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 2:06 am

ENFANT TERRIBLE

On August 13, 2002, Judge Alex Kozinski took the bench in the Ninth Circuit courtroom in downtown San Francisco to hear oral arguments in Kremen vs. Cohen. Kozinski is a maverick, which was apparent to everyone when Reagan appointed him to the Ninth Circuit bench in 1985. Widely admired for his brusque rhetoric, he had graduated from UCLA Law School a mere ten years earlier, thus becoming the youngest appointee to the U.S. appellate bench. Born of Rumanian immigrants in Los Feliz, a Latino suburb northeast of LA, he was known for writing clever, biting opinions, and suffering fools with very poor grace.

Perhaps foreshadowing the outcome of the case now before him, about ten years earlier Kozinski had authored the blunt opinion that gave Cohen a pyrrhic victory in his appeal from the San Diego bankruptcy fraud convictions. Kozinski’s opinion reversed one of the three convictions and remanded him for resentencing by Judge Judith Miller. The same Judge Miller who Cohen had called a “cunt,” something she probably hadn’t forgotten when he stood before her again a couple of years later. Despite Cohen’s appellate victory, Judge Miller sentenced him to the same term of years as she had at the conclusion of trial. For some reason, Cohen thought his first encounter with Kozinski boded well for the outcome of the Sex.Com case.

Cohen had taken up the habit of calling me occasionally to incite my animosity toward Gary and to share his plans for causing Gary pain and expense. Sometimes, when he was very proud of his cleverness, he would disclose his litigation plans, and in such a mood he told me about his lawyer’s theme for the appellate argument. It didn’t sound like a good theme, and I was sure he’d never use it, so I was surprised when Cohen’s lawyer stepped up to the podium in the beautiful Ninth Circuit chamber and spoke his opening line.

The atmosphere was hushed and decorous for what those involved knew was a momentous hearing. Several reporters, and bigwigs like Phil Sbarbaro of NSI, were in attendance. The appearance of the courtroom was truly splendid, the most dazzling I have ever seen. The stonemasons and cabinet-makers of the FDR era had outdone themselves creating a temple of justice. Everywhere the eye wandered it settled on sculpted marble and fine woods carved with complex designs. The lights were concealed behind stained glass. The three judges, with Kozinski in the middle, sat in high-backed leather swivel chairs, black-robed and charged with power, surveying the lawyers and the gallery from their exalted position.

Mike Mayock, who had argued Cohen’s criminal appeal years before, addressed his opening line directly to Kozinski. To my immense surprise, he said just what Cohen had told me he would say: “Judge Ware was sucker-punched.”

Kozinski’s brow immediately furrowed, and a cloud gathered over his head. While Mayock was drawing his breath, Kozinski checked his advance with an abrupt response: “Wait a minute. You can’t come here and call the District Judge a sucker.”

Mayock tried to dig his way out of the hole Kozinski had put him in. He hadn’t called Judge Ware a sucker, he pleaded.

Kozinski kept him on the hook. Yes he had called the judge a sucker.

When a judge speaks to a lawyer that way in open court, it’s like being hit in the forehead with a fencepost. His brain stalls. If he’s lucky, he does the right thing from pure instinct. Mayock wasn’t lucky. His instincts failed him, probably because there was no right thing to do. A sucker punch hits the sucker before he has a chance to defend himself, and it was obvious to everyone in the opulent chamber that Mayock had been suckered by a master. Kozinski finished him off with a dose of disdain, demonstrating utter disinterest in his argument, allowing him to drown in disgrace. Cohen told me that Mike had a heart attack a short time later. Unlike past occasions when Cohen had reported that he or his lawyer had suffered a heart attack, this time I think it was true.

Jim Wagstaffe was up next, arguing for affirmance of Judge Ware’s verdict against Cohen, and a reversal of the summary judgment for NSI. The atmosphere in the court relaxed as Wagstaffe efficiently recounted the story of how Cohen had stolen Sex.Com, laundered the proceeds through offshore banks, and was living in Mexico, a fugitive from Judge Ware’s arrest warrant. Machiavelli said that victory makes everything all right, and it certainly was true of Gary’s case against Cohen. Gary had gone from fighting an uphill battle to coasting downhill, and the nods from Kozinski and his fellow judges made it clear that Wagstaffe had little to worry about from Cohen’s appeal.

Wagstaffe moved on to the appeal against NSI. Judge Ware had concluded that domains were a form of intellectual property too evanescent to form the basis for a conversion claim, because they weren’t “merged with a document.” Thus, Gary’s search for a “document of title” had expanded. In the trial court, I had pointed to the registration documents Gary filed to obtain Sex.Com, and the falsified documents Cohen submitted, combining Gary’s name with Cohen’s email address to “spoof” NSI. They had looked like “documents of title” to me, but Judge Ware had not even considered them. Wagstaffe took my argument further, pointing to the entire Whois database as the fundamental document that makes all domains a form of personal property.

Through Gary’s growing influence, he had gotten a variety of cutting-edge legal organizations to support his fight, like the Electronic Freedom Foundation, that had never been interested in the cause before. Kozinski and his fellow judges had received numerous amicus briefs attacking NSI’s arrogant position, but more than scholarly legal opinion was in the air.

A wind of change was blowing through the courtroom, as the barometer of public opinion came into harmony with the facts of Internet life. What had been esoteric in June 1999 when I joined the case, and remained obscure in May 2000 when Judge Ware dismissed NSI, had since become common knowledge. Computer printers were on every desktop, ready to turn online documents into hardcopy. In truth, printing itself was irrelevant, as electronic documents had become ubiquitous. Our society had moved beyond reading its email to drowning in spam. The very word “document,” was losing meaning as people Googled for facts they once would have looked for in books, newspapers, libraries or archives. Taxes were filed online, paper airline tickets were an anachronism, and even the federal courts were requiring lawyers to learn the new “e-filing” system. By fall, 2002, Internet domain names were being registered at a rate that was accelerating exponentially, generating millions of dollars in registration revenue. Meanwhile, NSI was still trying to hide behind the lack of a “document.”

The danger of Internet fraud had also ceased to be theoretical. Newbie websurfers everywhere were falling prey to Nigerian inheritance scams, offshore casinos, and phishing scams that forged whole financial websites to extract precious personal data. Identity theft had become the fastest-growing crime in the nation, aided by insecure databases and loose verification procedures. Forgery and false impersonation were becoming the signature crimes of the computer era, and the courts were beginning to see more cases like Gary’s, where con artists directed their deceptions not to the owner of property, but to those in charge of their property -- the banks, the credit reporting agencies, and of course, the domain name registries.

The domain name business had also changed. NSI had lost its monopoly on domain registrations, and with it the mystique of being a government contractor performing a unique function. Nor was it any longer a wet-from-the-womb dot-com brimming with electronic cash. It was a mere small-cap subsidiary of a big company called VeriSign, for which domain registrations were a drop in its revenue bucket. New companies like Godaddy and eNom had made mincemeat of NSI’s registration business by cutting prices and providing a decent level of customer service. NSI’s argument that it would be too burdensome and costly to impose oversight obligations on registrars had been shown to be ridiculous.

Kozinski received Wagstaffe’s arguments welcomingly, asking questions that brought out the strongest points in Gary’s favor. When Dave Dolkas stood up to argue NSI’s defense of Judge Ware’s decision, Kozinski’s mood changed. When Dave said there was no document of title, Kozinski’s response wasn’t polite. What about the Whois database? NSI had total control over that record. It was printable. It recorded the names of domain name registrants, and all of their information. Why wasn’t it a document? Wasn’t it NSI’s property? Wouldn’t NSI have a claim if someone injured that property? Dave seemed puzzled. Maybe, he ventured, it would be trespass? Kozinski seemed appalled by the response. Dave’s habitual thinking patterns had apparently reached the limit of their utility.

Kozinski’s questioning then moved Dave further into unfriendly territory -- the topic of the forged letter. Ellen Rony’s analysis finally received its due. Citing what Ellen had called “red flags” that should have raised questions, Kozinski rejected Dave’s argument that NSI couldn’t have discerned fraud from the face of the letter. He pointedly asked if it wasn’t strange that a company called “Online Classifieds” would lack an Internet connection, as the forged letter asserted. As the pace of Kozinski’s attack on NSI’s position moved to a brutal conclusion, Phil Sbarbaro, his bald spot jerking and his pin-striped suit a jumble of conflicting lines, began shifting uncomfortably in his seat. By the time Dave sat down, NSI’s position had been utterly rejected by the enfant terrible of the Ninth Circuit. Phil sprang from his seat and darted from the courtroom, pushing through the massive red leather doors without reverence for the dignity of the court. Although I called to him as he blew past, “Hey, Phil,” he was not interested in exchanging pleasantries with an old enemy, and ignored me completely.

After the hearing, I congratulated Wagstaffe on his argument, and maneuvered my way around Idell. I was standing by the ornate elevator, wrapped in an old-fashioned cage, when Gary came out.

Gary swung his bulk a little side to side and tossed me a question, “Whaddja think?”

I answered politely, “I think it was good for you.”

Tara, who had appeared at my elbow, leaned forward to interject “I think it was great for Charles!” Like giving a vial of nitroglycerine a sharp rap, her remark had an instantaneous effect.

Gary’s eyes exploded into bulging orbs of rage as his reply flew forth from his goatee-encircled mouth: “Well, you really fucked up Wells Fargo! Idell has the proof!”

Ah yes, the bittersweet pleasure of hedging your bets. Gary’s victory over NSI was tainted by the painful thought that he had just lost leverage against me. I had been vindicated by Kozinski’s endorsement of my reasoning. The court could now lift the stay of my lawsuit, and he would no longer be able to accuse me of malpractice for not filing a stupid negligence claim against NSI. Negligence! How absurd. For after all, what could NSI have negligently damaged but Gary’s property? As I had always said, Sex.Com was either property, or it was nothing.

Jim DeSimone was delighted to hear about Kozinski’s performance, whom he reminded me was UCLA alumnus. I took a few calls from clueless reporters who didn’t know how to read a docket sheet and still thought I was Gary’s lawyer. Cohen called, but when I told him about Mayock’s terrible performance, he still expressed optimism, and looked forward to reading the opinion. Cohen didn’t have long to wait, but the panel’s unanimous opinion couldn’t have been worse for him. If there had been a baby in the bathwater that Mayock had presented to the panel, they ignored it entirely, because all of his arguments were sent unceremoniously down the drain with a one-line opinion published in early October 2002. “In light of Cohen’s status as a fugitive from justice and his egregious abuse of the litigation process, we exercise our discretion to dismiss his appeal.” In response to this news, Gary told Wired magazine, “It shows sometimes justice prevails.”

I was hoping that I, too, would receive a little justice from the Ninth Circuit, in the form of an opinion vindicating my position on the property character of domain names, but the distance from the cup to the lip once again proved elastic. When Kozinski’s opinion came out, it was not unanimous, and it was not what I had hoped. The other two silent judges apparently got the memo that NSI was supposed to win the case, and tried to derail Kozinski’s common-sense efforts to treat NSI like any other civil defendant. In an opinion that didn’t attempt to conceal his outrage, Kozinski revealed that his two fellow robe-wearers had decided that the issue he saw as an utter no-brainer -- that domains were property under California law -- was actually a great big open issue that required them to solicit an opinion from the California Supreme Court. He was livid, because these judicial nincompoops had actually forced him, the panel leader, to “certify a question” to which the answer was utterly clear. Kozinski thus loaded the certification with an extended rant that listed all of the reasons why the California Supreme Court couldn’t be bothered with such a ridiculous request, like its backlog of death penalty appeals, and implied that the matter would now take another three years to resolve simply because his fellow-panelists refused to interpret well-settled California law.

Kozinski and I got the last laugh, though. The California Supreme Court followed Kozinski’s advice, refused to certify the question, and kicked the case back to the Ninth Circuit within a couple of months. Kozinski swiftly issued a new, unanimous opinion, that established that Internet domains are property in the State of California, and throughout the Ninth Circuit, from Alaska to Arizona.
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 2:06 am

THE MIDDAY SUN

By summer 2003, I had been litigating against Gary for longer than I had litigated against Cohen. The bar arbitrators concluded I’d saved Gary’s case from certain catastrophe, and performed everything I’d promised in the October 4th agreement. However, they held the agreement legally invalid for lack of the magic words, and awarded me what they figured was the reasonable value of my services. I didn’t agree with the results of their estimations, and rejected the award.

Jim DeSimone and I prepared to march forward to trial, but increasingly he was playing Sancho Panza to my Quixote, cautiously asking whether I hadn’t considered the possibility that a jury might not award much more than the arbitrators? Wondering if we’d even get a jury, since during the years the case had been pending, invalidating fee agreements had become increasingly popular with the judges. Jim was urging me to wake up and smell the coffee. Schonbrun, DeSimone had spent over twenty-thousand dollars on the litigation, and they weren’t eager to throw more cash at a quixotic quest. His partners thought we needed to settle.

Gary, I realized, had the resources to engage in a forever war, and as I viewed the mounting debts I was accumulating, I realized I did not. Because the whole matter was so convoluted and insoluble, one evening at home, I turned to an old friend for advice. I grabbed three pennies and my favorite edition of the I Ching, a birthday gift from a friend in LA. Tossing the three pennies six times, and recording the results in a series of six lines, I deciphered the oracle and read the advice that King Wen and the Duke of Chou recorded in antiquity for the guidance of society. While it may seem strange to consult an oracle, rumor has it that the Japanese were winning the war in the Pacific until they stopped consulting the I Ching. That story may be apocryphal, but it has the ring of truth, and whenever I have faced a big legal career decision, I consulted the big Chinese book.

I had made my first big legal career decision twenty years earlier, reading the I Ching by the light of a kerosene lamp, in a little yurt in the middle of a big, muddy field in Southern Oregon. The children and my wife were asleep and it was as dark outside as if there were no cities anywhere on earth. There was no electricity or running water in the yurt, where we had lived for nearly three years in continuous poverty. The I Ching delivered an oracle that encouraged me to enter the legal profession, predicting that I would reach the heights of what it called “the way of the inferior man.” This seemed like a mixed blessing, but the oracle explained that if I wanted to obtain power, I would have to learn the way of the inferior man, because I lived in corrupt times, when inferior men control the heart of society, and superior men have small influence. As somewhat of a consolation, I should know that Heaven favored my following the way of the inferior men, so I could not be blamed. Ever since, whenever I’ve been offered an opportunity to change jobs, I’ve usually consulted the I Ching to get an understanding of the options before me.

When I consulted the oracle about my lawsuit against Gary, it told me that by continuing my chosen course, I would arrive at a complete disaster. After an understandable feeling of letdown, I began to feel relieved. There had been something behind that sense of doom that had hung over my battle with Gary. It had been an ill-advised campaign, conceived in the worst crucible of all -- pride and passion. Sun Tzu advises but one way to deal with an overpowering adversary -- don’t fight them. I had ignored that teaching for three years. I’d been in darkness so long, it was as if the sun had stopped on the wrong side of the earth. Now that the oracle had warned me in the clearest terms, I could sheath my sword and make peace.

In June of 2003, Gary and I sat in Wagstaffe’s conference room, drinking Bushmills Irish whiskey from big, square water glasses. The settlement documents were being finalized by Wagstaffe, Idell, and Jim DeSimone. My escape was pre-planned. I had booked two flights to Europe for departure the following week and told everyone that Tara and I were going on vacation, and I was settling the case before I left. The gambit had worked. Everyone came to the table and bargained hard. Only Idell seemed pained over the demise of the conflict. Another few months, he was sure, and he could have crushed me. I wasn’t giving him the chance. I saw an exit, a bright light at the end of a very long hallway, and I was walking towards it like a condemned man waking from the dream of his execution.

As I sat in Wagstaffe’s conference room, I threw the I Ching again. Sitting there, tossing my pennies and writing out the lines, I received a positive oracle. The bright, shining lines advised me to make the most of my situation, to enjoy abundance and bestow warmth like the sun at midday. The oracle had guided me to this place, and now it confirmed my decision to make peace. I hadn’t spend much time thinking about how to make peace until then, but in the future, I decided, I would explore this new land. Hidden in the changing lines of the oracle lay a reminder that the sun always passes from its zenith, that summer gives way to fall, and abundance is followed by austerity. I knew that must be true, but austerity seemed far away as I contemplated what the settlement would bring. I was ready to rule a peaceful domain.

I got up from the conference table, went downstairs, walked across the street, sat down next to a beautiful young blonde at a fancy bar, and ordered a beer. She was a Stanford student, an aspiring environmental consultant, and she was having one of those light blue drinks that beautiful young women sometimes drink. I chatted with her for about a half hour about the exciting career she was planning on having. It was great to have not a care in the world. I left the bar after finishing my beer, and walked to the corner market to buy a fifth of Bushmills.

When I got back to Wagstaffe’s office, details were still being hammered out by the two Jims, but I was ready to relax, and poured myself a splash of the reliable Irish whisky. Gary asked me for a drink. I hadn’t even offered him one, because he doesn’t much like to drink, so I knew he was trying to be friendly. I poured him a good shot, and we sat sipping the warm, amber fluid as the sun went down and the spherical lights of the bridge turned to the scalloped hem of a dress edged with pearls.

When the agreement was ready to sign, Gary and I drew out our pens and signed a new agreement, one that put all disputes to rest. It had been a long time since there had been peace between us. It felt good. We decided to have another shot and go eat dinner.

Our lawyers looked at us like we were crazy. After a settlement, the clients do not leave the building together, carrying a fifth of whiskey and wandering out to find a new adventure. But that was Gary, and that was me. We left our lawyers in the glass tower, signed out with security, and walked out past the huge brass propeller screw that dominates the entryway of Wagstaffe’s office building.

We picked up my car from the parking lot, and I drove us to Joe’s, an all-night cafeteria where Gary and I had often eaten among cabbies and nighthawks. We stood in line for roast beef, mashed potatoes, cole slaw and dessert. We set the plates down on red and white plastic tablecloths, and ate just like we had in years past. Joe’s is like that -- it never changes, so time kind of stops there. As in years past, Gary spoke to me in sharp, clipped, phrases, as if we’d never stopped being mutual venturers in the world of profit and loss. As if the years wasted in anger had been nothing more than a record skipping a groove, that we had put right at last so we could hear the rest of the song. Things were just like they’d always been, as the juggernaut of a San Francisco night spun around us, heavy with aborted dreams. In the general destruction of everyone’s expectations, the fracture of our relationship had been less than a minor matter. Still, we had marked one stone in the edifice of civilization with the scars of our striving.

We finished our food, and Gary invited me to spend the night at his place, so I drove to his house on Third Street. We were pretty tired, so after talking, we agreed it was time to crash. He insisted that I take his room and use his bed, and he would sleep on the couch. There wasn’t any brick dust anywhere, and his room was pretty clean. The bed was unmade, but looked fine, so I poured myself some whiskey, and shut the hall door. As I looked around the room, I saw that Gary’s room hadn’t changed much, except that he now had a row of porn videos on his shelf, many still in the shrink wrap. There was a book by Jared Diamond he’d once borrowed from me and never returned. I felt a silly desire to reclaim it, but let the impulse go.

There was nothing to do, so I turned off the light, and went to sleep with the bay breeze billowing the curtain over the sliding window, wide-open to the west.

When the brightening sky filled the room with soft light, and I awoke in Gary’s room, I knew there had been a miracle. It was barely six in the morning. Gary was sleeping on the couch. I wrote him a note and left it in his room, thanking him, wishing him well, and saying I’d decided to make an early start of it. I put my things in my car, carefully backed it out of his narrow garage, and drove north on Third Street. As I sped past the empty dockside warehouses, long, dark shadows alternated with blasts of sunlight that flooded the car with brightness. I got on the freeway onramp, pulled onto the eighty west, and headed for Oregon.
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 2:07 am

EPILOGUE

Steve Cohen was arrested by Mexican police on Friday, October 27, 2005 in Tijuana, while trying to renew his visa. He was turned over to U.S. authorities, who arrested him on the outstanding civil warrant issued by Judge Ware. He refused to comply with Judge Ware’s orders directing him to account for and return the stolen Sex.Com money, and remained imprisoned for contempt of court until May 5, 2007.

Yishai Hibari runs Profit Plantation, and continues to focus on delivering porn to dialup users at a high markup.

Richard Martino and his brother Daniel pled guilty in February 2003 to stealing over $650 Million from Internet and telephone users seeking adult entertainment, psychic readings, and other services by billing them for undisclosed charges. As part of his plea agreement, Richard admitted to being a Gambino crime family “capo de regime.” On January 30, 2006, he was sentenced to nine years in federal prison.

Gary Kremen settled with NSI for an undisclosed sum in April 2004, and sold Sex.Com for fourteen million dollars to a company called Escom, LLC in January, 2006. He continues to make efforts to recover some portion of the sixty-five million dollar judgment he obtained against Steven Michael Cohen, but so far has been only marginally successful. Gary sued ARIN, the Association for the Registration of Internet Numbers, in part because ARIN refused to implement a court order to give Gary the IP addresses formerly assigned to Cohen. ARIN claimed the IP addresses are not property.

Susanne Whatley moved to Florida to become the paramour of Internet porn mogul Serge Birbrair, and got breast implants so large that they were referred to in the industry as “the Twins.”

Steve Sweet was acquitted of all obscenity charges by a British Columbian magistrate, who concluded that, while the SadoSlaves.com content was disgusting, it did not offend contemporary community standards in Vancouver. His alliance with Max Hardcore was solidified, and Max’s videos are now marketed through the Sweet website.

Tom Sweet settled his lawsuit with Steve Sweet and started a project to raise a million dollars to start an environmentally sustainable business using web-based marketing and billing. The project is well on its way to success.

Max Hardcore, aka Paul F. Little, was convicted on June 5, 2008 on ten counts of obscenity by a Florida Federal jury.

Alex Kozinkski was elevated to Chief Judge of the Ninth Circuit Court of Appeals on November 30, 2007. In June, 2008, he was forced to recuse himself from sitting as a trial judge in a Los Angeles obscenity trial after the L.A. Times revealed he had posted titillating images on his son’s website.

Phil Father ended his partnership with Gary Kremen. According to Phil, his two percent of Sex.Com did not provide him with any substantial monetary payout.

Tara Carreon retired from the law business and became the webmistress of American-Buddha.com, which features, among other things, political philosophy, muckraking, satirical erotica, and spiritual cinema.

Maria Carreon was hired as a legal secretary in New York City by one of the lawyers whose clients were subpoenaed by Ana Carreon, thanks to Sue Whatley, who talked the other lawyer into hiring her. Maria recently gave up her legal secretary career, and now attends The New School for Social Research. Her blogs about life in the Big Apple appear at ByBeautyDamned.com.

Ana Carreon applied to Stanford and was admitted to the Classics program, where she put in two years as a straight-A student. She returned to her home in Ashland to attend Southern Oregon University, where she is studying photojournalism. She maintains a website of her work and photos at Dreampretty.com.

Peter Carini survived the departure of Maria Carreon as his secretary, hired two lawyers to work for him, and became the undisputed DUI king of Southern Oregon. He bought a large house in a tony neighborhood in Medford, Oregon, becoming the first Italian family to achieve the honor.

Joshua Carreon, the only son of Charles and Tara Carreon, and a loving brother to his sisters Ana and Maria, was a kind, gentle man, and a very talented graphic artist. His roots were in graffiti art learned as a skater kid in Santa Monica. He loved to buy stacks of t-shirts that he hand-silkscreened with political art. He also created prints on industrial materials and on fabric, often enhanced with bright painted calligraphic strokes to create striking works of visual art. Joshua was the head designer and reporter for the Ashland Free Press, and took hundreds of videos of musical, political and social events in Southern Oregon. He was killed in an automobile accident on February 16, 2007 in Dunsmuir, California, at the foot of Mt. Shasta, near Castle Crags, and is deeply missed by many friends and family.
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