. Cohen will pay any judgment rendered against him! He has millions!”

That argument wouldn’t hold much water in the face of evidence that Cohen was spiriting money offshore at the rate of $400,000 a month. We could get that asset freeze order, because the Omnitec account was nothing but a pipeline for pumping cash offshore, and in fact, the vast majority of the Sex.Com money was already gone, and would never be recovered. By tracing Cohen’s rise from a broke ex-convict to a supernova in the pornography firmament, we made a common-sense argument that effectively traced all the funds to Sex.Com, and placed the injunctive relief lever firmly in Judge Ware’s hand.

On Monday afternoon, we had to call the courthouse to ask for permission to submit the Kinko’s security video as evidence. When Sue called and asked the clerk, she was asked to wait, then the clerk returned to ask what type of video it was. Sue explained that it was a security video of Mr. Cohen stealing subpoenaed bank records from Kinko’s. The clerk seemed surprised, and after a further delay, presumably to talk with the judge, returned to the phone call with considerably more animation to say that, yes, we could definitely file that video. Sue’s declaration attached the video, which included a clip of Cohen’s deposition for the sake of comparison, along with the police report recording Det. King’s “90%” estimate of the thief’s identity.

The vibes were getting positive around Wagstaffe’s office. Pam and Michael were allowed to depart with the sun still in the sky, leaving Wagstaffe to polish their draft. The Bay Bridge was cloaked in the encroaching dusk as we pushed up against the seven o’clock Fedex deadline. We were making seven copies of every document, and Wagstaffe’s copy machine was in constant operation as each written work reached final, was proofed, signed, and copied. One by one they stacked up in the back hallway of Wagstaffe’s office, waiting for the Fedex guy to arrive. The copy machine racketed on, producing seven reply briefs, seven proposed orders, seven copies of Sue’s declaration, and at last, seven copies of my declaration, revealing the marvelous, amazing, $400,000-per-month pipeline. The explosive videotape was taped into a manila envelope that we stapled to the last page of Sue’s declaration, and placed on top of the whole stack. If it had been a shooting war, we would’ve sealed it with a kiss and a short inscription, scrawled in lipstick, “To Cohen, with Love.”
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:57 am

THE MAGICIAN AND HIS PHANTOMS

The day after we filed our massive reply briefs and declarations, Wagstaffe told me that he’d finally read through my declaration and voluminous exhibits with full attention, and was pleasantly surprised to see that we had convincingly proved all of Cohen’s sham companies were nothing other than Cohen’s corporate alter-egos. Wagstaffe thought I’d given Judge Ware good reason to “pierce the corporate veil,” under the alter-ego doctrine. He said he figured I was gathering up useful information with all of the discovery I was doing, but hadn’t realized it would end up being so comprehensive and convincing.

The alter-ego theory had assumed even greater importance for us when we realized that we had never sued Omnitec, because Cohen had obscured its significance quite effectively. The long-desired Wells Fargo bank records alone revealed the central role of Omnitec. No wonder Cohen stole them from Kinko’s. He had laundered the Sex.Com profits through five companies. Most of them were decoys, like Sporting Houses Management, Ocean Fund International and YNATA, that nominally “owned” Sex.Com. Others, like Omnitec and perhaps Sandman, were primarily bags of money that inflated as the money came in, then deflated to be sure that, as the YNATA name promised, they would “never amount to anything.”

The alter-ego doctrine is based on the reasonable proposition that a company has to operate on the same set of laws as a person, because at most, incorporation turns an inanimate stack of papers into a pseudo-human. A person can’t be allowed to immunize themselves from the consequences of their conduct simply by using a corporation to perform unlawful acts, so the doctrine holds that if a corporation is merely the alter ego of an individual, and has no true separate character, the acts of the corporation, and its legal liabilities, are binding upon that individual. Like many other legal doctrines, it rarely works as intended. For example, no court would pierce the corporate veil of the corporations that hooked children on cigarettes, or killed workers with asbestos, or despoiled countless acres of public lands with toxic waste. Such a result would be antithetical to the true purposes of our corporate system, which protects the individuals who drive our economic juggernauts from being judged too harshly when they occasionally steer us onto the reefs of mass misfortune. Someone has to run the world of industry, after all, and who but the rich would know how? While you may reject such a doctrine, the courts pretty much abide by it. On the other hand, amateur frauds like Omnitec that produce no apparent benefit for society are a fit subject for corporate piercing. This may seem ironic, because compared with Enron, that created money that never existed, Cohen’s business model was actually more legitimate -- at least the money he stole was real!

That real money, however, coursed its way through numerous illusory companies. We got the last piece to Cohen’s puzzle when we traced the flow of Sex.Com money to Omnitec’s Wells Fargo accounts, and thence to offshore banks. Omnitec’s role in the business was so central that Cohen probably created Ocean Fund, YNATA and other companies primarily to conceal its existence. By leading us down the Sandman’s trail, and in search of Vito Franko and Sir William Douglas, Cohen kept us barking up trees that held no treasures. Small wonder Cohen seemed amused by our efforts to unwind his twisted tales. Nevertheless, piercing Cohen’s serial deceptions was necessary to engineer his final defeat, because Gary had to defeat YNATA’s claim that it was a “bona fide purchaser for value.” To conceal the fact that YNATA’s acquisition of the domain was merely Cohen passing the domain from his right hand to his left, all Cohen had to do was contend that YNATA was actually owned by someone besides himself, to forge their signatures, and to procure their non-attendance at depositions. Since one who seeks to “pierce the corporate veil” in Federal court must prove by “clear and convincing evidence” that the doctrine applies, Cohen was hoping he could defeat our efforts to unmask his corporate alter-egos by propping up phantoms and charging Gary the expense of proving they were nonexistent. The burden was on us to prove that he was YNATA, and if we couldn’t produce such evidence, YNATA might prevail. It took a long time to dissolve all the phantoms. We just needed to keep Cohen talking. When someone is lying, there is no such thing as asking him too many questions.

The opportunity to get Cohen under oath one last time arose fortuitously. You may recall that Judge Trumbull ordered YNATA to either produce Sir William Douglas for deposition, or produce some corporate document to show that he was not in fact a YNATA corporate officer. This ruling must have delighted Cohen, who, seeing one more opportunity to forge his way out of trouble, had provided Dorband with the corporate resolution signed by several “officers” and YNATA’s “sole shareholder.” The resolution pointedly stated that Sir William Douglas had stopped working for YNATA the day before I served the notice to take his deposition. Besides Cohen himself, four imaginary persons had signed the resolution, which was just a few pages, and looked like a basic forgery project that had presented no challenge for Cohen. All this forgery was very good for us, I reminded myself, because winning in court is often based more on proving that your adversary is lying than proving that you are telling the truth. Thus the William Douglas story, tired as it was, continued to serve as a handy battering ram, cut from Cohen’s own corrupt timber.

When we insisted on deposing each of the signers of the resolution, Cohen played his position like a poker hand. He raised the bet. We wanted to poke holes in the YNATA corporate veil? We could pay for the right. During Christmas 1999, he’d tried to send me to Russia, Israel, Greece, and other distant lands with poor security. Now he found another use for hazardous venues. The corporate officers of YNATA were all in Caracas, Venezuela. Why could they not leave Caracas? Dorband explained that they could not obtain US entry visas. Why? Because they had all sold arms to Iran and Iraq in violation of the UN arms embargo. They were, in other words, gun runners, whom we would have to visit on their home turf in what was then the murder capital of the free world, a place where you could check into your hotel one night, and get hosed off the pavement before coffee the next morning.

Cohen’s Caracas gambit stimulated a round of soul-searching on the Kremen team. Gary was furious, and didn’t have the money to send me to Caracas, but he didn’t want Diestel to go alone. Diestel had his bags packed, and Wagstaffe thought he should go. If he didn’t, then Dorband could hold the depos, claim we’d had our shot at cross-examining the witnesses who would be unavailable for trial, and move to admit that un-cross-examined testimony at trial. That was a nasty prospect, but I argued that it was totally unreasonable to expect me to go to South America, and Gary to pay for it, after we had all three wasted our time and money traveling to Mexico for the sham “deposition” of Roman Caso, who discovered after his arrival that he was urgently required elsewhere. Gary backed my position, and we planted our heels. I wasn’t going to Caracas.

State Farm probably preferred having Diestel file a motion to compel YNATA to produce its officers for deposition in California over sending him to Caracas. It was certainly cheaper, and worth a try, so Diestel drafted and filed a declaration that recited the Roman Caso story to explain why we didn’t want to embark on another hegira through Latin America. We showed Judge Trumbull the resolution signed by the YNATA corporate insiders and asked, essentially, “What’s up with that?” YNATA can file declarations here, but its officers can’t abide the heat of our laws? YNATA submitted no supporting evidence for its inability to produce its officers for deposition in the U.S., aside from a note in Spanish from a purported Mexican lawyer.

Faced with yet another goofy international discovery scenario, Judge Trumbull considered the lessons of recent history, and concluded there was no need for Kremen’s lawyers to travel to Caracas and repeat a farcical experience. Ruling from the bench, she ordered YNATA to produce its officers in California, and to present a designated witness in San Diego to testify as to specified topics within YNATA’s corporate knowledge. Judge Trumbull was tired of Cohen’s game, and never ruled in his favor again. From what I could conclude, virtually all of the territory in her mind had been liberated by Kremen’s forces. Although it was not her job to determine the merits of Gary’s position, I suspect that, if Judge Ware had asked her for a thumbnail summary of Cohen’s case, she would have said, “Hang him.”

The depositions of imaginary people never happen. Although Judge Trumbull ordered the YNATA directors and officers to testify in the United States, they never came. Dorband’s bland letters responded to my demand that YNATA produce its officers as ordered by simply stating that Cohen could do nothing to procure their presence, nor could the corporate officers themselves travel here in violation of visa restrictions. It was all too convenient, and devilishly frustrating for Gary. Cohen appeared to be using the signatures of people allegedly in foreign countries to add an international glow to his forgeries, while shielding their origins from inquiry. Still, Dorband’s mask stayed in place, and the existence of YNATA’s officers was untested. To all appearance, Cohen was getting away with forgery again.

It was thus especially important that Judge Trumbull had also ordered YNATA to designate a witness to testify in California. The corporation didn’t need an entry visa to get in the country -- it was already present before the court. We could anticipate that, even if he were subpoenaed to testify at trial, Cohen would deny knowledge of YNATA’s activities, and characterize even his signature on the forged corporate resolution as the artifact of some clerical task to which he had accorded little attention. So it was essential to get some human being on the record who was authorized to testify for YNATA. Judge Trumbull had ordered the deposition to take place in San Diego, and the only question was who Cohen would find to occupy the witness seat in Beth Ballerini’s conference room. As the day for the deposition approached, Dorband wasn’t forthcoming about who that would be.

As November 4th, the date set for the deposition approached, Dorband temporized, avoiding phone calls, buying time. We had reached, and he knew it, that point in the hunt when the predators are closing in on the quarry, having kept it on the run for long enough to induce exhaustion. In the hunt, pursuers take turns keeping pressure on their prey, to deprive it of rest and drive it to collapse. Bob Dorband was tired. You could see it in his face, hear it in his voice. We, on the other hand, had sighted the pulsing jugular of cash, like a vein beating hard on the neck of our prey, Omnitec, a lumbering beast full of tasty blood and fat to appease our hunger. Cohen was too arrogant to pay attention to Dorband’s lagging stride. Playing the role of a mad genius who had planned for every contingency, he was not expecting any reversals. He didn’t realize that Bob Dorband had tired of fronting for a humongous liar, had stopped caring about the outcome, and was beginning to let the chips land where they might.

As the hail of lead that was daily trained in his direction took its toll, Bob’s writing lost its zip. Instead of sounding pithy and biting, his arguments seemed short and inadequate. He had bandied words well at the pleading stage, where only theoretical principles were at stake, but once we started to trade heavily in facts, he found that he could rarely cook up a convincing story from Cohen’s stock of lies. Cohen’s record of weird conduct had been thoroughly documented in the court’s records, so there was an inexhaustible source of evidence to support our claim that he was a lying crook who breathed deception. Dorband’s job had thus been reduced to that of the loyal courtier, insisting that the King certainly did have clothes, and of the finest.

Still, Bob fulfilled his role with dastardly aplomb to the bitter end. He never dropped his sword for an instant, never pled for quarter, and never betrayed a hint of despair, regardless of the odds against him. Dorband earned my resentful admiration as he slogged on through the fall of 2000. As the weeks stretched out and the frequency and intensity of our attacks steadily mounted, Bob kept up a stream of correspondence or avoided communications, as circumstances required, conceding nothing, disputing whatever was disputable, and scoffing at the purported significance of whatever he could not deny. His loyalty was manifest by the rigor of his efforts.

Clever advocates always keep silent about bad facts as long as possible, because the earlier you reveal them, the more likely it is that your adversary will use them against you. Following that rule, Dorband kept us in suspense about who YNATA would present as its witness on the fourth of November until a few days before the deposition. I shouldn’t have been surprised by Dorband’s disclosure that Cohen would appear as YNATA’s witness, but it seemed like such a bad move on Cohen’s part that I actually was. Then again, remembering how badly Roman Caso had performed as the Sandman designee, I figured Cohen probably knew better than to try using a puppet a second time. When Ana heard that Cohen would testify for YNATA at the deposition, she talked Gary into letting her accompany me as an assistant. I loved the idea, since Ana’s ability to keep paperwork organized had grown to the point where she did it better than anyone but her mom. Gary surprised me by deciding to skip the trip, and got a kick out of authorizing Ana to go in his place.

Ana’s presence at the deposition completely changed Cohen’s demeanor. Gone were the lewd comments, the sneers and jeers. I had less need of attitude as well, having finally gotten fully prepared to question him about the issues that would come up at trial. With my documents in chronological order, premarked with exhibit numbers in one big binder, I was ready to begin my march on the capital of Cohen’s deceptions -- YNATA. Although Cohen’s shell game had lost much of its mystery, the best time to ask questions is when you know the answers. Over a year after my first, vertiginous meeting with the master-deceiver, I had learned a great deal about Cohen’s affairs. Directed by Gary’s indefatigable research, our barrage of subpoenas had produced hard data that revealed the extent of the wealth Cohen controlled. I assumed that Cohen was fully aware of how much we knew, since we’d put it all into the documents we had already filed with Judge Ware. It was a far different situation than the one I’d faced the first time we met.

Cohen knew we had Levinson’s Union Bank records showing monthly deposits to Omnitec’s Wells Fargo account. He knew we had brokerage statements referring to “Omnitec, DBA Sex.Com,” and other financial documents that proved he owned Omnitec. He knew we had the loan file for his place in Rancho Santa Fe that proved he bought the house with Omnitec funds. He knew he had signed all those Omnitec checks and wire transfers. But when I showed Cohen these records, he seemed unaffected, and peeled off new lies like a series of hundred-dollar bills fresh from the mint. Cohen’s latest lies were intended to rebut the claims we’d made in our latest filing, by denying that all Cohen’s money came from Sex.Com.

Omnitec, Cohen explained, was “a bill-pay company,” and very little of the money in its accounts came from Sex.Com. The Wells Fargo Anaheim Hills records showed different, of course -- all the money came from Levinson, the Sex.Com bagman. Like most corporate criminals, Cohen would calmly trot out the latest lie, then fade into vagueness when asked to provide corroboration for his assertions. He couldn’t give details about Omnitec because he wasn’t there to testify on behalf of Omnitec. When I asked him to explain what YNATA knew about the financial affairs of Omnitec, its wholly-owned subsidiary, he refused on the grounds that he was bound by a confidentiality agreement that was conveniently located in Venezuela. Further, it would be a violation of Venezuelan criminal law to breach the confidentiality agreement. His memory was conveniently vague on all details. Diestel, sitting quietly to my right, shook his head in gentle disgust as the new lies befouled the room.

One question, and only one, provoked Cohen to depart from his script of wholesale denial and out-of-the-loop executive ignorance. After he agreed with me that YNATA derived its claim to ownership of Sex.Com from the rights of Steven Michael Cohen, I asked whether YNATA had any other basis for claiming ownership of the domain, if Steven Michael Cohen’s rights to Sex.Com were proven to be invalid. After Dorband declined Cohen’s request to answer the question for him, Cohen launched into a proclamation of his deep, abiding faith that Kremen had no rights, had no standing, and never would be found to have any rights. Therefore, he concluded, YNATA would never have to deal with the issue, and it was irrelevant.

Most people, not suffering from brain damage, recognize their signature on the documents they signed. It is a hard question to deny when your signature is staring up at you from the page and someone asks: “Did you sign this document?” But when I showed Cohen a dozen or more checks and wire transfers he’d signed on behalf of Omnitec, he refused to identify his own signature even once. He couldn’t remember when or why he signed the checks, assuming he’d signed them at all, which he declined to concede.

Cohen adhered to a disciplined act of self-obliteration. Committed to denying his role in any recent transactions involving Sex.Com, he nevertheless was forced to appear as a witness for a corporation whose workings he was at pains to conceal. In defense, he argued that in fulfilling his duties as YNATA’s designated witness, his personal knowledge was irrelevant. As YNATA’s designated witness, he officially knew nothing, and would gladly testify to it. His phantoms were meant to be the focus of your attention, and to them your attention was duly directed.
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:58 am

NOTHING LEFT TO TRY

It was late November 2000. We were tracking the progress of our weapons arcing toward ground zero. They met a little anti-missile defense in the form of motions to strike the declarations of Carreon and Whatley, with their wild tales of Cohen’s evil deeds, but the days of easy deflection were over for Cohen. We vaporized his obstructions, and our weapons continued en route to their targets.

Judge Ware had finally set the hearing for a date we hoped would stick -- November 27th -- and the entire Oregon team was coming down to see what our efforts would produce. Although Gary invited us all to stay at his new place on Third Street, it was an aesthetic purgatory in a run-down industrial district across from the wharfs. Gary had lost old Bob Deschl as his computer geek and pizza procurer, replacing him with a tweeker named Crab whose sleeping habits were irregular. Crab bragged about his remodeling skills, but gritty brick dust coated everything in the house for months, including the bed sheets, rendering it uninhabitable by members of the fairer sex. Not that Gary seemed to mind. He called his new headquarters Dogpatch, named after the bar down the street, and was building out a dungeon in the basement, forging a new, kinkier image.

With victory approaching, and relief in sight, crappy lodgings were more than I expected my wife, child and fellow-lawyer to endure. So Tara, Ana, Sue and I stayed at the Lighthouse Hotel in Pacifica that has great views of the pounding surf, and is just twenty minutes north of the San Jose federal courthouse.

The morning of the 27th, the weather was sunny as Tara steered the Camry South on the 280 through the rolling green hills that fringe the Pacific coast. We sailed past the exit to Half-Moon Bay, the Stanford campus, and Sandhill Road, and rolled into San Jose, down the broad curving streets, and into the parking lot south of the Federal Courthouse. Inside, we met up with Wagstaffe and Pam, who would be arguing the trademark issue after Jim tackled the main issue of conversion of personal property. The bright, sunlit areas on the second floor of the courthouse were rather solemn, but our mood was bright. Diestel showed up, smiling with friendly anticipation. Ana and Sue talked cheerfully with everyone. Tara and Diestel hit it off. In the last year, Gary’s team had swelled to three firms and eight lawyers -- two from my office, two from Diestel’s, and four from Jim’s.

Then Gary showed up with a copy of the San Jose Mercury News. There it was, on the front page, below the fold, with a color picture of Judge Ware -- an article about the case. Wagstaffe had finally come through with the publicity he said he could conjure, and it was the first time an article about the case had hit the print media. All prior articles had been digital only. Somehow, the fact that the mainstream news had already picked it up made it seem more likely that we would win. How, after all, could Judge Ware tell the whole world that Cohen, a convicted con-man, should keep what he had stolen? Perhaps Gary had been right all along, and what was simply needed was that everyone should know that “the guy stole it!”

In the courtroom, Jim, Pam, Gary and I sat down at the large conference-sized counsel table next to the jury box, settling into the blue leather swivel rockers edged with faceted brass tacks. Tara, Sue and Ana sat in the gallery on our side of the aisle -- the left side, as we sat facing the bench. It was one of those moments that make you proud to be a lawyer, despite what you know about the profession. The surroundings pull it out of you, as you contemplate the majestic symbols on the wall, and enjoy the physical separation between those who sit at counsel table and those who do not. You appreciate the size of the room, the solemnity of the bailiff, the mental isolation of the court reporter, the indulgent power of the clerk who takes business cards and speaks with the advocates. I for one cannot forget, when standing in a federal courtroom, that this is the place, for good or ill, where right and wrong are distinguished from each other in our society, in a free-for-all of debate and argument, a fast-changing flow of facts and rules that only experts can navigate.

When the case was called and we introduced ourselves, Judge Ware seemed his usual self, but his opening words suggested something more. He began:

“Well, although this matter has been before this court in a number of different ways and in a number of different motions, and I’m familiar with the background, I’m presented here with an opportunity to adjudicate the case summarily on an argument that, as a matter of law, there’s a basis for declaratory relief being granted in favor of the plaintiff and requesting certain injunctive relief.”

Alluding to the large volume of our submissions, Judge Ware continued:

“I doubt if I would have enough time in the day today if you wanted to repeat all the arguments that you’ve made in your papers, but I wanted to give you a brief opportunity to say by way of oral presentation to the court anything you would wish to add.”

Jim began. Directing Judge Ware’s attention to the forged letter, he laid out the facts in parallel statements:

“There’s no dispute that the signature at the bottom of this page from Ms. Dimmick is forgery. There’s no dispute as to that fact. No one is arguing that this document effectuated a transfer of this domain name. There’s no dispute that Ms. Dimmick had no involvement or connection with Online Classifieds, none whatsoever. In fact, there is no dispute that Mr. Cohen prepared this letter with his friend Vito Franco. There’s no dispute that the first line of this letter saying that Mr. Cohen supposedly had numerous conversations with Ms. Dimmick was a lie. He had no conversations with her.”

With a series of gentle nods, Judge Ware confirmed the indisputability of this trio of facts. Jim continued attacking the letter, saying it was “implausible, to say the least, that an Internet company that sells online advertising would not have a connection to the Internet.” Judge Ware’s face showed that he agreed with this proposition. Judge Ware also appeared willing to infer that Cohen had substituted his own email address for Gary’s on the registration form so that, as Jim put it, “if NSI actually checked up on the bizarre letter, they would call up and say ‘Did you mean to transfer?’ and he would have impersonated Mr. Kremen.” Since ordinarily, an error in the contact fields of a computer document wouldn’t give rise to an inference of fraudulent intent, Jim deftly sprinkled mud in Cohen’s direction, alluding to his theft of the Kinko’s documents: “I would ordinarily not make that assumption, if we didn’t have a substantial history of this man impersonating people his whole life, and he’s done it in this case, impersonating a lawyer to get documents.”

Using the knife of undisputed facts to reveal the place where the decision had to be made, Jim cut to the heart of the issue:

“The signature is forged -- it’s undisputed. It’s forged ab initio, and all title transfers fail as a matter of law; therefore, the domain name must be returned and NSI has already submitted itself to your Honor’s jurisdiction to do that, to return the domain name.”

Latin phrases sometimes seem to say more than the English equivalent, or at least lawyers like to think so. Take the term ab initio, which means “from the beginning,” and provides the root for words like “initiate” and “initially.” Beginnings are fundamental to the distinctions the law must draw to establish who owns a piece of property. Ownership rights arise from lawful beginnings. Illicit beginnings generate only illegitimate claims of ownership. Law distinguishes legitimate rights from illegitimate claims. Property law is almost entirely the product of inheritance litigation, and English property law denied bastards the right to inherit a crown, a fortune, or a title. In essence, we were arguing that Cohen had a bastard’s claim to Sex.Com, and nothing more. He was a pretender, a usurper, a man without good title, and Gary Kremen was the true heir.

Judge Ware had taken it all in. Cohen’s claim was void from the beginning, because as the old rule says so simply, “no lawful title can arise from theft.” But the law has another principle of great age, which is that only those with “standing” can bring a civil suit to correct a civil wrong. Only someone who stands to inherit has standing to contest a will. Only the defrauded person can complain of a fraud. And only the person who owned a piece of property when it was stolen can file a civil complaint for conversion. Referring to Cohen’s standing argument as a “piece of confetti,” Jim dismissed “the suggestion that Mr. Cohen somehow can get away from summary judgment because the domain name was not owned by Mr. Kremen.” His argument is an excellent example of how to keep the focus on your opponent, even when the attack is on your own client’s status:

“It’s perhaps glib, but let me say it, your Honor. His argument is that ‘I stole from someone, but I don’t know from whom. It wasn’t Mr. Kremen.’ That’s not his standing to make that argument. He is not here. If someone else wants to come into this courtroom and say, ‘We’re the owner,’ they have the power to do that, but that’s not before your Honor.”

So Cohen had no standing to contest Kremen’s standing! Wagstaffe had stolen Cohen’s weapon and deftly turned it against him. Judge Ware’s face showed satisfaction at this artful turn of phrase. Nevertheless, artful phrases are not enough to win summary judgment, where every essential fact must be indisputable. We needed to remove every cloud on Gary’s title to Sex.Com, particularly those cast by his own careless statements at deposition. Fortunately, Gary had managed to obtain declarations from five of his former business partners at Electric Classifieds, Inc., whom I will call the “ECI Insiders.” As you may recall, ECI purchased Online Classifieds, Inc. (OCI). The ECI Insiders all swore that Sex.Com had always remained Gary’s personal property, and had never been assigned to OCI. Wagstaffe now laid the declarations of the ECI Insiders on the table:

“Attached as Exhibit F to my declaration are all of the declarations from people at OCI that say we never acquired Sex.Com. There is no witness in this case who says that OCI acquired Sex.Com and Mr. Kremen’s testimony, if it is read with any care whatsoever, does not say that Sex.Com was transferred to OCI.”

The team hadn’t been all of one mind about including the declarations of the ECI Insiders, because Pam and Michael were inclined to shy away from the issue, and didn’t even mention the five declarations in their legal brief in support of summary judgment. But Gary and I knew we needed the declarations, which had cost Gary a lot of time and effort to obtain. I had not addressed the problem at the writing stage, and it’s not the best practice to just toss some declarations in to the record for unexplained reasons. Nevertheless, at the last moment during our three-day marathon in Wagstaffe’s office, I had pointed out to Gary that his painfully garnered declarations weren’t being included in our submissions. After a short discussion with Wagstaffe, who agreed with our thinking, he attached them as Exhibit “F” to his own declaration. Watching Judge Ware’s approving look as he took in their importance, I was very glad Gary had been able to obtain them, and that I had made the necessary fuss to get them into the record. The ECI Insider declarations put paid to Cohen’s “standing” argument with a five-pointed seal.

Jim wrapped up his argument by passing the torch to Pam, continuing his use of festive metaphor: “So the trademark piece of confetti -- Ms. Urueta can address that.” Pam had decided to burn the confetti by arguing that no one could trademark Sex.Com. This is called proving more than you need to, but for Pam it was easier than understanding all the facts. The USPTO had already determined that Sex.Com was a descriptive mark that Cohen could trademark by showing that, despite its descriptive character, the mark had acquired “secondary meaning.” I had no argument with that conclusion, and simply contended that Cohen had tricked the USPTO into approving the registration with false statements. Cohen’s declaration that said he’d used Sex.Com in commerce long before he stole the domain in 1995 was a complete invention, and all the use of Sex.Com he’d gotten since he stole it was illegitimate. We could have gotten Cohen’s trademark registration set aside for fraud, while preserving our right to trademark the domain lawfully. However, to make such an argument would have required Pam to have a greater grasp of the facts in the USPTO file, and frankly, at the time, I was not fully up to speed on trademark issues, so Pam’s strategy became our strategy.

Pam was operating like many intelligent young lawyers do -- entirely on theory, and thus she took a theoretical tack that destroyed the future to secure the present:

“When analyzing whether or not Sex.Com can be marked in the first place, the court needs to look at the word ‘sex.’ Mr. Cohen makes the argument that Sex.Com is not generic, it is descriptive, but even that argument, your Honor, fails. For a descriptive mark to be trademarked it needs to acquire secondary meaning, and all Mr. Cohen has done is offer thirteen declarations, submitted by friends of Mr. Cohen’s, that go to the prior use of Sex.Com.”

Just thirteen declarations? On any ordinary day, that sounds like a lot of evidence -- thirteen declarations should be enough to bulwark the arguable validity of a trademark that the US Patent & Trademark Office had already concluded was protectable as a descriptive mark possessed of secondary meaning. Thirteen unrebutted declarations, as these all were, would seem likely to raise an issue of fact.

Pam needed to explain why thirteen declarations meant nothing:

“Those thirteen declarations don’t establish secondary meaning, and even if they did, those secondary meanings aren’t a survey of the relevant market. Mr. Cohen needs to show this court that, worldwide, a consumer would associate Sex.Com with YNATA, and he has failed to do that.”

Now this was a good point -- Cohen’s declarations didn’t even attempt to establish secondary meaning. Ironically, it would’ve been easy to do so, because every day, lots and lots of people type “sex.com” into their browser and hit “return.” One might presume they knew what they expected to find there. The statistics necessary to make a good “secondary meaning” argument were all there in Cohen’s computer, and he didn’t use them.

As her argument went on, Pam meandered deeper into theoretical realms, arguing there was no “likelihood of confusion” between Gary’s “use” of the domain and Cohen’s operation of the website. That was strange territory because Gary had never used Sex.Com at all, so any claim of confusion was absurd. Gary had no use, so how could it ever have conflicted with Cohen’s use? Pam theorized that Gary might someday market chocolate chip cookies through Sex.Com, and that would not infringe on Cohen’s use of it as a sex site. Theoretically, she posited, Cohen might come back to court with a trademark claim if Gary abandoned the theoretical sale of chocolate chip cookies and reverted to selling pornography. She had run so far into the woods that she was running out the other side.

At the time, however, I had no criticisms. Pam’s words were just a merry tinkle in my ears as I watched Judge Ware’s face, the mirror of my fate. Reading the transcript today, Pam sounds like a fruit loop, but Cohen’s case had been marked for death, and Judge Ware was happy to hear a nice young lady prattle on with such confidence. He could adopt her argument. It was probably correct, or not too far wrong. More importantly, Cohen’s number was up. Judge Ware was going to pull the trigger.

Dorband stood up, and began by arguing, as he had for years, that Gary lacked standing to sue, because the domain had been registered in the name of Online Classifieds, Inc., a non-existent corporation. Although Judge Ware tried to maintain the appearance of judicial neutrality, he failed. His face registered disgust as he listened to about a hundred words of Dorband’s argument, then began rebutting it vigorously with his own counter-argument. Cohen, said Judge Ware, had used a forged letter to acquire the domain! His claim was based on no valid title! He had no standing to object to Gary’s standing! He had stolen documents produced under subpoena!

It warms an advocate’s heart to hear the judge reciting his own arguments, and I swiveled in my chair at counsel table to pass amazed and delighted looks to Tara, Ana, and Sue, who reciprocated with subtle nods.

When Judge Ware concluded there was nothing new from Cohen’s side, he set aside legal issues and just asked Dorband where Cohen was. When Dorband said Cohen wasn’t there, and didn’t have to be, it was not what the judge wanted to hear. He was sick of phantoms, of conjuration, of endless wordplay. Like a lion tamed by an enchantment, suddenly recovering his ferocity, he turned on the enchanter. His cool exterior dissolved, and sharp angles of displeasure showed in the folds of his robe. It was time to back off, but a weary Dorband dug in his heels, his silver head bobbing somewhat as he deflected one after another of the judge’s hostile questions. Judge Ware seemed shocked by the mildness of Dorband’s deflections, as if some emotion from him, some acknowledgement that the spell was unwinding, was required.

Judge Ware had wanted to be sure that Dorband had no evidence to rebut the claims of actual fraud and theft. We had exposed the workings of Cohen’s larcenous machine in our papers, and Judge Ware had apparently examined them in detail. He had clearly watched the video. Only that could explain his rage, barely restrained by judicial decorum, which revealed itself as a slow detonation proceeding in Judge Ware’s consciousness. That suppressed explosion was setting off an even bigger charge of outrage that had slowly accumulated in the judge’s mind, fed by all the evidence drawn from our briefs and exhibits -- Cohen’s lifetime of crime, his liberal use of forgery to take what was not his, the network of phony companies with nonexistent directors, the pipeline of cash, the entire map of Cohen’s Big Lie. Though it had all seemed unlikely upon first hearing, we had proven it all, even down to catching Cohen on video stealing bank records.

When Cohen decided to steal the Wells Fargo documents, he blithely staked the last of his personal capital on a wild bet, probably without even thinking about what he was doing. When the camera caught him at his game, he lost everything. After that, Cohen was just a thief, and the judge knew how to deal with thieves.

Judge Ware had been fully primed when he took the bench. He knew all he needed to know about Steven Michael Cohen, and nothing Dorband said had changed his mind. He was now permitting himself to go ballistic. His voice began to rumble like thunder. I turned back toward my crew and gave them the raised-eyebrows look. They returned the same look. It was real. We had arrived on the plain of judgment.

Like the wind that announces the onset of a sudden storm, Judge Ware swept the last of Dorband’s arguments aside, and declared that he was ruling in Gary’s favor on everything. He was directing NSI to immediately put the registration in Gary’s name. He was freezing all Cohen’s real estate and monetary assets, and he was going to require Cohen to pay a bond into Court to secure the judgment he intended to levy against him. He would reduce his order to writing during the noon hour, and we could pick it up after lunch. So that Cohen didn’t pull any clever tricks before then, he told Dorband to call Cohen immediately and tell him that the freeze order was effective now.

The thunder of Judge Ware’s voice had barely subsided when Dorband asked whether he was imposing a temporary or a permanent injunction. Judge Ware answered that it was permanent. Dorband then ventured to ask about the trial date. Judge Ware took umbrage at the very notion of a trial, as his response made clear: “Trial? What trial? There is nothing left for a jury to try!”
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:58 am

THE KING IS DEAD, LONG LIVE THE KING

As Gary’s team poured out of the courthouse, victorious and exultant, we tasted the sweetness of complete vindication, and immediate attention from TV news. Gary urged me to step forward to get my share of the acclaim, so he, Wagstaffe and I addressed the cameras in turn. We had lunch at the nearby Spaghetti Company, and frankly, the event felt incongruously ho-hum. Jim, Pam, Gary, Tara, Ana, Sue and I gathered ‘round the table and congratulated each on the work, but the true festive feeling that characterizes most courtroom victories was lacking. For one thing, the work was anything but done. After lunch, Wagstaffe and Pam headed back to their office, and I returned to the courthouse.

Although Judge Ware had spoken his order from the bench, warning Dorband to phone Cohen immediately and tell him not to move a dime from his left pocket to his right, this was only a stopgap through the lunch hour. We could pick up the written order at one o’clock. At one o’clock I was at the door of the judge’s chambers. I waited a short while until Judge Ware’s large, impassive bailiff opened the door and handed me the order.

I read each page eagerly and with amazement. Judge Ware had given us everything. His Order was virtually unchanged from Gary’s original wish list, in fact he’d just signed what we gave him, with minor alterations. He had filled in a number where Wagstaffe and Gary left a blank for how much Cohen should pay as a bond to secure his right to proceed to trial. It was $25,000,000. As I examined the Order, the wave of amazement that had engulfed me rose higher, bearing me buoyantly down the hall, down the elevator, and floating, all smiles, past the guards I’d gotten to know over the past year, out the doors, into the bright San Jose afternoon.

The Kinko’s across the street from the courthouse became our command post. The first thing I did was get a stack of fax cover sheets, and started faxing the Order to all of the banks and securities houses that held Cohen’s assets. I also arranged for immediate filing of the Order in the title records of the Rancho Santa Fe house and the Godinez house. Gary rented a workstation and started downloading congratulatory e-mails. His cell phone rang constantly, as callers he’d never talked to before in his life interrupted each other to offer congratulations. We had barely finished lunch, and the world knew. Not, of course, the world at large. Not my relatives, like my Aunt Pearl or my brother Aaron; not my fellow lawyers back in Oregon, not my friends and acquaintances. They wouldn’t find out until I told them. No, this world that knew all about our victory and that was suddenly clamoring at our door was a world I had never really thought about. It hadn’t mattered to me when I was pursuing Sex.Com. I hadn’t ever thought about it, but now we had arrived in Cohen’s world -- the world of online sex.

Although I’d spent nearly two years battling to acquire the crown jewel of Internet pornography, I knew little about the top players, or how they garnered so much loot. I was about to learn that Sex.Com produced extremely high returns on investment for a small number of very wealthy people, and they all wanted to keep those high returns coming. Indeed, as the phone callers made clear, there was nothing they wanted more than to be very nice to the new owners of Sex.Com, and to keep their advertising running without the briefest lapse.

Sex.Com was now our business, and Gary had an idea that seemed logical, but I had always avoided considering. He wanted me to be the lawyer for our company. Things had changed, and he urged me to step into a new role. I objected that I had a lot of discovery left to do to unravel the whole money web, and recover what we could from the wreckage of Cohen’s machine.

Leaning forward to emphasize his words, Gary said, “Don’t you understand? You don’t have to do that anymore!” I could quit working on subpoenas and discovery, trial preparation and all that other stuff. I could leave that for the hired guns -- Wagstaffe, Marty Moroski, and Pam Urueta. There was plenty of cash to pay them, and I was needed in the position of General Counsel for Grant Media, LLC.

So we made plans. Plans that ran rough-shod over the year-end holidays. We had to make the scene with a lot of people. People in New York, Toronto and LA, who ran companies with names like Crescent, Orgasm, and New Frontier. We had planned to end our victory by selling the name to the big-time adult media people, whoever they were, but now, as they all came calling, fawning, and obsequious, a different idea took hold. We could do this. We could run Sex.Com. Why not? We were smart, tough, and had proven ourselves in battle.

We were big in porn, and porn was riding the biggest wave in history, the earliest of early adopters of a technology that barely had a name. Suddenly, it seemed the name would have to be Sex.Com. I suspect that this vision had seized the entire porn world simultaneously, giving a big jolt to an industry that, despite its cutting-edge image, is actually dominated by some very old ideas. By unseating Cohen, we had accomplished the largest single power shift the porn world had ever seen. We had also done it in the face of great skepticism from the porn world itself. Ron Levi, Seth Warshavsky, and their pet lawyers Joel Dichter and Katie Diemer, had backed away from the battle, possibly bought off by Cohen with traffic and cash. Gary had turned down deals with other porn magnates, like Serge Birbrair. From the perspective of hindsight, many of the porn players felt as if they had placed their bets badly. The guy that they’d all laughed at as the self-proclaimed “Big Dummy” had turned out to be the Big Winner. Would Gary punish them all by actually converting it into a “woman-friendly” format, as the mainstream press had reported? That idea struck most pornographers as possibly the dumbest idea in the world, like letting your prize horses sit out the Kentucky Derby because you didn’t want them to get tired. Quite simply, their world had been turned upside down, and inquiring pornographers wanted to know -- what would we be doing with the site? We had them in the palm of our hand.

If this was baseball, we had knocked the ball out of the park, and it was time to take a victory lap of the bases. First base would be the Big Apple, to meet our new webhost and advertising seller, Yishai Hibari, whom Gary had chosen to run the website and collect the advertising wire transfers in exchange for fifteen percent of the take, paid monthly. The fifteen-percent number was considerably less than the proposal offered by Jonathan Silverstein and various others who had approached Gary immediately after the November 27th victory, so it seemed all right to me. Yishai thus received an immediate share in the venture equal to my own, just for being the bagman. Of course if I’d known how to hook up a job like Yishai’s, I wouldn’t have become a lawyer.
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:58 am

WITH FRIENDS LIKE THESE, PART 2

We met Yishai in a very stylish, expensive Manhattan bar and restaurant with sky-high prices. He’s a handsome Israeli man, partial to dark suits, and according to Sue Whatley, our ear on the street, the subject of mafia jokes. Ron Levy seems to take particular pleasure in murmuring that he never speaks ill of Yishai because he doesn’t want to sleep with the fishes.

The night we arrived, Gary and I were to meet Yishai at a very fancy restaurant where Gary surprised me by knocking back several large gin and tonics, while I drank a few beers. Yishai didn’t drink alcohol, and had an apologetic air, as if it were unfortunate that the world forced us to think about money all the time, but what was there for it? The evening was pure socializing, and we barely discussed business. He is a classical pianist, and seemed to have a protective attitude toward his wife. We exchanged a lot of platitudes about family values. When we parted, I felt like we had gone into business with a very serious man who had favored me with his most charming aspect. He wore his gentility like a protective suit for navigating the dark waters of sexual finance.

The next morning, Gary and I walked to a building not far from our hotel. Yishai met us in an upstairs office where he said they were opening up some new space to accommodate rows of computer desks. In a large, sparsely furnished conference room, Yishai and two assistants, a couple of former Mossad guys, gave us a presentation that projected live feeds from a high-speed Net connection on a big screen. They provided us with detailed statistics about our site that amazed me with their specificity and abundance. Type-ins were cascading into those magical six letters like rain into a mountain lake, a lake of pure liquid cash. It was dizzying. It was exciting. It was partly mine, and everyone acted like I was a co-owner of a very desirable asset.

But in the midst of the exhilaration, a dark tinge invaded my mind, and grew deeper as the hours passed surfing the Net on the enormous browser in Yishai’s Manhattan conference room. The big screen shimmered with the energy of millions of minds cascading in from everywhere, colliding with the images and words that populated Sex.Com. From our digital vantage-point, online humanity appeared as a vast throng of eyeballs speeding through a functionally infinite universe of colors, images, text, and video. The statistics Yishai provided showed nearly a million hits daily, sorted by the equivalent price per click being charged to each of the short list of buyers, some of whom were in for $50,000 per month.

The statistics also told a dark story. Although the site was nominally under our control, we were still selling traffic to the same people who had been buying traffic from Cohen, except for Jordan Levinson, whom Gary had insisted on dropping at once, rejecting Yishai’s entreaties on his behalf. The largest advertisers were Wired Solutions, Yishai himself, and Ron Levi, who had been buying traffic from Cohen through a straw man when we took over the domain. They were all running the same gross-out contest that had evolved during the Cohen days, a race in which graphic artists competed to find the lowest common denominator of human desire. Was it a fresh face receiving a rain of semen from a rigid penis all over her innocent face, splattering her eyes, and cheeks, matting her lovely young hair with slime? Perhaps it was a short video clip of an anal sex routine accelerated just a bit and pinched into a three-second loop. There were so many ways to say the same thing, and Sex.Com was the only place pornographers could say it to the whole world, without restraint. Yishai believed in Cohen’s stupid, direct approach, and feared any attempts to improve on it. Although Ocean Fund press releases had once crowed about a website “a thousand pages deep,” Cohen had actually kept the website to one page, with six banners costing fifty-thousand dollars each, and a single row of text links that sold for between six and nine-thousand dollars apiece. The one-page banner-farm format kept the cyber-real estate scarce, and accordingly expensive. Cohen set his rates, then let the industry integrate his charges into their pricing. Levinson said that with Cohen, it was always “his way or the highway.” All advertising revenues were paid in advance by wire transfer, and gratefully so. Serious pornographers were happy to pay for the traffic, especially those with the graphics skills and large image libraries to deploy the smut wonderlands that took the millennium by storm. Cohen had also given advertisers total freedom to post any picture or text link they thought would score a click, which kept the advertiser’s conversion rates high, and ad rates similarly so. You might say that, by combining totally free speech with a completely free market, Cohen had found the sweet spot at the top of the profit pyramid. Certainly Yishai’s report, with its short list of big numbers, made it clear that the status quo at Sex.Com was very profitable.

Cohen’s version of Sex.Com was popular for another reason that fans of open markets might appreciate -- the lack of intrusive government regulations. Cohen had never reported any of his transactions to the IRS, the Treasury Department, or any other agency of government. This leads to the possibility that some of the millions of dollars that Cohen had pumped through the Omnitec account was simply being laundered from various illicit sources, and may not have reflected real advertising revenue. After all, even AOL had to admit to doing hundreds of millions of dollars in “wash” advertising deals that were simply a way to kite checks for astronomical sums. Cohen was always dabbling in ways to inflate his income and skim a profit, and he wouldn’t have blushed at the opportunity to launder a few bundles of drug or gun money. This might account for occasional fluctuations in Sex.Com’s monthly revenue, like the month in 2000 when Omnitec received a million in deposits, a substantial upward deviation from the standard 400K. So you never know -- maybe Cohen really did have some friends in Caracas who were gunrunners -- I never went to see.

Even discounting total Sex.Com revenue somewhat for the possibility that Cohen was actively exchanging black money for white, there were plenty of real clicks being sold to pornographers for their conversion value. In those days, before Google had gone into the business of selling clicks, the term “conversions” was heard almost exclusively in porn circles. Conversions, as most every person knows now, are simply sales, cash transfers via credit card for website signups, that in those days usually cost $20 to $30 dollars each before merchant fees. Profit is calculated based on a simple formula, because certain website traffic will convert at an ascertainable rate. Some traffic is utter garbage from a pornographer’s viewpoint -- converting at low rates, or not at all. The question is, of course, who is doing the clicking? And in the case of people seeking pornsite conversions, how old is that person, and what is their sex? According to Fernando of Wired Solutions, Sex.Com traffic converted at unheard-of rates, suggested to him that the bulk of visitors were young and sexually inexperienced, typing in the most obvious Internet address to find the object of their desires. In the aggregate, they were clicking at the rate of around 200 clicks per second, and converting at rates sometimes as high as one out of fifty -- an unheard of rate during a time when conversion rates of one in two-hundred and fifty were considered extremely profitable. Fernando was a corpulent Latino whose face filled with delight when discussing the unbelievable conversion rates he had seen with Sex.Com traffic. It made me quite uneasy.

When we met in New York to formally sign the hosting and commissions deal with Yishai, we discussed ending the gross-out contest still taking place on the page. Since such agreements don’t always look right when you put them in writing, we verbally agreed that within thirty days, advertisers would no longer be allowed to display “penetration” or “girls who look underage.” We agreed to immediately stop running text links that smacked of criminality or conduct generally acknowledged to be depraved, like incest and bestiality. Aside from these small adjustments, we weren’t changing the site at all. We were afraid to scare off advertisers, and since the word on the street was unclear about Gary, we needed to reassure the markets. Yishai wanted to pour a pitcher of ice water on the idea that Sex.Com might become a “woman friendly” site, as we had suggested in our press release and court filings. Haha, very funny! As Steve Sherman had told me during our breakfast meeting -- “Get real, this is pornography!” The end result of the meeting with Yishai was that the Cohen format stayed in place. One page of banner ads, a list of advertisers you could count on two hands, and pure profits of at least $400,000 per month. Not a formula you want to tinker with.

Toward the end of the day, Yishai took us to meet his boss, Richard Martino. They talked about how their company, Crescent Communications, was about to buy a midwestern phone company. They took us on a very boring facilities tour, which consisted of views of eight accountants housed like cattle with their computers, calculating all day long. On the way out of our meeting with Richard, Yishai pulled me aside. They would be happy to pay $15,000,000 for the name -- half now, the rest in payments.

Back in the hotel room Gary and I were occupying jointly at Yishai’s expense, I told Gary that Yishai had offered to buy the domain. He responded as I’d expected, utterly disinterested, and said he was going out. I was alone in New York City. I took a shower. I lay in the tub, letting the numberless drops cascade off my body into the narrow beige porcelain concavity. The hotel tub was small and cramped in the supposedly fancy hotel. Apparently, regardless of how much money we were going to have, Gary would still be extremely parsimonious, and the facilities could still be banal.

But I had a much bigger problem. All the money in the world would not change the fact that I was getting rich on the exploitation and degradation of women. I was very tired, and felt like crying as I lay in the tub, feeling that every drop of water was a click of someone accessing an image of some girl being photographed forever like a captive animal, and some poor sucker’s cash rolling down the drain. I felt like the sewer, collecting all those unwanted moments and mistakes made by young, foolish people with basic needs for love and money. I felt for the women and men, embracing each other lovelessly, doing things they’d balk at doing at gunpoint, just for a little cash. I felt like I was riding with my rich friends on an ocean liner floating on a sea of garbage. I lay in the tub a long time, wasting water and listening to it gurgling down the drain.
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:59 am

WHAT A FINE CHRISTMAS!

Leaving New York, Gary and I hopped a plane north to Toronto, crossing into the comparatively relaxed atmosphere of Canadian airports and hotels, where I suddenly realized Gary and I were really keyed-up. I had adopted his habit of walking bent forward, leaning into the wind of the omnipresent opposition, pressing ever onward. Our impatience didn’t quicken the slow pace of the Canadian airport clerks, who questioned us mildly and used ball point pens to fill out new airline tickets after they bumped us off our flight for snow up north. It felt like a plot designed to cause the brains of time-conscious Americans like Gary and myself to explode with rage and frustration. Get a printer!

In the Canadian customs waiting area, I practiced relaxing my mind while closely studying a display case of all kinds of stuff you can’t import into Canada, like rhino horn, endangered birds, live snakes and other Asians-themed novelties. The display looked like it had been assembled by a seventh-grader for Science Day. It was dull and obvious, but far more interesting than the concrete floors, metallic surfaces and scuffed vinyl of the baggage depot. We were eventually asked to queue up and be subjected to a quick, skeptical eye from an official servant of the Crown, before being admitted to Toronto, the city of snow and concrete.

In the cab from the airport, Gary and I fiddled with our cell phones, answering calls and inflating our self-importance as we rode through the dark. Sue had set us up to meet Dave Vanderpool from Python and Meir Strahlberg of Orgasm and Date.com. We met in their large spacious offices, where racks of caged servers pumped cash in a clean room, and rows of computers awaited the workers who would arrive again tomorrow to optimize and upload sexy pictures to the Net. The layout was more interesting than the stable of accountants Yishai had shown us in New York. We talked about Date.com, and Gary collected kudos for creating Match.com. After getting acquainted, we left the office and walked down quiet, dark streets to an opulent bar with huge ceilings and black floor-to-ceiling wall drapes. Men were smoking cigars and leaning back with exaggerated ease. There were few women anywhere, and none at our table.

I played my role as consigliore to the big man at Sex.Com, and received encouragement for my performance from everyone except Gary, who was noticeably off his feed. But our companions were jolly enough, and while we sat in the opulent, sophisticated lounge, Gary tried to seem interested in the conversation. Sitting back sipping a pint of good, Canadian draft, I contemplated the appearances of our industry colleagues. Demian, who worked for Meir, was devilishly handsome in goth attire, long black curls and a goatee. Dave was a tall, blonde impeccably groomed Northern European sophisticate who looked like he would be comfortable anywhere the elegant are found. Meir’s delicate frame was smoothly packaged in preppy clothes. He made eye contact, and used delicate gestures and words when he spoke to me. The three made good company, and seemed to prove that minting money on the Internet needn’t turn you into a grim servitor of cash like Yishai or his boss, Richard Martino.

We dined at a large, round table stacked with silver, china, and starched napkins carefully folded into fan-shapes that looked like chickens roosting on our plates. There we sat, five knaves dining like kings, and discussing the electronic skin trade. Demian talked knowledgeably about “content,” what pornsites sell, saying more is always better. Orgasm.com offered several hundred thousand images, streaming videos, a silly astrology column that lampooned sun-signs for their sexual foibles, and various other gimmicks. Suffice it to say that having a dirty mind seemed to be an asset in this business, and discussions of the product led to the inevitable conclusion that inducing masturbation among the clientele drove profits. Hence, the slogan for Orgasm.com was “keeping Kleenex in business . . .”

I thought perhaps we’d have some fun with these guys, but Gary’s mood went completely sour sometime during dinner, and he decided to go to bed early. If I’d thought about it, I might have deduced that forced breaks in Gary’s pharmaceutical regimen, such as those imposed by air travel, might be causing the downturn in his mood that had been evident for the last several days. After Gary left, I headed out to the streets with Meir, Dave and Demian. They teased each other like kids as we navigated the icy sidewalks and heaps of dirty snow. Dave was minding the business, though, and quickly flagged down a cab that we piled into noisily, jostling and joking. The club they’d chosen for our evening entertainment offered up two floors of nubile women gliding about in revealing outfits, and lounging with customers on large couches and chairs. When they weren’t working the customers one-on-one, they danced sensually in brass-railed enclosures, like imaginary creatures trapped in bottles of colored light. When the music stopped, they were freed from the spell, and moved about the railed stages, squatting on six-inch heels to collect their tips from the floor, while murmuring thanks with their beautiful mouths and eyes.

Demian made the most of our entrance. The boys were obviously known for their generosity. We all settled down among soft cushions and chatted while various women came up to talk with us and hang out. They even seemed to actually want to talk to us. Given who I was with, I figured they did a certain amount of recruiting here, so the goodwill I felt might be genuine. After engaging in the obligatory good-natured ogling and salacious talk, we settled into a mood of professional relaxation. I chose a golden-skinned Maltese woman with almond-shaped eyes and a lovely smile as my conversation companion. I rarely want anyone but my wife to push her ass in my face, and once I made it clear that she could relax, that I was having a good time just sitting next to someone as pretty as she was, and that my friends were paying the fee for her idleness, she was good with it. I suspect that most exotic dancers have kids, and this young lady fit the mold. We talked about her little boy, and how she enjoyed her work because it allowed her time and money to care for him. I drank several more Canadian beers, and after a couple of hours, the place was closing, so we left. The party broke up on the sidewalk, with Demian taking off by himself to walk home, weaving slightly around the mounds of snow. Meir and Dave flagged down a taxi and dropped me off at the hotel, on the way remarking that in this city, the cops keep an eye on the prostitutes to make sure they’re okay.

Back in the hotel room Gary and I were sharing, he snorted and gasped through his fitful dreams. I don’t know about now, but in those days, he slept poorly, and while I’m not a light sleeper, it could keep me awake listening to him struggle with basic respiration. But the beer wrapped me in a blanket of oblivion, and when I awoke, it was a new day, and we were on our way back to the States.

From Toronto, our plane drew a great big diagonal line southwest across the continental United States, landing in LA, where we had been invited to attend the Christmas party for New Frontier, the only publicly traded U.S. company dedicated to selling sex online, and trading on the NASDAQ under the symbol NOOF. Gary and I had been talking with Greg Dumas of New Frontier for months, going back to the days when Gary was trolling for bankers to help with legal fees. Of course, like all the other smut dealers, New Frontier hadn’t taken us seriously, or responded in any meaningful way to our funding overtures, but hey, that was before the victory. Nowadays, wherever we went, it was all a big chorus of, “We love you, Man!” So that’s what we’d grown to expect, and why we were here, a couple of days before Christmas, looking for a rented hall near Sunset and Vine. I was on my own turf, and found the location easily in the rental car, but as had become the norm, Gary seemed bored and distracted.

I soon realized that we had been invited to the classic year-end LA company party, where corporate bigwigs and their wives are distributed evenly among the circular banquet tables, rubbing elbows with middle managers in a ritual atmosphere of artificial bonhomie. It was so familiar. We had the Nazi-style bouncers with muscles bulging under their black t-shirts, sporting cropped blonde haircuts and surly faces. There was a spread of shrimp cocktail, a vast array of cheese cubes, veggies with dip, and an open bar. Folks were eating under the bug lights out on a patio, where rented propane heaters dispelled the chill of the ocean breeze blowing up Sunset Boulevard.

I had endured similar events a half-dozen times during my years in the LA lawfirm scene, and immediately sensed that this was going to be one dull evening. My expectations were fulfilled with a vengeance, as Gary and I were virtually ignored in the glow of self-love radiating from the NOOFers. Whether blinded by the glare of the radiant heaters that warmed the outdoor dining area, or simply the glamour of their own splendid empire, not one bigwig did what Gary expected -- stop everything, move people aside, and seat him at his table as a guest of honor. Apparently, Greg Dumas had failed to circulate a memo about how to court Gary. Not one person approached with a rapt look to ask him big questions and bestow their admiration.

As the evening crushed down on us, I absorbed the poignant absurdity. New Frontier had actually outdone itself with the music, supplementing the DJ’s sonic output with what has now become a commonplace, but was then rather unique -- a handsome, energetic male dancer, his naked upper body toned by the southern sun, his lower body swathed in an Indian-style wrap, feet as bare as if he had been performing on Venice Beach. He was beating a big conga drum, dancing, singing along to the recorded music, his face shining with ecstasy. He was like an ad for health, youth, beauty, and celebration.

A throng of office-help swirled below the bare-chested dance-leader. The messenger boys and photocopy guys were outdoing themselves in their black suits, deploying clichéd male dance postures to ensnare the skinny LA women who are only magnetized by moves they’ve seen a thousand times before. The event inverted class relations for one night, during which the subordinates demonstrate how much they enjoy the event, in contrast with their bosses, who are so stiff they never make it out to the dance floor, or just take a few turns for the sake of the night. Their uptight asses shake weakly as their silly smiles say it’s all good fun, the boss can never dance -- that’s not how it works -- and everybody’s dignity survives intact.

I sat on a thumping speaker above the dancing crowd watching Gary from a distance. I’d left him hounding a couple of New Frontier execs about “Where’s my escort?” Looking around the room at the abundance of top-shelf booty, I could understand Gary’s take on the scene. I don’t think he seriously meant he expected an escort -- he hadn’t asked for one in Toronto, where the service could’ve been easily and lawfully provided. He was just ribbing the self-stuck, ignorant NOOFers -- “Isn’t this a sex company? Aren’t we in LA, ground zero for sex and money? Isn’t it Christmas? Don’t I own Sex.Com? Where are my presents?”

Any serious hopes for a linkup between New Frontier and Sex.Com was doomed that night. Some weeks later, I heard from Gary that New Frontier had offered to buy Sex.Com for three times yearly revenue in stock, approximately $24,000,000. Since New Frontier rose markedly in 2001, this would have been a nice deal, but if the company really had any interest in courting Gary, it wasn’t visible that night. Too bad -- New Frontier had legitimacy, and even though it had over fifteen-thousand domain names, Sex.Com had better web-traffic, and much higher conversion rates. New Frontier was also a public company with relatively transparent finances and big contracts to supply adult cable-TV programming. Cross-marketing through Sex.Com would have given them an instantly recognizable brand in an industry where aside from Playboy and Hustler, brands don’t matter. Sex.Com, with its unforgettable six letters and Internet cachet, could have become the third most recognizable name in the minds of sexually curious men everywhere. My old friend Steve Marshank strongly advised me to make this deal happen, and I didn’t listen. But as Steve Cohen was fond of saying, “If wishes and buts were apples and nuts, Oh, what a fine Christmas we’d have.”
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:59 am

“S” IS FOR “SEND”

From L.A. we returned to San Francisco to face an inevitable, tension-filled exchange. It had been nearly a month since we got control of Sex.Com and with the assistance of Richard Idell, Gary had formed Grant Media, LLC and established a bank account into which Yishai had already deposited $385,000. Gary had been sitting on a bill for eight-hundred and fifty hours worth of legal work I had done on credit, since around July of 2000, when Gary’s money got scarce, and what he had went to costs and Wagstaffe’s firm. I hadn’t said a word about the money since November 27th, so when we got back to Gary’s new house on Third Street, I had to raise the issue.

I only had about a four-hour layover in the bay area before my flight left for Oregon, so the exchange was time-pressured. After we got back from the airport, I sat down with Gary in his bedroom, amid the chaos of jumbled bed clothes, heaps of clothing and the usual snowfall of papers covering his battered gray desk. I sat on the bed, and Gary sat on his office chair while I explained that we needed to do our 15% split now, and I wanted to be paid $10,000 in costs that I’d advanced. Also, before we won the name, Gary had said that we would both have signature authority on the account. It was time to give me signature authority. Gary’s lips became tight, as he shook his head and said, “No.”

Gary said before we figured my cut, I should pay him back for all the money he’d paid Wagstaffe and other lawyers to help with the case. I figured I owed him 15% of that expense, but he didn’t agree, and said I owed him all of Wagstaffe’s fees, several hundred thousand dollars. Our written agreement didn’t say who would pay if Gary hired more lawyers, so we had a bit of a problem, but I couldn’t wait to resolve it. We reached a temporary resolution by agreeing we’d leave $85,000 in the account, and divide the remaining $300,000 between us, with me receiving $45,000, fifteen percent of 300K. My unpaid hourly fees would wait, and so would Gary’s claim for reimbursement of Wagstaffe’s fees.

I waited outside Redwood Bank on Montgomery Street in Gary’s car while he wire transferred the forty-five thousand to my account. When he got back he gave me the pink receipt for the wire transfer. I was much relieved and thanked him for the payment. The atmosphere between us was troubled as he drove me back to the airport. In the familiar atmosphere of the Crab Pot restaurant on the SFO departure level, I reflected on my situation, and ate a crab sandwich on white drenched with Tabasco sauce, preceded by a bowl of clam chowder. A week’s worth of tension had built up inside me, so I had an oversize glass of beer, then another. Watching the airliners and service vehicles prowling the tarmac outside the restaurant windows, taking passing notice of the TV news on the screens behind the bar, I encouraged myself to relax, but it was a tough sell.

When I got back to Oregon, I was able to pay some bills, and began considering the process of closing down my law practice to take a job as house counsel for Sex.Com. The more I thought about it, the less I liked the idea. The meeting with Yishai and the look of the website scared me. Word was getting around among the lawyers in town that I had won the Sex.Com case. Sooner or later it was going to be discovered by one of the enemies you make in some profusion when you practice law in a rural area. Some lawyer might report it to the Oregon State Bar and make an ethics complaint, saying that owning an adult website that displayed free fuck movies without the barest age-verification requirement, was conduct “likely to expose the legal profession to disrepute.” Money comes and goes, I realized, but you can be a lawyer your whole life, and as I now knew more clearly than ever, a lawyer can spin straw into gold, given the right opportunity.

So I started writing Gary an e-mail which began with “Thanks for the offer of a job,” and ended three pages later after a long discussion of a lot of my internal gripes about his behavior. I didn’t plan on sending it right away. I’d written at least a half-dozen e-mails that I’d never sent to Gary, venting my frustrations first, then adopting a more thoughtful approach after considered reflection. I had planned to do the same thing with this one -- get it off my chest, then come back to it and say only the important, essential stuff. I usually composed large documents in Word, and without thinking about it, I had written the whole thing in Outlook Express. After venting for I while, I went to do a shortcut save, and ZIP! The email was gone. It went. Gary had it. Oh SHIT. In Word, CTRL-S means SAVE. The CTRL key is right next to the ALT key, which was what I hit, and in Outlook Express, “ALT-S” means “SEND.”
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:59 am

EL DORADO

“In El Dorado-town there is a great bullfighter.
His hair is red as blood,
His eyes are screamin’ blue.
And when the gate goes up,
The crowd gets so excited.
Then he comes dancin’ out,
Dressed in gold lame’.
He kills the bull
And lives another day.”

-- Neil Young, Eldorado


In Arizona, the power of precious metal has shaped the people and the land. My mother grew up in a town called Morenci, that once had the world’s largest open pit copper mine. We went there only once. The town was a big hole in the ground, with tiny trucks maneuvering down a spiraling road into a huge, flat pit. We drove past the few buildings that lined the perimeter road ringing the enormous hole. I asked my mom where her house was, and she gestured toward the center of the gaping chasm, laughingly responding with only a single phrase, “Oh, it was out there, honey.” We never discussed it again.

People have seen mirages of great wealth in the desert. As a child I learned of Pizarro, who went seeking a utopia and ended by kidnapping the Inca God-King and ransoming him back to his people for a roomful of gold. After accepting the gold, Pizarro killed the Inca king anyway, ending the life of a man known to his people as “The Son of the Sun.” Pizarro himself was murdered a few years later by his co-venturers, who thought, heaven knows why, that he was too greedy. I heard other tales of gold, like the story of the Lost Dutchman Mine in the Superstition Mountains east of Phoenix and Mesa, where a goodly number of folks have died inserting their lives into a puzzle of their own making.

I was most affected by The Treasure of the Sierra Madre, by B. Traven. It was the first novel I ever read, at the tender age of four, and my unforeseen choice of reading material caused some concern among the grownups. The cover of the paperback edition I’d found on my father’s bookshelf showed a gang of grizzled miners wearing clothing worn out from hard labor, battling each other amid the ruins of their mining camp, each one clutching a gun and a bag of gold. From rents in several of the bags, precious gold spilled in long thin triangles. As I read the story and understood the plot, it broke my heart to see the bright dust piling up in mounds on the desert soil. The men had extracted it through months of backbreaking labor that had, nevertheless, been filled with the joy of mutual effort. I wanted to end the madness that had caused these men, flush with the fruits of their labors, to unleash hatred and violence upon each other, when all they had to do was share. I wanted to stop the gold from spilling on the ground, or catch at least a little of it in my own cup. Perhaps I was pained so deeply by the story because of that very love for gold that destroyed the miners in B. Traven’s book.

Like a poisoned arrow, my email went straight to Gary’s heart. He was on the phone to me within seconds. It was not the sort of thing he liked to receive. I did not know what to tell him except that I hadn’t intended to send it, and argued that the contents were not that inflammatory after all. In truth, I had somehow obscured from myself how gravely I had injured myself. A bizarre twist of fate had revealed me out of uniform, less than perfectly loyal in spirit. I now have no clear memory of that time period, when the magic I was handling exploded in my face. I only know that I went on, because the damage had been done and the only way was forward.

There were two dedicated intercessors -- Sue Whatley and Phil Father, who now held a nominal two percent interest in Sex.Com, Gary’s gift to Phil for being his partner in Kremen, Father & Partners (there were no partners). It now seemed like a good thing I had decided to attend the Internext trade show in Vegas during the dawning days of January 2001. At first I thought I’d skip it, and leave it to Gary, Sue, and Phil. But after hanging out with the Python and Orgasm people, and spending quality time with Yishai, I thought perhaps I should show my face at the trade show.

Gary had given Sue Whatley the job of exploring the big players in the online porn business. She had identified the usual suspects -- Luke Ford, the gossip columnist, Ron Levy, the King of CyberErotica, Jonathan Silverstein, a perennial player, Serge Birbrair, and various others. The goings-on at Internext were apparently somewhat risqué, or so I was lead to believe, which is why I at first thought it would be more lawyerly to not attend. When I changed my mind, and decided to go, Gary was grumpy about it, and said he would allow me to come. And that had been before he got my draft email. Now that Microsoft Outlook Express had spilled the beans about my discontent with the new regime, Gary simmered on medium high all the time. He ignored my emails or replied so tersely it was clear he was freezing me out. Still, I figured I’d make the trip, and Sue rearranged our flight and room plans easily. Gary and Phil had booked rooms at the Hard Rock Hotel, where ostensibly there were more chicks. Sue and I would share a suite at the Venetian, the convention venue.

So there I was, in the lobby of the Venetian Hotel and Casino, with its huge, curving portico, and doormen in pseudo-Italian outfits, equipped with wireless mikes that enabled some of them to sing operatic airs while hailing cabs. It was all dissonant and dazzling, in that offhand way Vegas has of jumbling megalithic glitter into a supposedly cool thing -- the Strip! In this glamorous environment, Sue and I were short on glitz. A tall woman, Sue wore big, black, platform-soled boots, and concealed her entire person under a full-length pink flannel coat that looked a lot like a housecoat. Wearing Dan Post boots, black Levis, and a tired leather motorcycle jacket, I didn’t look like I needed to change companions. She was dowdy and I was scruffy. We were perfect for each other. As we stood in the long line snaking up to the desk, we observed crowds of young men in leather sport-coats, wearing jewelry, occasionally looking up from absorption in their cell-phone conversation to hail the person they were talking to. They seemed to be there for “the Show,” as industry-types refer to the yearly Internext bash. There were geeky types, gothish people, and occasional gaggles of chicks who looked like they might be passing out literature or adorning a trade-show booth.

Sue and I checked into the room, which wasn’t a suite, but was a split-level big enough to appease my desire for a small slice of luxury. After freshening up, we headed back downstairs to face my first post-email meeting with Gary. Extremely stressed is how I would describe my condition. On the elevator ride to the casino floor, a young man and woman, both impeccably attired, were going down with their bags. The woman was a breathtaking brunette around twenty-four, with hair like chestnut-colored silk falling to well below her shoulders. The young man had sandy brown hair, wore clothing that was casually high-class, and looked like he belonged behind the wheel of a Porsche.

The brunette asked us “Checking in?”

“Yep,” I answered, with a smile.

With a slightly rueful expression, she said, “We’re checking out.” She paused, then supplemented this with an explanation, “We’ve been here a long time.” Silence. The gentleman was reasonably handsome, but seemed drained of virility. What was this sad story all about? A dentist who had left wife and kids, being jerked back to reality? An oil scion who’d just run through his trust fund, responding to a warning call from his accountant? Something had turned out badly, probably at the gaming tables. The elevator doors opened, and the sounds of the casino flooded in -- batteries of slot machines chiming out the promise of abundant returns for those eager to achieve the unlikely goal of instant riches. We crossed the gaming floor to the Grand Lux Restaurant, where Gary and Phil were waiting. On the way, we saw scores of the young industry players dressed identically in black-on-black, leaning against craps and roulette tables, looking slightly bored with what they hoped seemed like big bets.

Inside the Grand Lux, we found Gary and Phil in a booth. Phil rose to meet us solicitously, while Gary remained seated, his clenched right fist planted firmly on a hardcopy of my excessively candid email. He had grown a goatee, and someone had joined it to a comb-over that accentuated his bald spot. He looked like maybe he had hired a stylist, so I complimented him on the look. He responded with an acid smile that suggested I did not mean it. Shallow breaths heaved his shoulders, as if stoking a fire in his chest. In the booth that seated four, I sat diagonally to Gary, maximizing the available distance between us, in an effort to avoid spontaneous combustion.

Into this situation, Sue and Phil maneuvered expertly like a couple of bomb squad vehicles covered with blast cushions, spraying foam everywhere. Both were extremely obsequious to both Gary and myself. Phil asked me to reconsider my decision not to join the company as an employee, which was of course flattering, because I wasn’t sure Gary wanted me as a Grant Media employee, anyway. It seemed that Phil had prepared the ground well, though, because he was focused on getting me back into the company. I had to be okay with that, because I was sure Gary would not make it easy for an absentee partner. Within twenty minutes, the atmosphere had cooled considerably. The igneous heat that had suffused Gary’s body retreated into a tiny point of nuclear heat, gleaming in the recesses of his eyes. In my heart, I fervently hoped that I could withdraw the sudden mis-step that had abruptly landed me on the wrong side of the Rubicon.

We finished our dinner, and with rising spirits, headed up to our room for more refreshments. We were putting the past behind us, and Sue was now in control of our agenda. The first stop. she informed us, was Yishai’s party, on the upper level in a white-tablecloth Italian restaurant Yishai had rented at a reputed cost of $50,000. Not bad for a business expense, and less than a month of his share of Sex.Com revenue. It was so nice knowing we were helping him stay afloat. As Gary and I strode through the Venetian mall under the big, fake sky they’ve painted on the ceiling, past the landlocked gondoliers in their marble-lined canals, he threw his arm around me and looked into my eyes, enthusing, unbelievably, “Isn’t this great?” To which I was only able to agree. Hoo-ya! We were team Sex.com.

Yishai’s party was just like Yishai -- so upscale and lavish that you could mistake the guests for actual rich people. Polished silverware, white table cloths, spreads of higher-quality fare, and plenty of good-quality wine and champagne. It was not much of a surprise to see Joel Dichter. But when my eyes focused on his conversation partner, and I realized he was talking to Katie Diemer, it was dejavu all over again. Since they were the only people I knew there, I said hi to Joel and Katie. Joel seemed amused at my presence at the party, and Katie said, “Well, this must be quite a feather in your cap.” Ah yes, the feather in my cap. I had almost forgotten about it, worried as I was about the color of the cap itself, which I was certain had started out white, but was looking increasingly grey, or even darker. I acknowledged her compliment and took my leave of the compromised pair.

Then came another bizarre exchange, as our host Yishai importuned me by seeking amnesty on behalf of Jordan Levinson, Cohen’s Sex.Com bagman. Jordan, who had been scarfing up a percentage of advertising sales, was blameless, Yishai explained. Hardly. I knew Jordan was one of the younger members of a family of seasoned fraudsters with their roots in phone-sex (euphemistically called “audiotext” in the industry) and phone-fraud. His uncle, I believe, was one of the celebrated rate-gougers at Crown Communications, a company that the FTC had taken down a few years back. I wanted to go to the bathroom and see if someone had written “DUMBASS” on my forehead, because why would I want to keep doing business with Cohen’s confederate? Nevertheless, Jordan now stood before me, impeccably garbed in black-on-black, beseeching me to please understand that he had never been in sympathy with Cohen, and really wanted to keep buying traffic. Jordan had been buying less than $10,000 per month of traffic through small text links that reputedly converted at a very high rate, so there was plenty of money still on the branch for him, waiting to be plucked, even though he was already stuffed with stolen Sex.Com money. He asked me to please not sue him. I was disoriented. Yishai was our partner now, and being a turncoat seemed to be the way of things around him. I looked around. Where was Gary? Sue sidled up to tell me that Gary was, at this very moment, telling Katie Diemer that he would sue her. Accordingly, the fight with Levinson would still be on as well. Levinson’s peace overtures were poorly timed, and left me feeling as confused as a field commander receiving a call that should have been routed to the spy guys.

I felt completely out of place wearing a tattered motorcycle jacket amongst all these well-dressed desperadoes. I stood alone, looking listlessly at the little round tables covered with wineglasses and plates bearing abandoned wedges of brie, cut veggies, and fractured water crackers. I felt like I had lost my sleek profile. My black jeans were crumpling down, bagging about the knees, and the heels of my boots felt big and heavy. Gary was still sporting the rumpled sweatshirt that gave him his Michelin Man profile, but it wasn’t radiating any Silicon Valley geek cachet. It just looked like he was cheap and clueless, especially with the new hairdo and goatee. Sue was humbly moving about in the midst of all the refined vampires with downcast eyes. Christ, I thought, Gary should have bought her a coat. Phil Father was elegant in his own black-on-black outfit, but was obviously just window dressing. I had to face it -- in this crowd, the Sex.Com crew was nikulturni. The experience must have depressed Gary, too, because when we left, he and Phil headed back to the Hardrock Café, ostensibly to look for chicks.

As night turned to morning in the sunless caverns of the Venetian, I stuck with Sue, whose ever-accommodating shy smile, knowing eyes, blond curls, baby-like features, and throaty laugh increasingly reminded me how nice big German girls can look. She was playing a lowbrow, supersized ingénue, and managing to draw more favorable attention than I would have expected. She was blossoming in the scene, making connections in person with people she’d been gabbing with for months on the Net. She didn’t look like a model, which was a plus, because we avoided awkward exchanges and were able to answer inquiries by jointly presenting ourselves as the Sex.Com lawyers. Besides which, she was comfortable in an environment where sex, sex toys, fetishes, bestiality, and other marginal subjects fed bottom line. Sue was quickly becoming one of the boys, mixing easily with important players, and I was very thankful for her knowledge of the business, about which I was still fundamentally clueless.

Industry insiders usually turned adoring when we said we were the Sex.Com lawyers who had beheaded Cohen, the old dragon. It had been an upset victory, because no one in the industry thought Gary had a chance of knocking Cohen off the throne. Paul Wolfowitz should’ve been there to see what it’s like to be received as liberators, because we were the toast of the night. We were receiving accolades for making the world safe for ordinary, decent smut peddlers. I got a sloppy kiss from a porn star. We were the new face of Sex.Com, and a kinder, gentler face it seemed, no doubt, as long as you were looking at me or Sue.

Left to ourselves, Sue and I wandered through hotel lobbies, across gambling floors, into restaurants and bars, collecting kudos, networking and passing out Sex.com business cards that Tara had printed for us back in Oregon. They had vintage erotica pictures on them and looked humorous and light, but a little ambiguous. Eventually we made it back to our room and turned in for the night. The next morning, Sue had arranged a big meeting with Ron Levy, at his request. We were supposed to hook up with Ron’s people on the show floor for directions.

The next morning, Sue and I were up, taking care of business. The trade show exhibition floor was enormous. About three hundred booths vied for attention in a room big enough to store a couple of jumbo jets. Above us hung thirty foot banners displaying enhanced blondes overprinted with logos in blue, pink, yellow and silver rendered in visual perfection with high-tech printing. Website logos were everywhere, notable for the extreme obviousness of their appeal -- “Hardcoremoney” -- “Silvercash.com” -- “Cyber Erotica” -- “Porn Profits” -- “Babenet” -- all rendered in bright colors and dynamic characters. The air was shimmering with skin tones, bright colors and metallic sheen. Precise, crisp images of idealized females are the product, and they received pride of place at this exhibition.

Visually, the scene was titillating, but the audio track was tedious. The theme music for the sex industry is a blend of featureless beats that demonstrates disrespect for all legitimate musical forms. At the CyberErotica booth, you couldn’t get away from the tired sounds, because Ron had hired a half-dozen slightly past-prime Barbies to bump and grind to the rhythmic dreck that oozed from banks of black loudspeakers. The exhibition of tired hip-swiveling, listless shoulder-rotation, arrogant chin-pointing, and bored pouting would sap anyone’s enthusiasm for the sex business. Where, I wondered, had they found these women? They lacked funk, spunk and everything else that would have enlivened their presentation of God’s basic handiwork. No wonder Viagra was so much in demand.

The desultory dancers adorning the CyberErotica booth were appropriate, though, because Ron Levy is oblivious to everything about sex except its ability to generate conversions. Call it professional focus. And Ron had a proposal he wanted to present to Gary in the secluded comfort of his hotel room. We approached a member of the scurrying posse of Ron-worshipers clustered around his trade show booth, the largest on the floor. We met Ron’s Canadian lawyer, and he gave us the room number and directions to Ron’s extremely expensive room, which was off in some exclusive wing of the hotel. Ron was ready, so I called Gary and Phil to request their presence at the Venetian. Phil said he’d be getting Gary moving, but it might be tough.

I think Phil had to use a winch or other device to get Gary out of bed, because he looked about as bad as he did when Dorband asked him if he ever took drugs that might affect his memory. Whatever he’d ingested, it seemed to have obliterated all memories, going back to childhood. I felt his pain. He could barely talk, and I was sure that whatever he was hearing, he wasn’t understanding. He looked like a sick dog that might have to be put down, because it was just suffering too much. Gary had always gotten sweaty palms when he thought how it would go with Ron. It was by now part of the lore of the case that Ron had invested $150,000 in Joel Dichter’s representation of Gary. Rumor had it that Ron felt some sense of entitlement based on that investment, even though Gary had fired Dichter and Diemer years before, declaring the whole deal a dead letter.

I wasn’t worried at all. We owned Sex.Com. If Ron wanted to make a deal, we could evaluate his offer just like Yishai’s or NOOF’s or anybody else’s. It would have been nice to have Gary’s brain operational that morning, but for the moment, it wasn’t taking calls. Gary was going where he was led, up the elevator and down the long halls of the Venetian to the wide double doors of a suite that Sue told us Ron was renting for $4,500 per night.

Admitted to the suite by a black-T-shirted CyberErotica servitor, we walked into a large white room where Ron was sitting at the head of a conference table a short walk from the entryway. Two packs of Marlboro Lights were stacked to his left, and he occasionally adjusted their position with his left hand, squaring them up parallel with the edge of the large, white table. We sat at a comfortable distance from the great man, Gary and Phil on one side, Sue and I on the other. After getting Gary’s approval in the form of a light nod, I took over as the speaker for Sex.Com. This wasn’t difficult, because Ron made what seemed like a reasonable proposal -- CyberErotica would license the Sex.Com name for $400,000 per month, and would pay us 40% of all the money over that amount that CE brought in from the website. It was a one-year deal, renewable. Ron had no paperwork to review, but if we were interested, he’d have his lawyer write it up. I said sure, write it up, and with that, the interview was over. We finished our coffee -- way too strong -- and were back out in the hall. For me, it was just one more experience with astronomical numbers and blasé pornographers. I was getting used to this. Gary, relieved simply to have a stressful meeting behind him, caught a cab back to the Hard Rock with Phil.

I accompanied Sue out to the front of the Venetian so she could have a smoke, and there we met a balding, sixty-ish English guy, puffing his unfiltered cigarette with earnest enjoyment. Sue introduced the fellow, who was dressed as unstylishly as we were. His name was Mike Sweet, aka, “The Dirty Old Man,” a Canadian porn star. Mike had the laconic style of a fellow who has no real point of connection with the social aspect of the industry, claims he knows zip about chicks, money transfer, etcetera. His partner, Steve Sweet, he said, had brought him to Vegas for the show. He didn’t know what it was about, didn’t care. Mike droned on stylishly, exuding grandfatherly amusement for the whole affair. Within six months, I would be working for Mike, and I would be privy to his true name, his true passions and just how difficult a job it is to be an aging porn star. Mike has a fascination with military history, and an extensive knowledge of many of the more frightening arts of persuasion. He has, on occasion, paid pain-resistant models one-dollar-per needle-insertion. That’s Canadian dollars. The top earner took home $200 bucks. When I got to know him, Mike became scary -- not like Yishai, or Ron, or Gary. Scary in his own way, because his mind went into places that I feared I was never meant to go. But at the time, he seemed like a sweet old porno grandpa, involved in some kind of bizarre and profitable family enterprise.

At a lunch meeting later that day, Sue and I met with Fernando, Ben and Mike from Wired Solutions, which had been buying $150,000 of traffic from Cohen’s Sex.Com and had maintained that level of buying after Gary took over. These were, by definition, customers, so we wanted to treat them well, and show an interest in their business. Fernando was a moderately obese young man of Latino ancestry, who at that time owned a place in Barbados, which he said got very claustrophobic after a few days. Ben was a Massachusetts prep with a yen for ecstasy that some said might be available from a certain blonde Sex.Com team member. He and Sue made fast friends. I hit it off with Mike, a wiry techie who worked at the Wired Solutions headquarters in Santa Fe. He had a lot of questions about the lawsuit we’d just won, and volunteered plenty of information about Wired’s business. Fernando gushed about the conversion rates for Sex.Com “type-ins,” clicks that originated from direct requests for the domain, typed directly into the address bar of the surfer’s web browser. Unlike search engine clicks, Fernando explained, type-ins to Sex.Com were coming from very young people, who had just figured out how to navigate using a web browser, and were therefore highly susceptible to backbrain stimulation induced by the sexual imagery flashing on the website twenty-four hours of every worldwide day. Suddenly, I started to worry all over again about the ethics of the present condition of the website. It was looking smarter and smarter to consider a partnership with some established player to manage Sex.Com, someone other than Yishai and Richard Martino, perhaps like Ron or Fernando, who knew how to make a bundle without getting in trouble. I wished that Gary were there to hear some of these things, so we could discuss them together, but I was beginning to intuit that Gary didn’t want to be my partner in this business.

After meeting with the Wired Solutions guys, Sue and I cruised the showroom floor one last time. Sue was assiduous in collecting all the VIP passes and free drink cards we would need to assume our properly exalted place in the hierarchy of porn magnates during the last night’s blowout. As it winds down, the three-day sextravaganza debouches into a swirling vortex of obscene self-love, the aptly named “Pimp and Ho Ball.” Staged in a huge ballroom, powered by expensive light shows and computerized beats, populated with skinny young men and hired women, the scene is well lubricated with a healthy injection of free drinks, available of course to those with free drink cards. I had a pocketful that Sue had provided, and stuck to a diet of cranberry vodkas and the occasional Red Bull.

The real fun at the Pimp and Ho Ball isn’t the music, the dancing, the achievement awards for excellence in smut distribution, or the drably scripted stage patter between the porn industry leaders and the crowd of sycophantic webmasters. The fun is about getting things sorted by pecking order. There are three kinds of free tickets given out. The regular ticket will get you in the door. A VIP ticket will get you up one set of stairs. A special VIP ticket will get you to the third floor balcony area, where private rooms have been rented by the majors. And in an extremely elevated location, were no one gets in without an invitation from a true skin-trade tycoon, there is a room where it is rumored you can smoke a joint with Ron. But Sue was the only Sex.Commer to allegedly get into that room, and it’s still a rumor to me.

That night, I spent most of my time with Ben, the Wired Solutions ecstasy-head, who seemed to enjoy my company, after Gary drifted away and Sue went looking for Ron’s secret hideaway. Up in a private room I met the most intelligent, genuinely attractive woman I’d discovered at the show -- Jamie Sweet. She was Steve Sweet’s girlfriend, and therefore obscurely related to Mike Sweet, aka The Dirty Old Man. Jamie and Steve were dressed in pajamas, and were fun and easy to talk to. It’s strangely cosmopolitan to stand, casually talking with a woman in her pajamas, while leaning against a bar where an anatomically correct, flesh-colored simulacrum of a female ass has two Corona bottles stuck into it, one protruding from the simulated anus, the other from the snug, rubber vagina. I delicately removed the beverage containers from the sex toy as an act of politeness, which Jamie acknowledged with a little laugh. We had a nice chat about sexual freedom and the liberating power of erotica. She introduced me to Steve, over six feet, probably a hundred and eighty pounds, dressed in a leopard print bathrobe and silk pajamas. Steve’s shark-like grin, military-style buzzcut, and impressive build bespoke a powerful man with abundant personal charisma and ready access to large sums. I liked him immediately, although I knew nothing about him. He briefly expressed admiration for my litigation prowess, then left me to chat with Jamie, which I kept right on doing for the next half-hour, until Ben and I decided to drift on to some other place.

I found Sue, who had been up in the ganja den with Ron, so she said. We parted company with Ben, who went in quest of a new source of serotonin to heal his overstimulated dopamine receptors. The hours drained away like dark water, leaving us on the faintly brightening shores of a Las Vegas dawn. Susanne and I had checked out of our hotel already, because in some sort of half-assed cost-saving, Gary had only booked his room for the last night. So on the last night of the fun, Sue and I were the homeless Sex.Commers. My plane was leaving sometime that morning, so with our luggage in tow, we caught a cab to the Hard Rock Hotel, there to enjoy what remained of Gary’s meager hospitality.

Gary’s room at the Hard Rock was much smaller than what Sue and I had at the Venetian. She and I showed up with our luggage at around 4:30 in the morning. Gary was wadded up in the bedclothes like a hundred-and-ninety-pound infant with a comb-over. He looked tortured. Phil was exhausted, and offered us the couch and mini bar. My boss, my partner, my client, snored, snorted and shifted his body repeatedly in the room, which was slowly brightening.

I stood on the balcony and looked toward the bright lights of the Vegas Strip. My brain felt tenderized from lack of sleep and all of the yelling I had done to make myself heard while conversing in smoke-filled rooms drowned in hip-hop noise. The lights ringing the profiles of the hotels and casinos seemed to shimmer with beauty, with hope. In the dusty dawn, the colored lights twinkled brightly in a world where I had membership in the upper crust of low occupations.

The six-letter mantra that had fueled my obsession for nearly two years was still overbearing in my mind, but now, it seemed to exude fulfillment. It was the gleaming sun of morning that was about to rise over the summertime of my life. I had made it. I had done something in the world of money, power, and influence. I had mounted the heights. Standing in my heavy boots, which I hadn’t removed from my feet in at least twenty hours, I felt well able to move ahead into the new world I had helped to conquer. I would get on with some of the white hat stuff. We would change Sex.Com for the better.

As I turned these thoughts over in my mind, they began to turn me over. I felt divorced from the earth as persistent thoughts of self-importance lifted my spirits. Nevertheless, after three days of outshining Gary with the people who were responsible for making Sex.Com valuable, I had a strange presentiment. As glamorous as it was to be a warrior, I might be a liability in time of peace.

Looking out over the Vegas skyline, hearing Gary thrashing his sheets in an effort to find a niche of unconsciousness in which to stuff his mind, I remembered the way the fire in his eyes had retreated, but not disappeared. Taking refuge in sleep and intoxication, he had hidden from me ever since the brief reconciliation in the Grand Lux. Hearing him snort and convulse his way through fitful dreams, it did not, frankly, look good for me. I knew what I dared not tell myself. Gary had come to mistrust me. His pain was breeding inside him, darkening his mind with suspicion, jealousy and hatred. He suspected me because I’d expressed secret thoughts. He was jealous of me because I had a wife, kids, a house, and now, money too. He hated me because I was starting to enjoy my new position as a principal in Sex.Com, and he hadn’t approved my ascent to that role.

Whether it was preordained or not, I knew from that moment forward that soon we would be adversaries. Lying there, lost in the darkness of a fitful sleep, Gary was hiding from his power, from the terrifying adulation of an amoral crowd, but even as he did, the power of Sex.Com was filling him up like water fills a hollow space underground. The power of Sex.Com had no love for me or anyone. No longer the slave girl whom we had liberated, she now appeared like the whore of Babylon, bestower of all earthly pleasures, enslaver of her devotees. She had Gary completely in her power, and was seducing him utterly with her most powerful, one-syllable mantra, the mantra known only to one person, now pounding away in Gary’s heart over and over again -- mine... mine... mine... and every now and then... all mine.

The sun was rising on a new world, filled with gold and its power. It was my first morning in El Dorado. Outwardly dressed in crumpled black clothes, stinking with cigarette smoke, inwardly I looked up to behold a golden sun at its zenith, blazing in a cobalt sky. I heard the crowd’s cheer as the barred gate across the arena slowly rose. The bull charged through the gate on pounding hooves, tossed his horns this way and that, then found me. When the bull charges, I remembered, the bullfighter stands his ground. The bull, not the man, must move. The bull trotted up to face me from a near distance. He lowered his head, scuffed the sand, and looked up at me. I saw the red coals hidden deep in eyes that did not recognize me. I gripped my sword and planted my feet.
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 2:00 am

ROAD TO RUIN

As I walked out of the Hard Rock Hotel to find a cab, the sun rose full above the eastern horizon, and the hard light scrubbed the glitter off the town. I saw the cheap stucco walls, potted oases, empty parking lots and ubiquitous billboards offering big meals, big payouts, and big entertainment. After three days of being pummeled by boring beats in smoky atmospheres flowing with free drinks, I was ready for home. As the cab rolled down sun-scoured avenues, the driver reminisced in generalities. He began with, “People in this town...” and concluded with, “They’re all into that Ecstasy.” To which I responded, “Tell me about it!”

After Vegas, communications with Gary decayed, and black tension seeped into my life. Wagstaffe’s office continued to report to me diligently, informing me about trial preparation in deferential letters. On the surface, I was cocksure and optimistic about the future, planning to continue meeting with prospective partners and helping Gary sort through their proposals. On the surface, Gary and Phil sent me e-mails about various business opportunities with industry players, soliciting my remarks. Under the surface there was little sense of interest on their part, and I felt like I was on suspension.

After Vegas, I promptly went looking for trouble and found it. I became obsessed with changing the look of Sex.Com. Everyday I checked the website to see if the changes we had agreed on back in New York had been made yet. And every day I found the same old gross-out contest. I started emailing and calling Yishai every other day or so, to ask him why the banners were still showing all the radically distasteful shit that they had always been showing. I called Wired Solutions and asked why their ads were still so raunchy -- hadn’t Yishai told them to tune it back? They told me that Yishai had said it to them, but his own banners were still as nasty as ever, so they couldn’t afford to back off the hardcore while he was still pushing it.

Feeling that I’d been saddled with this relationship with Yishai, I started insisting in emails to Gary that he had breached his promise to control the appearance of the website, and demanding that we give Yishai the required thirty-day notice of our intention to end the relationship. I tried various angles to create points of division. I told Yishai I couldn’t have Joel Dichter in the relationship. No worries, said Yishai -- Joel was not indispensable. Joel called and said he was resigning as Yishai’s lawyer with respect to Sex.Com. When I couldn’t complain about that, I came back to the nasty content issue, and wouldn’t leave it alone. After being in Vegas with all the click-mongers, I thought I knew something, and I couldn’t believe that our website was obliged to be the absolute sewer of Internet sex. We were the premier type-in domain on the entire Internet. We could do better than to spatter our white hat with mud. Boy, was I dumb.

The entire thing exploded on January 15th, Martin Luther King Day, in San Francisco. I was heading back from Reno with Tara and Ana, where we’d stayed for a few days as the invited guests of the owner of XXX.Com. He had pitched me a proposal to manage Sex.Com, and I was trying to organize a meeting so he could talk to Gary and Phil about it. Actually, I’d tentatively arranged for Gary to meet us in Reno, but he dropped off the map that weekend. He wouldn’t answer his cell phone, and when I finally got hold of him, his mood was foul. He’d spent a miserable weekend entertaining an auburn-haired woman he met in Vegas. When I asked him about the experience, hoping he’d had some fun, his answer was filled with bitterness: “Total waste of a day. She made me go and see her kid.” He sounded disgusted, convinced that once again, he’d been used for his money.

As if seeking my own destruction, I directed myself straight into the path of Gary’s anger. Knowing that he was spoiling for a fight, I told him I was coming to San Francisco to do business. I told him I had been monitoring the appearance of Sex.Com, and nothing had changed. The gross-out contest had to end. I wanted Yishai’s contract cancelled, and since our agreement required thirty days notice to cancel, the 15th was the day. I told Gary I was on my way with a letter that I wanted to send to Yishai. I might as well have danced on an old pirate’s bunions.

Tara, Ana, Gary and I met at a sushi place up the street from “Dogpatch,” Gary’s new house on 3rd Street. He was keyed up to an intense pitch, perspiring heavily. His energy had turned to iron. As we sat at the table, I tried to speak, but conversation skated off him. He was a gauche, graceless, bellowing beast. Suddenly, my cell phone rang and I answered. While I was talking, Gary devoured the sushi off my plate. The call was from a bonehead spam outfit that was trying to pressure Gary into a deal by threatening to launch their own website, which they intended to call “TheNewSex.Com.” The caller was an obvious jackass, and when I told Gary who it was, he exploded -- “Tell that guy if he calls me one more time, I’ll fucking sue him!” I ended the call, and tried to placate Gary, but he just stormed out, leaving me with an empty plate and a sense of doom.

Hungry, rattled, and humiliated in front of my wife and daughter, I followed Gary back to the office and continued to beleaguer him with demands to review and approve my letter canceling Yishai’s contract. He read it, but wouldn’t approve it. We revised it until there was nothing left, and then he told me he would write and send his own letter. Then he disappeared from his office. No one could find him, so we left and got on the freeway for home. Three hours later, as Tara and I drove north on I-5, with Ana riding in the back seat, Gary called. The conversation was short and one-sided. It ended with Gary shouting “See you in court!”
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 2:02 am

THE SHATTERED MIRROR

“Whom the gods would destroy, they first seek to anger.”


Lucifer cast from Heaven might have been more enraged than I was after my ouster from Sex.com. But as his cry of rage ripped the sky, God’s favorite angel took a third of heaven’s stars with him into exile. I had only my wife and children, Peter and myself to share the sad news. Sue promptly threw her lot in with Gary, moving to San Francisco. My outrage was unbearable. Had I not triumphed? Had I not been hailed as a conqueror, with adoring crowds acknowledging my role as Gary’s general in the halls of the Venetian, while magnates inclined their heads in respect?

In two months I’d gone from unknown lawyer to top-flight litigator to porn mogul to ousted Sex.Com partner. I had been counting my millions since I first saw the pipeline of cash from Union Bank Fort Lauderdale to Wells Fargo Anaheim Hills. They were mine already, by contract, and I intended to have them. I couldn’t go back to my former life as a country lawyer. I had resigned from the list of federal public defenders, cancelled my yellow pages ads, and ended my lease with Peter.

I had made a dreadful miscalculation. My self-flattering mirror was shattered, and the broken shards reflected a frightening visage. Grim lines of determination sealed over stark hollows of grief. A mild smile occasionally softened my look of steely obsession, but no one gained my attention, because my mind was now totally obsessed with a grey chessboard of claims to be made and rebutted, allies to be gathered, and a war chest to be accumulated. I had begun to think harder than I had ever thought before, and what I thought was an unending stream of aggression. I would destroy Gary, humble Idell, and redeem Sue from captivity.

I could hear Gary taunting, “Now you find the lawyers. You pay the fees. You wait for motions to be decided, then postponed. You try facing the mechanized firepower of the hired guns! Enjoy!” And I took up the challenge, filing a lawsuit against Gary for breach of contract, and moving to withdraw as his counsel for nonpayment of fees.

One man pointed me in another direction. When I appeared in his court before the trial with a motion to withdraw as Gary’s counsel, Judge Ware’s features drooped in sympathy as he gently asked me why I was leaving now, when I had been there from the beginning. I drank up that small draft of recognition, like the last flash of water in the parched bed of a disappearing stream.

Judge Ware counseled us in chambers to mediate our dispute. We mediated. I hired an expensive and well-respected lawyer from Ashland who had once interviewed me for a job in LA when he was a partner at a New York law firm. He was not cheap, but the mediation had to be done properly, with a name lawyer. My lawyer negotiated well at the mediation, and we got up to a number that, in retrospect, would have been a good result. But on that day, I couldn’t accept it. The atmosphere was poisoned. I had imposed only one condition on the mediation - that Richard Idell not be there. But Idell ended up talking to Gary on the cell phone all day, throwing sand in the gears with one piece of negative advice after another, until we just had to get the hell out of there. My lawyer’s bill was over seven-thousand bucks for a few days of representation, so after I paid that bill, I realized I had to convince some lawyer to take forty percent of fifteen percent of Sex.Com, or the game was over.
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