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 1:53 am

WHERE THE BODIES ARE BURIED

I had planned to take Karon Cohen’s deposition ever since I called her on my cellphone just before sunrise one morning in mid-summer 1999. I’d risen early after a few hours sleep on the couch in Gary’s living room. I went to the unused back bedroom, and dialed the Florida phone number I’d gotten from my private investigator Paul Nyland. As I gazed down into the overgrown garden behind Gary’s apartment, a suspicious Karon answered the phone. She asked how I had gotten her unlisted phone number. I was chatty and friendly, but she was dead serious, and asked quite a few other questions before she decided I really didn’t work for Cohen. Once she decided I was the lawyer for one of Steve’s enemies, she turned talkative, and entertained me for nearly an hour with Cohen stories.

She told me how Cohen had stolen her life savings from a brokerage account while he was in prison, forcing her to hire a lawyer to get it back. Cohen hadn’t forgiven her for daring to keep her own money, either. After he got out of prison, he stalked her for years. One time she discovered him sitting right next to her on a barstool in Florida. She didn’t recognize him at first, though, because he had grown long hair and a beard, and was wearing sunglasses. When she realized who he was, she left the bar and went back to her car. When she reached it, she discovered all four tires had been slashed. Cohen, she said, had kept turning up in unexpected places, causing her problems in myriads of ways, until she made a committed effort to disappear and cover her traces. She hadn’t heard from him in years.

Karon spoke with the honest accent of a lower-middle class southerner, sounding like someone who had never thought she was smart enough to outsmart Steve Cohen, and had just hoped she could outrun him. My phone call was an awkward reminder of a painful past, an opportunity to vent, and a reminder that Steve was still casting a shadow over her life. She was willing to give testimony, if the case required it, so long as her current whereabouts could be kept a secret from Cohen. She knew all about The French Connection, and the lawsuit by the software-makers. She had been there when Cohen was arrested for bankruptcy fraud. As for Sex.Com, she had never heard of it, or heard Steve talk about it. These were just the things I had hoped to hear from Karon, so I added her to the short list of people who had known Cohen back in the day, and weren’t either dead, bought off, or unwilling to talk.

I went across the street and bought coffee for both of us, and went back to the apartment to wake Gary with fresh java. Gary had a voracious appetite for positive information, and the news that I’d just chatted with Karon was better than breakfast. On that particular day, however, funds were still in short supply, so actually deposing Karon remained on the list of things we’d do when we got money. Now that Diestel and State Farm were on the case, the time had come. Diestel’s private investigator contacted Karon. She had suffered some health setbacks since we had spoken, and was less willing than before to give a deposition, but after some negotiation, she agreed to give a deposition at Volusia Court Reporters, in Daytona Beach, Florida.

I had only been to Florida twice before. During the summer of ’74, Tara and I had hitchhiked from Colorado to Florida, up to Michigan and back to Arizona, a rolling courtship we carried on in other people’s cars and houses, concluding in marriage back in our hometown of Tempe. During our trip through the south, a top-forty hit by David Bromberg haunted the airwaves, recounting the tale of a “sweaty, stinking trip through southern hell.” The song could have been our soundtrack. On our way to Mississippi to see Tara’s relatives, a cracker dry-fired a revolver in my face from a passing car, causing me to think I was imminently dead. So we skipped Mississippi and detoured to the beach in Pensacola, Florida. In Pensacola, we cooked fried shrimp and hush puppies, sang songs in the campground with a couple of young dudes, and tried to make love in a sleeping bag in our pup tent. David Bromberg was right -- even sex feels like work when you’re sweating that much. When we woke up, we turned our thumbs north, only to narrowly escape death in a nightmare ride on the wrong side of Green River in Tennessee with a crazy cracker who fortunately repented of his ways before raping Tara and killing me. We made it to Memphis alive, and after a day of bird watching in Audubon Park, continued hitchhiking north, getting a ride on the single bench seat of a blue 396 Chevy Ranchero next to a fat, slightly depressed, but utterly harmless, white boy. He did ninety all the way to Michigan, and it wasn’t too fast for me. I had returned to Florida only once, in the early nineties, to defend the deposition of an elderly plaintiff in an accounting malpractice case. That turned out depressingly enough. My client, a holocaust survivor who lost a bundle in Texas residential real-estate bonds, also lost his malpractice lawsuit, and died when he got my letter telling him he’d lost.

Florida, named “the flowery place” by Spanish explorers, has apparently been entirely taken over by developers who scrape off the vegetation, line the coasts with high-rise hotels, drain swamps, build homes on bogs, and cover the rest with a thick layer of asphalt and concrete. Daytona Beach is a car drive away from Orlando, so I scheduled myself to fly in the day before Karon’s deposition, after which I would drive to Miami and meet an investigative reporter specializing in Caribbean money scandals. The next morning I would fly out of Miami. When Ana gave me the tickets, I stuffed them in my briefcase without a second look.

At the Orlando airport, I rode a train from the flight terminal to the main airport. Disembarking from the train after sailing through the gleaming tunnel, I was momentarily surprised to be greeted by the most famed diplomats of the Magic Kingdom -- Mickey and Pluto. I suddenly remembered -- Disney owns Orlando! The airport was essentially an embassy manned by ‘toons, where life-size statues of Bugs Bunny, Elmer Fudd, Porky Pig, Daffy Duck, and the Tasmanian Devil remained on guard against an invasion of reality. The airport shops and restaurants were uniformly decorated with movie memorabilia, dulled by a thin layer of condensed cigarette smoke. Walt Disney himself, a stickler for pristine clarity, would have been livid to see the magic dimmed by a lack of white-gloved attention. For at least one jet-lagged lawyer, the unity of civic reality and Hollywood fantasy was existentially nauseating.

After a quick pint of cold beer, I walked to the rental car area. Diestel was standing in the Hertz line, litigation case in one hand, a soft suit-bag slung over his shoulder. He upgraded his rental to a sharp-looking gold Mustang GT without comment. My car was reserved with Avis, and I had no upgrades to apply, but the little blushes of jealously passed as I realized I didn’t care what I drove, as long as it had a CD player and was big enough to survive a collision with an SUV. In my plain vanilla four-door, I drove down two-lane blacktops, past white clapboard buildings, east toward the Atlantic coast.

Daytona is a little town with a big racetrack that lives for NASCAR. Walk into a bar during the off-season, and you have the entire floor to yourself, all four thousand square feet of it. As I entered one of these barn-like enclosures, the absence of the race fans was palpable. I missed them myself, and felt I should apologize for not being one. It required no imagination to visualize the place stuffed with hundreds of guys in race caps, jostling each other in a masculine fashion, swilling twenty-ounce cups of Bud Lite, shooting pool, and talking about fuel injection. This place was for them, I realized. The pert waitresses and sports bar decor made me thirsty, but I had no cause to linger. I could get swozzled in my hotel room on a six-pack of yuppie beer or some Stoli, for the price of two plastic cups of Lite. And in my motel room, I wouldn’t have to sit there like a bar-stool ornament while the bartender flipped from one cable sports channel to another, working his way through his cigarette slowly, one eye squinched against the smoke curling past his slick dark hair, until at last he deigned to ask me what I wanted, and painfully poured me a draft. One beer, extracted from the unwilling, consumed in my role as the unwanted, was all the southern hospitality I could stand.

After leaving the sports bar, I cruised the empty streets of Daytona briefly, looking for some “there” to experience or observe. Since my quest for something, anything to hold my attention, was utterly fruitless, I headed out to the motel row down by the beach, separated from the rest of Daytona by a long, watery inlet. I drove across a narrow bridge to the windswept coast, a narrow finger of land pointing south, looking vulnerable lying alongside the enormous Atlantic. Diestel and I had rooms at the same place, a circular concrete and glass high-rise with a big lobby, plush restaurant, and rooms overlooking the sloshing gray-green sea. Diestel and I had dinner together in the restaurant downstairs, mulled the next day’s prospect like the grizzled survivors we were, and retired early to our separate lodgings. Upstairs in my room, I got my materials organized for the next morning and went to bed early, teased into sleep by the murmuring ocean, barely audible through the sealed window-glass.

The next morning, Diestel, Dorband, Karon, and I met at Volusia Court Reporters. Karon said she wasn’t feeling well and wanted to finish quickly, so we started immediately.

Karon married Cohen in Las Vegas in 1990, moving from West Virginia with her adolescent son into a two story house on Via Pardal in Trabuco Canyon, where Cohen mysteriously enjoyed free rent. Chandra Boydstun, Cohen’s daughter from a previous marriage, joined them, and there on Via Pardal, all three were held prisoner by Cohen’s paranoia. They weren’t allowed to have visitors, and were forbidden to answer the door, to prevent the Sheriff from serving papers. Cohen used video surveillance to protect himself from unwanted intrusions. As Karon testified, “He had a camera set up in his office in the bedroom and he could see who was at the door. I mean, we could go in and out. But we wasn’t to answer the door to anybody. If you saw parcel post, something like that, he had to answer the door, he answered it himself.”

Cohen held multiple licenses to perform security and property-recovery business. He was licensed as a locksmith, a repossessor, a private investigator, and a contractor. He got into business repossessing cars through Action Auction, owned by a fellow named Heitz. Using his repossessor’s license, Cohen wormed himself into some sort of partnership with Heitz, but ruined Heitz’s relationship with the Highway Patrol. I related this with LA bankruptcy court filings that revealed Cohen’s use of YANTA (not a misspelling of YNATA, but rather another shell company) to buy and loot a towing company. Perhaps the YANTA name was a play on the Spanish word for tire, which is “llanta,” pronounced “yahnta.” The joke would be apt, because tires are made of rubber, so they bounce, and after some use, wear out. Karon had been officially designated in corporate filings as the Director of YANTA, and when I showed her the documents, she was not surprised, although she laughingly declared that she had nothing to do with the company, had never gone to a board meeting, and knew nothing about the company. It was just like Cohen, she explained, to include her in the paperwork without telling her.

Cohen never paid the bills -- they went straight to the trashcan. He had five telephone lines, but paid no phone bills, because they were billed to the names of other people. Cohen procured stolen cell phones from thieves and reprogrammed them with telephone numbers he plucked out of the air with a scanner from cars driving by on the freeway. He sold the hacked phones, that worked “free” until the cell phone companies disconnected them. Although this left some of Cohen’s buyers irate, he shrugged them off. I suspect many of his customers were happy with their purchases, and knew exactly what they were getting. Stolen cellphones are perfect communication vehicles for criminals, just like stolen cars are always used by experienced holdup men.

Despite knowing he was involved in illegal doings, Karon believed Cohen to be a lawyer. Early on in their relationship, he had shown her his suits, and his name in a book full of attorneys. He sometimes got up in the morning to go to court, to appear in his own cases, and sometimes to make appearances for other lawyers. Sometimes he would have papers laid out in the morning that were signed with Frank Butler’s name, but she couldn’t remember seeing Cohen actually forge the signature. Since the topic of Frank Butler had come up, I asked her if she had ever heard of Butler having a heart attack, as Butler had apparently sworn in a declaration filed by Cohen.

CARREON: Did you ever hear him say that Frank Butler had had a heart attack?

KARON: I don’t recall. Just that he’s out of the country one time. I don’t recall.


While Karon had no recollection of a heart attack by Frank Butler, she seemed genuinely bemused by my question about whether Steve himself had had a heart attack, as he had sworn in court filings.

CARREON: Did you ever know of Steve having a heart attack?

KARON: Steve Cohen?

CARREON: Yes.

CARREON: My husband? (In a tone of confusion)

CARREON: Yes.

KARON: No. I didn’t know he had a heart attack.

CARREON: Had you ever heard that he had a heart attack back in ‘87, like in maybe April or May of 1987? I know you didn’t meet him until a few years later but did he ever tell you ‘I had a heart attack back in ‘87?’

KARON: He didn’t tell me about that. I never heard anything about that.

CARREON: Did he ever go to a cardiologist or heart doctor?

KARON: Steve never went to the doctor. He’d go just because he could get prescriptions pills one time free. He had Kaiser insurance and he got the pills, brought them home and didn’t take them.


Life with Cohen was not very exciting: “He was always at home all day long. Every evening we went out to get the mail, out to eat. That was pretty much the regular routine all the time.” Another part of the routine was cleaning up after the sex parties Steve hosted at “The Club,” a suburban playhouse for swingers in the City of Tustin that Cohen once described to me as a business where he “got paid by rich guys to fuck their wives.” Well, in LA, that’s probably a job that needs doing.

The Club boasted a mailing list, newsletter, and all-night parties replete with finger food, drinks, lubes, and acres of rumpled sheets. Members of the club got free memberships to the French Connection BBS. Karon cleaned up with help from young Latinas, many of whom were shocked, and sometimes unwilling to clean up the wreckage of a gringo orgy. Disgusting! Somehow I doubt that Cohen provided rubber gloves. Eventually, neighbors complained, and the DA charged Cohen with running a house of prostitution. Apparently, Cohen didn’t tell the jury, as he told me, that he was in fact screwing women for cash, which would be prostitution, albeit it of the pleasant sort, and walked out of the courthouse a legally not-guilty man. The story had gone out on TV, though, and while Steve was proud of his visibility as a free love entrepreneur, Karon was humiliated, and lost the companionship of her son into the bargain. The young man returned to West Virginia rather than share a roof with a man who had been charged with running a whorehouse.

Eventually, the free ride came to an end. The cops came to the Trabuco Canyon house, looking to arrest Cohen.

KARON: He told me not to be scared. Because the police had come and surrounded the house and someone was ringing the doorbell. Which we couldn’t answer. He wouldn’t allow us. Then I guess they left. He tried to get in his car and leave. The way he was doing it was very suspicious, trying to sneak out. They surrounded the house and I saw him get arrested.

CARREON: They surrounded the house and then demanded he come out and he went?

KARON: He wouldn’t come out. They left and went down the road a little bit. He got in his car to take off and they got him.

CARREON: Oh. So he actually attempted to escape?

KARON: Yes.


After the arrest, the unhappy family moved out of Via Pardal, and Cohen hired Mike Mayock to fight the charges. At trial, Cohen was convicted of bankruptcy fraud and related crimes, and remanded to the custody of the Bureau of Prisons. Judge Keep denied Cohen’s request for bail pending appeal, prompting Cohen to call her a “cunt” on his way out of the courtroom. He immediately received a set of handcuffs and a yellow jumpsuit as a reward for his eloquence, and began serving his sentence at low-security Lompoc Federal Penitentiary, where according to Karon, Cohen pretty much had the run of the place.

CARREON: Did you have strange experiences regarding Mr. Cohen and his use of the telephones at Lompoc?

KARON: I called that Lompoc prison one night . . . and I told them my husband just got through calling me on the phone.

CARREON: About what time of night or day was this?

KARON: I don’t know. It was dark. I’m really not sure what time. Nine. Ten. I’m not sure. Eleven. It was dark. And they say there is no possible way. They are only allowed like five minutes a day on the phone and there is no way he could be on the phone and I said I know his voice, it was his voice and he was on the phone. So I guess eventually they went and checked and said he was in bed. Later he told me - when I went in to the last visit in Lompoc and told him it was over. I said “You’re not getting any better at this situation.” He laughed and said that they came to his room and he acted like he was sleeping when they come to check on him.


Inmate status posed no serious obstacle to Cohen’s larcenous schemes. When Karon married Cohen, she deposited the $75,000 death benefit from her first husband’s life insurance into an account in the name of Repossessor’s Inc. Without explaining how his creditors would attempt to seize Karon’s money, Cohen moved the account to a Shearson securities brokerage in North Carolina “to avoid creditors.” But when Cohen went to prison, Karon learned she had no signature authority on what she thought was her own account. When she called Shearson, they told her Cohen had removed her name from the account using a fax authorization. When she questioned him about it during a prison visit, he told her she didn’t know what she was talking about.

KARON: And I called the company myself. And they said, ‘I think it was faxed over, as far as I can remember’ and I go, like, he’s in prison! How can he be faxing you over information? So I told them, I threatened them with my attorney, that I wanted my money, and I wanted it back in my account. That’s how I had to pay my bills. He was in prison. If they didn’t -- he didn’t tell them about being in prison. I said if you don’t believe me you call Lompoc. I give the number and everything. He’s in prison, doing this from prison. Because I did not give him authority to do it.

CARREON: Did you get your money back?

KARON: After about two, three weeks, yes, threatening them.

CARREON: Who paid you? Shearson Lehman?

KARON: Uh huh. He later went on to tell me that well, when I come out of prison I won’t have any money. I told him that didn’t give you no right to take my money!


The Shearson caper was the last straw for Karon. She filed for divorce. I knew both Karon and her divorce lawyer had been sued in the RICO lawsuit that Cohen filed from prison. I thought Karon would recognize the RICO complaint, but she had never seen it before. She had never been served and knew nothing about the lawsuit that alleged she and various others conspired to “purloin” the French Connection.

Karon didn’t have to hear more than a few lines of the complaint before she declared confidently: “Basically what I think is happening here is he’s too embarrassed about what had happened and he’s trying to throw the blame on me...”

Even though Karon hadn’t seen this particular frivolous lawsuit, she was painfully familiar with Cohen’s tactics for hijacking the judicial process: “You have to miss work. You have to go to an attorney. Then he pulls up all kinds of stupid stuff in here you didn’t do, didn’t say, it didn’t happen, but he’s representing himself so it doesn’t cost him any fee. But a person like me, you’ve got to keep taking off work. You’ve got to pay your money. And it’s no fun. And the judge told me at one point. ‘He has the right as a citizen to sue whoever he wants,’ but he can keep throwing it out if it’s not true. So basically he can sue me all he wants or anybody else.”

Karon was very familiar with The French Connection, on which Cohen, under the screen name “Tammy,” played Systems Operator, “sysop” in bulletin board parlance. Karon had been a French Connection member, and regularly chatted with people online, but had never heard of Sex.Com. Her testimony confirmed my belief that Cohen had forged the French Connection screen printouts attached to the Sex.Com trademark application. Karon recognized Richard Klaus’s video of the interface, but had never seen the screen captures Cohen filed in support of the Sex.Com trademark application.

Karon recalled that Cohen did not easily surrender his hold on her, often calling from prison to urge her to keep The French Connection running. It was hers now, he told her, for everything she had done for him, and she should keep it going for the profit potential. Cohen was a true pioneer in the era of prison labor out-sourcing, but typically turned the concept on its head, getting a free person to work for a convict. Karon remembered: “he would call me from prison and have me on the line the whole time until it was finished.” But Karon couldn’t deal with the complexity of it all -- phone bills in the names of people she didn’t know, technical issues, and the whole mess. One day users started calling to say the system was down. Karon looked in the room where the computers had been stored, and the whole system was gone -- computers, modems, and all. I asked her if that made her feel better, but she had her own response to the disappearance:

CARREON: You probably breathed a sigh of relief?

KARON: I could care less.

CARREON: And after that you never logged on to The French Connection again in your life?

KARON: I didn’t want to log on to Steve, The French Connection, or anything that had to do with him.


As the deposition wound to a close, Diestel, Dorband, and I were all of the same mind. We had invaded Karon’s privacy long enough, and she had given us all she could. Dorband quickly abandoned his cross-examination when it became apparent that Karon was incapable of saying anything helpful to Cohen. In response to one of Dorband’s last questions, Karon explained how she came to give up on Cohen: “I gave him a chance, if he would go straight, and stop doing things like that. I could forgive for the past. But he just continued to do things illegal.”
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:55 am

MY MIAMI

Diestel and I ate lunch together after Karon’s deposition. He was starting to trust me. It couldn’t hurt that Karon had proven several of my theories right. The encounter with one of Cohen’s most vulnerable victims tapped a vein of outrage. Diestel had far more sympathy for Karon than he had ever shown for Gary. He was angry. It showed in the way he ate his lunch, chomping with tenacious resentment. After lunch, Rich took off for the airport in his gold Mustang, and I hit the road in my four-door refrigerator.

I got onto I-95, the big traffic artery that drains straight down the leg of the state into Miami, siphoning traffic onto the counterclockwise arc of Biscayne Boulevard, a broad beachside motorway that tracks the curve of the shoreline. I rolled into town with the setting sun shining through the back window as my car hurtled east along the sweeping concrete curve. With light shining all around me, I smiled and took the exit ramp into Little Cuba. Because the weather is similar, I couldn’t help comparing Miami with LA, where I lived for ten years. LA never ends, it just sweeps around and loops back on itself like a never-ending snake of red and white lights, coming and going. People sleep and salve addictions in LA neighborhoods, but they don’t seem to live there. In LA, everyone is going somewhere, and nobody stays anywhere.

In Miami people are living, hanging out, walking down the streets. Young Cuban women wear tight dresses and high heels, walking like prizefighters, extending a challenge to which many a man feels compelled to rise. Sometimes the traffic moves so slowly, it feels like drivers are just taking a good look at the women, and no one seems to mind. Intrigued, I resolve on seeing the town later, and start looking for the office of the investigative reporter I’m there to meet. This guy has blown the lid off a couple of Caribbean money-laundering scandals. He’s not clear how he can help us, and I try to sound like I know what I’m talking about, but the idea of chasing Cohen’s offshore millions doesn’t appeal to me. In all my years of lawyering, I had only recovered large amounts of money from banks, insurance companies, and large corporations. I agreed with Willie Sutton -- one must go where the money is.

Gary thought he could seize Cohen’s offshore accounts, though, and he wanted me to talk to this guy to see what I could learn. The reporter confirmed what my online research had taught me -- the Caribbean has more swindlers than the beaches have crabs; the islands provide employment for a small army of English-style solicitors; and, the army of solicitors services the needs of thousands of corporations, each comprised of little more than a stack of papers, a mailbox, and a bank account. Not surprisingly, the solicitors have no interest in perforating the secrecy of their clients’ dealings. But there was a ray of hope, said the investigator. After the BCCI scandal, the British imposed the Proceeds of Crime Act on its protectorate nations in the Caribbean and, if you could find a lawyer to handle your concerns, the laws were on the books to help you track down and recover stolen millions. But that was a huge “if,” because most island solicitors refuse work that might make them unpopular in the few really good clubs and restaurants. On most islands, which are small by definition, being unpopular can be very uncomfortable. And should you suffer an accident, there are so few police to conduct an investigation.

The investigator had a date in a short while with his Colombian girlfriend, who didn’t speak English. When I asked if he spoke Spanish, he said no, that they actually had a language problem but in some ways, it was better that way. I understood. In Miami, it’s more about what youdo than what you say. With the investigator gone to make sign language with his Colombian girlfriend, I went back to my room, spread the entertainment weekly out on the apricot-colored bedspread and studied the ads. Looking for a nice, pleasant dive, I settled on “Churchill’s, A Sort of English Pub,” which seemed to host rowdy rock acts on Northeast Second Avenue. Big-city addresses on streets with small numbers are always interesting to investigate. I drove into the deserted downtown, leaving the cool air of the shore behind, directing the prow of my generic rental into a dark slice of unfamiliar city.

Approaching Second Avenue, the neighborhoods began to look run-down. Then there were young black guys standing in the bus lanes, offering a chance to score. This was the perfect place and the perfect vehicle in which to get my brains aired out, but I hoped my ponytail would mark me as a defense lawyer. Something worked, because even stopped at the lights, I wasn’t approached with baggies extended. The pervasive presence of the edgy entrepreneurs suggested to me that Churchill’s might be the real deal. Then I saw it up on the right -- a one-star dive in a cratered neighborhood, butt up against a row of crack houses.

Walking through the dimly lit doorway, I discovered the place was somewhere between beautiful and falling apart. Behind the big, oval bar, stood a tall gal with a wide mouth, red hair, a slightly insolent tilt to her head, and some flamboyant neck-gear. A big pile of refrigeration equipment hulked near the back wall. Two people sat on the far end of the bar. I sat down at the empty side, and ordered a Bass ale that the redhead quickly delivered in an icy glass. Swampy air flooded the place with a sticky scent that slowly made me feel slick with sweat. I slumped down in the chair and drew the night air and solitude around me. The spooky guys dealing drugs weren’t allowed to enter, but their eyes kept lancing through the doorway as they walked past.

Eventually, Plutonium Pie, a power trio, started up their equipment and blasted a few big chords from their five-foot Marshall stacks, followed by some guitar riffs that settled into my brain like acid splattered randomly across a steel plate. I ordered another Bass ale and settled back. As the band got going, I noticed the musicians shared similar features. All three had long wavy hair, black as coal. If I had to guess, I’d say they were descendants of the Dravidian people who inhabited the Indian subcontinent before the Aryans invaded.

Only five people including the barmaid and myself were watching this gig, but the Plutonium Pie people didn’t seem to notice as they blasted through a bunch of great-sounding original stuff. The drummer flailed the skins confidently, her hair a dark, penumbral halo around her young face. The bass player was always right where he’s supposed to be, and the guitarist stood like a calm, dark god, working the neck of his instrument, commanding platoons of power chords to destroy each other. Pretty soon I was dancing around like a fool next to the sprawling metal coils of disemboweled refrigeration equipment.

It continued that way for about an hour. Then the band took a break to go out on the back porch for some beer and conversation. I bought a round for all the band members. They started rolling joints with that self-assured manner musicians have, like smoking pot was their right in exchange for making music. The swampy night air out on the back porch was thick enough to eat. The porch ran the length of the back of the house, with makeshift shade-creating structures, all destroyed by the sun. Even in the dark, with the pot smoke drifting on the tepid breeze, everything felt sun-beaten. The wood was rough and splintery, the plastic frizzy, the cotton awnings frayed. There was even sunburned refrigeration equipment out there. I wondered idly if Churchill’s doubled as storage space for some air-conditioning repairmen, or if they never bothered to haul away the guts of their beer coolers after tearing them out. After the tea party, the Pie played another couple of tunes. Then it was 2 a.m. and time to close. By the time I left, I was tight with everybody, and made a mental note that Miami could be a nice place to self-destruct, if I ever had the inclination.

Back at the hotel, it was time to get myself organized, packed to go, and horizontal on the bed to catch downtime. I settled down, pulled out my plane ticket to see what time I had to be at the airport, and discovered that my plane was leaving in six hours from Orlando, the same place I flew into. Not Miami, where I was. Ana did not get this right. There was not even any point being very mad about it, because I had to save all my energy for a long night’s drive. I packed and checked out of the hotel the same night I checked into it.

My efforts to get back to Orlando turned out to be for naught. A few hours into the insane project, my eyes kept closing as I tried to keep my car between the fuzzy white lines. I pulled over in a restaurant parking lot and reclined the driver’s seat to get some rest. As warm daylight and morning traffic noises filled the car, my resolve to reach Orlando at any particular time dissolved like honey melting in the sun. Curled up behind the steering wheel, I abandoned myself to several more hours of luxurious, who gives-a-fuck oblivion. I had missed a plane, for the first time in my legal career. No worries. I was only going home.
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:56 am

QUEEN OF LIES

The showdown with Barbara Cepinko had been a long time coming. Barbara owned Midcom, an Orange County personnel placement company for government contractors, from whose offices Cohen had faxed the forged letter to NSI. Gary had longed to sue Barbara and Midcom back when he hired me, but I had steadfastly refused to do it, seeing no sense in multiplying the number of our foes, or filing claims based on thin evidence. Searching for dirt in courthouse databases, Gary had discovered that Midcom, Barbara and Cohen were all being sued for sexual harassment in Santa Clara County by Tammy Robinson, a former Midcom employee. Robinson’s complaint was stuffed with juicy tidbits that rang true, like Cohen talking up Camp Wanaleia and making salacious remarks.

Hoping to find a lawyer who would do what I wouldn’t, Gary had me call Robinson’s lawyer to try and interest him in filing another suit against Barbara and Midcom, for conspiracy to aid in the theft of Sex.Com. He wasn’t interested. Midcom’s lawyer, Robin Offner of San Diego, had turned the Robinson case into a sinkhole of attorney-time, filing over a dozen discovery motions. Robinson’s lawyer wanted out of the case, and no more of Midcom.

Deposing Barbara had always seemed likely to generate conflict, so it was comforting to coast in behind the deposition subpoena Diestel had served on Cepinko in his capacity as Gary’s defense lawyer. I could have served my own subpoena, but didn’t want to invite flak. On the appointed day, Gary and I walked into the dusty brick Midcom office building on Tustin Boulevard in Anaheim, California. Midcom’s double doors were secured with keypad locks that Gary said were required by government regulations. We met Barbara in the white-walled Midcom conference room, windowless and devoid of decoration. The room was so sterile it seemed as if they’d stripped it just for us.

Barbara sat at the end of the conference table, lounging at her ease, looking a little frowsy, and altogether too comfortable. Diestel was setting up quietly. Dorband was absent, and in his stead appeared Robin Offner, an urbane young lawyer who rose to shake my hand. I sized him up -- medium height, wrapped in a dark sportcoat comfortably buttoned round a waist filled out by the good life. He had thick dark hair, a tanned face, dark eyes and brows, and soft lips that seemed pleased with themselves. Gary returned Offner’s offer of a handshake by sticking his arm out stiffly at shoulder level, leaning away from Offner, and sighting down the length of his arm with one eye. Sometimes Gary liked to play gangsta. Offner accepted the weird handshake without change of expression.

Barbara neither extended her hand nor rose from her chair, instead casting me a mischievous grin accented by a single bucked tooth. She and Cohen went back all the way to the days of The Club. In her late forties, with a figure that had certainly seen good days, Barbara seemed like a woman used to getting her way without excessive effort. Her blowsy demeanor suggested she’d look good with a martini in her hand.

We were ready to start when Robin told us that only one of Kremen’s lawyers could question his client. Robin’s position was ridiculous, but nothing in his appearance betrayed it. Barbara assumed the role of a captive damsel who would be happy to testify, once her dragon gave his permission. Diestel puffed annoyance at encountering bullshit so early in the day. Cohen was pulling the strings through Offner, and Gary’s anger was swelling on our side of the table.

We had to punch through. I pulled out my Rules of Civil Procedure, reviewed Rule 26, passed Robin the book, and told him it said nothing about how many attorneys could depose a witness. I then began intoning Judge Trumbull’s name ominously, as if her magical edicts were mine to dispense, telling Robin that the Judge clearly ruled in prior motions that all of Mr. Kremen’s attorneys were entitled to ask questions of witnesses. I explained that Mr. Diestel and I had completely different jobs requiring separate lines of questioning, and had to conduct separate examinations of Ms. Cepinko.

Clutching his pen in a hooked right hand, Gary wrote on a page of blank paper that he’d turned parallel to the edge of the table, like a lefty. He didn’t look up, but his torso swelled with waves of angry breathing, his features knotted up, and his eyes darted angrily. He was ratcheting himself into a rage. His body language said he would fire everyone if he did not get his way. I called for a break.

Diestel, Gary, and I headed out the push-button doors in a knot of turmoil. Standing in the powdery light pouring through the windows that lined the hallway, Gary was snorting, about to go postal with his bare hands and teeth. Diestel and I assuaged his concerns. Not to worry! We would both throw ourselves against the foe and get what we’d come there for. We would both question Cepinko -- no retreat! Diestel and I were in complete agreement -- we had to prevail. Making Robin Offner unhappy was no problem, especially when we considered the alternative.

When we got back in the room, Robin was more accommodating, and we quickly worked out a deal that allowed both Diestel and I to question his client. Diestel started questioning Barbara, and for a short time, Gary’s rage subsided to occasional emissions of steam, like a volcano itching to wipe out a small town. But brimstone was soon raining again as Diestel, unfamiliar with the Midcom facts, got bogged down in bookkeeping. During Diestel’s first break, Gary told me to take over. Tell Diestel to move aside. When I told Diestel what Gary had said, he shook his head with a bemused smile, and in a tone of mild disbelief, said, “You guys are really something.”

Getting a kick out of the obvious conflict on our side of the table, Barbara exuded amused skepticism as I faced her. I started with the paper record -- Cohen’s Midcom paychecks. Barbara gave Cohen some kind of job after he got out of Lompoc, but she couldn’t remember why she paid him $600 a week, plus a house and car allowance of $900 a month. Barbara said she’d hired Steve to answer phones, but also said he usually worked in the wee hours of the morning. When I questioned how often the phones rang at Midcom during those hours, she just laughed as if it were so funny that I would try and trip her up with those cute little lawyer tricks.

Barbara had seen the Sporting Houses stock certificates I showed her, bearing her name, but insisted they meant nothing, because they were worthless. Steve had made all Sporting Houses decisions, and spent all of the money. She had hosted Sporting Houses meetings in that very same room where we were sitting, but she had simply made the space available as a courtesy to Cohen. Barbara remembered Sex.Com vaguely as a subject only Steve understood or cared about. Yes, yes, Steve had told the Sporting Houses directors that Sex.Com was worth millions, and he wanted to buy it, but there was no money, and it was all so long ago. So very long ago. As she drifted ever farther from the probing point of my questions, she became as languid as Cleopatra gliding on the flooded expanse of the Nile, sliding effortlessly out of my reach.

Barbara had actually given me a lot of good ammunition on the corporate alter ego front -- it was obvious that from her viewpoint, Sporting Houses was a sham corporation that Cohen used for his exclusive benefit. But with her languid demurrals and coy deflections, Barbara had deprived me of the satisfaction of a good adverse interrogation. Like Cohen, she deceived with practiced ease, leaving the impression that the entire exercise has been a waste of time.

Trying to close with a good show, I made one last stab at disturbing her composure. In the Ashton-Tate case, Richard Klaus swore in his declaration that Cohen had taken him to the Midcom building, through the keypad-locked doors, showed him the Midcom computers, and told him they operated The French Connection. As a result, a judge had ordered Federal Marshals to seize Midcom’s hardware. Squinting slightly at Barbara, I asked if she knew Cohen had lied about her and violated her company’s security just to embellish a confidence spiel. Did she realize her old friend had invited disaster to her door? Barbara didn’t dispute Cohen’s responsibility for the raid. Back when it happened, she’d asked Steve if he’d brought the law down on her, and he denied it. When the Marshals came to seize the machines, she had to spend all day on the phone, until at last the Marshals left without the computers. Yes, she admitted, back then it was a big problem, but in retrospect, it was just more silly Steve stuff. She smiled.
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:56 am

THE RUNAWAY STAGECOACH

Back in Oregon, Ana was learning the traditional lore of the subpoena clerk. Taking her work to heart, she served one witness after another, harvesting praise and ten dollars an hour -- better than the Santa Barbara library and not as dusty. The office was humming. Tara, resplendent in Nepalese silk clothing, long blonde hair shining, had settled into the new office I opened on East Jackson in Medford with Peter Carini. The move increased my floor-space by a factor of three, making it easy to work with my new staff.

Tara decorated the place in a Roman theme, and in the lobby we hung a large painting of a classical visage and an abstract banner. For a touch of pistolero-chic, we put out the big brown pigskin couch Tara shipped back from Guadalajara in the mid-nineties. We laid Tibetan rugs on the floor, and brought in our high-backed leather chairs, in Early Spanish Inquisitor style. We were getting respectable. Tara settled into her own office, where she tracked the gobs of cash we spent on investigation, service of process, deposition transcripts, copying, after-hours pizza, and sandwich runs.

Susanne and Ana shared an office with the filing cases and document binders. Susanne checked in to work regularly at one o’clock in the afternoon. She would show up, settle down at her desk and spend a little time pawing through her purse looking for a mirror or a Paxil, whatever. She was a great blonde creature with sleepy eyes, smiling, sad cheeks and gentle, pouting lips. Taking her station, talking into the telephone soft and low and deep, laughing that “huh, huh, huh” of hers that is knowing and wanton, conspiratorial. Sue enjoyed writing memos adorned with humorous asides, blending character sketches of the big players in the online skin trade with off-the-cuff comments about the personalities she was encountering in the subpoena enforcement project. She sometimes struck up email relationships with lawyers for witnesses or their attorneys, which often helped us to get the documents we wanted.

After Judge Ware reopened discovery in June 2000, we went after Cohen’s financial records with subpoenas propounded to his bankers, something you ordinarily wouldn’t do. But with Cohen begging for it by refusing to produce his own financial records, he left the door open for us to go directly to the source -- the moneychangers themselves. We were particularly interested in Sporting Houses records from the Las Vegas Wells Fargo, and those of Omnitec, from the Anaheim Hills branch, near San Diego. By August, we were receiving a steady stream of bank records that Ana scanned into PDF files and Tara filed in three-hole binders. We bought new shelves to hold the dozens of binders.

To be sure we got compliance from all of our subpoena-recipients, we kicked off “Operation Pushbroom.” Operation Pushbroom was named after the job of sweeping up after the horses in a rodeo parade. I saw a lot of rodeo parades as a child, since my nanny, Trini Noli, was part Apache, and her children loved horses. The parades would happen right downtown on First Street in Phoenix, a couple of blocks from my house, the cowboys wearing satin outfits with silver spangles, the child majorettes twirling their batons and tossing them high in the sky. Amid all this splendor, I noticed that the beautiful horses were crapping all over the street. Then I saw how the pushbroom people cleaned it up. They never walked past it -- they swept it all up in metal dustpans, dumped it into their rolling trashcans, then moved ahead to the next pile of crap.

Operation Pushbroom was based on the same principle -- give all the crap the same treatment, and don’t let any of it get past you. Ana listed all the witnesses on a big chart, marked them off the list when we received their documents, and narrowed the field to those few non-compliant witnesses who had to be compelled by court order. Nobody was permitted to fall through the cracks. Wells Fargo was looking for a crack to fall through. From the time we served them, Wells Fargo did nothing but delay. Ana and Sue spoke repeatedly with the Wells Fargo people, who would pull tricks like calling Ana with four or five people on the line at once, to interrogate her aggressively for the sake of intimidation. Everything Wells Fargo did was tentative. They always hedged their response, and were shameless about requesting one extension after another. I mean, it’s one thing to ask for extensions of time to produce voluminous archived documents, and quite another to simply dilate the time for response indefinitely, which was Wells Fargo’s established M.O.

In an effort to shut us down altogether, Cohen had Dorband file a motion to quash all of our subpoenas. He argued that our subpoenas were burdensome, because they directed the recipient to produce every document that in any way related to any person or business listed on a three-page list called Attachment “A.” Judge Trumbull denied Cohen’s motion to quash the subpoenas because none of the witnesses had objected to the burden of responding, and Cohen had no standing to seek relief from burdens that might be suffered by third parties.

Attachment “A” was a comprehensive document, as was the manner of its creation. Gary produced the list based on computer research, primarily using Google to drill down into records that frankly, I’m not sure were meant to be public knowledge. In those days Internet security was a topic of little attention, and people built websites with wide-open backends, as if they were parking their data on the dark side of an asteroid, where no one would ever run across it. Welcome to the world of the search engine! Gary searched for, discovered, and interpreted online documents that revealed the relationships that formed the infrastructure of Cohen’s online empire. By subpoenaing all documents discussing the people and businesses we knew were involved with Cohen, we forced Cohen’s secret associates to call their lawyers. It was probably because Attachment “A” was so thorough in tracking the net of Cohen-controlled money that Wells Fargo was at great pains to avoid releasing the documents in its possession.

Wells Fargo had been hiding behind Cohen’s motion to quash, so as soon as it was denied, I faxed Judge Trumbull’s order to Wells Fargo. Cohen then threw another hurdle in our path by sending out personal letters on his own stationery, threatening any bank that violated his privacy with civil liability. The letters infuriated Gary, who asked if he could send some personal missives of his own, but Wagstaffe and I wouldn’t let him.

Emboldened by Cohen’s letter, Wells Fargo continued stonewalling unto the eleventh hour. All Wells Fargo documents are electronically archived in Phoenix, Arizona, and were available for immediate production, but Ana and Sue were at their wits’ end. They had spent weeks talking with a lady in Phoenix named Barb Bakutis, a Wells Fargo document custodian. Her accomplice in The Big Stall was Felix Fierro, also officed in Phoenix. Sticking with my pushbroom, I sent the right letters to Barb and Felix, inviting them to schedule a conference call with Judge Trumbull’s calendar clerk. Pushing forward doggedly with mundane scheduling tasks makes a threat credible, and only credible threats induce adversaries to accede to your demands. As we talked about scheduling the hearing on a motion to compel production, I heard a sound in Barb’s voice that suggested she was eager to produce the documents, and was seeking clearance from some unnamed superior.

Just as Barb was about to crumble, our subpoena gun grievously misfired. I had filed a motion to compel compliance with a subpoena I’d served on Salt Lake attorney O. Bob Meredith, the fellow who took the credit for faxing out the press release announcing YNATA’s phony takeover bid for Starwood, the owner of Caesar’s Palace. I figured he would have some documents, and for about a month after I contacted him by phone, he repeatedly promised to produce everything he had, sometimes even saying he was “on his way to Kinko’s” right then. But he never sent anything. When he got my motion, O. Bob called Judge Trumbull’s clerk to object that the subpoena we had served was not enforceable, because he was in Utah, and the subpoena was “issued” from the Northern District of California. In a short ruling, Judge Trumbull refused to enforce a subpoena that hadn’t been “issued” by the district where the witness had been served. The terse ruling left me feeling sheepish, because she cited only one authority for her decision -- Wagstaffe’s book on Federal Civil Procedure. This ruling was a clear case of form triumphing over substance, because the courts don’t “issue” subpoenas at al -- lawyers do -- and correcting the error simply meant typing “Utah” on the subpoena instead of “Northern District of California.” But the Judge had ruled, so it was time to cope with the fallout.

O. Bob had revealed my error at a bad time, because the discovery completion deadline was looming uncomfortably near. If I had to deliver new subpoenas to all of the witnesses residing beyond the jurisdiction of the Northern District of California, it would be a costly fix for a technical oversight. The entire subpoena project was in danger of foundering. If O. Bob didn’t have to produce in response to a badly-worded subpoena, then all of the witnesses in the Eastern, Southern, and Central Districts of California, and those in all of the other forty-nine states, could also refuse production. With a single phone call, O. Bob had tied my tail in a knot.

Wells Fargo was going to take full advantage of the snafu if I didn’t fix it quickly. So, having indulged my sorrows for about fifteen stunned minutes after reading Judge Trumbull’s order, I called Ana to attention and we cranked out corrected subpoenas before we left the office. Fortunately, the dear child didn’t claim to have anything else to do that evening, and by the next morning, we had served corrected subpoenas on Wells Fargo. I called Barb Bakutis immediately to keep things moving.

As she had no doubt been coached by Cohen or Dorband, Barb raised the issue of the O. Bob ruling, but I was desperate, and mowed down her objections, reminding her that Wells Fargo had the prior subpoena over two months, that she had already located the documents, and that the new subpoenas I had just served accorded with the requirements of law in every respect. Admittedly, there was very little time left for Wells Fargo to produce documents, because they had delayed so long that the discovery cutoff was fast approaching. But that was their fault, I reminded her.

The Wells Fargo subpoena people are trained differently from bank tellers, who are supposed to give up the government-insured cash without a fuss. Maybe we should insure their records too, because as it is, they hold out as long as possible, hoping the party seeking records will go away, and providing documents only when actual court action appears imminent. The incentives are all on the side of non-production, and banks rarely get in trouble for not producing documents. To secure Wells Fargo’s compliance, I had to restart the mechanism of compulsion repeatedly.

Finally Barb called and told me she was ready to send the documents. I hardly dared believe it. I wanted to stop breathing, to make sure I didn’t screw something up. Before she ran the copies, she wanted a check for $700, for costs of copying the Anaheim Hills and Las Vegas bank records. I said I would fax her a copy of the check if she would please start copying the records immediately. She agreed, so I sent a letter confirming our agreement, and faxed a copy of the check.

She called back after she got the fax to ask how to deliver the documents. I suggested she ship them COD, so I wouldn’t have to send her a check. She thought a moment, and said that sounded fine. Ten minutes later, she called back to start the insanity all over again. She couldn’t send the documents to my office. She had to deliver them to the exact Kinko’s locations prescribed in my subpoenas -- Las Vegas records to the Kinko’s in Vegas, and Anaheim Hills records to a Kinko’s someplace in San Diego County.

Astonished, I asked her the obvious question. Weren’t all of the documents right there in Phoenix? Why then would she split them into two boxes, and ship one to a Kinko’s in Vegas and the other to a Kinko’s in San Diego, when she could send them all to my office? She just had to do it that way, she said. I sent her the seven-hundred dollar check via Fedex, crossed my fingers, and held my breath.
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Re: The Sex.Com Chronicles, by Charles Carreon

Postby admin » Fri Jun 13, 2014 1:56 am

INCIDENT AT CHULA VISTA

Chula Vista is south of San Diego, north of the Tijuana border. Gary and I had spent a night at a Budget Motel there on the way back from Ensenada, after the absurd circus of the Roman Caso / Sandman deposition. Chula Vista cops probably look at everyone like a suspect, and they took pointed note of my big, blue Cherokee as Gary and I rolled into the motel parking lot. The town looked boring as hell, we were tired, and we had beer for dinner. There was nothing to stay awake for, so we turned out the lights. As we lay in our separate beds, I fell asleep with Gary quipping occasionally about random issues.

Next morning, we breakfasted at a restaurant serving nothing but white flour pancakes anointed with colorful syrup, gleaming eggs, and bacon flattened under steel weights. This was no doubt the perfect welcome for persons fleeing poverty and low caloric intake in lands to the south. Stressed-out waitresses chucked plates on the sticky tables, and a snarly cashier gave me free steely silence with my change. When we left Chula Vista, I didn’t expect it would require any further attention from me, as it seemed to be falling in on itself quite nicely. I was wrong, though. Thanks to Steve Cohen, the name of Chula Vista is forever burned on my mind.

One day in September, returning to my office after spending the morning representing shackled men in green pajamas and plastic flip-flops, as I walked through the front door, Ana and Sue were excitedly shouting in unison, “Cohen stole the documents!” Turning to Tara, who seemed fairly calm, I saw her nodding with lifted eyebrows that told me that, yes, it was true, Cohen had stolen the documents. After a few moments, all three communicated the gist of the problem -- someone had gone to the Chula Vista Kinko’s, used Diestel’s credit card number to pay for all the copying of the Wells Fargo Bank documents, and walked off with both the copies and the originals! We had no Wells Fargo documents!

Standing in the hallway of my office, I screamed a couple of obscenities and Cohen’s name, and then suddenly, in the midst of shouting, felt myself overtaken by clear, calm thinking. I realized a great blessing had befallen us. It was just a question of whether we could properly take advantage of it. I cross-examined Sue quickly to confirm the key facts. She had talked to Diestel and the Kinko’s manager, and confirmed that Diestel had been in San Francisco when the documents were picked up at the Chula Vista Kinko’s by a man who looked a lot like Cohen, and told the copy clerk to charge the copies to the credit card number Diestel had previously provided by phone. It was a very smooth Cohen maneuver. Knowing all of the details of the copying arrangement, he used his knowledge to execute a last-minute gambit to upset a game I’d spent months putting together -- but I knew I could turn this to our advantage.

Most lawyers wouldn’t have agreed with my optimistic assessment of the likely outcome of Cohen’s theft. Viewed legalistically, Cohen had barely committed a misdemeanor, a theft of a copy job worth less than fifty bucks. Not exactly Court TV material. But any proper legal sorcerer would know that Cohen had committed an unforgivable sin against the very source of magic itself. Those documents had become the property of the court. They were evidence, the sacred ore from which legal alchemists extract the gold of truth. Not being a true initiate, Cohen did not sense the magnitude of his error. We could also easily infer that the documents contained damaging information, because he certainly didn’t need to steal his own bank records -- he was presumably free to look at them at any time. Thus, he must have been stealing them in order to prevent me from examining them, and there could be only one reason for that.

I went to work quickly, falling into prosecutor-mode. I needed a police report with witness statements, a description of the subject, a description of the stolen item, and an identification of me as the victim. Victims, as you no doubt have heard, have rights. Susanne got the Kinko’s manager on the phone. Our conversation went like this:

“Hi, this is Charles Carreon. I understand there is some problem with my copying job.”

“Well, yes sir, this guy came in and said he was one of the lawyers on the case and claimed the documents.”

“Did you see him yourself?”

“Yes.”

“You gave him the documents?”

“Yes.”

Pausing a moment to get the pitch of my voice just right, I launched the emotional javelin: “Well, my God, that’s a theft! Call the police!”

I literally held the receiver two inches from my mouth and screamed this into the phone, because I knew I needed to motivate the manager to make a police report, because without a police report, there is no crime. A police report is prepared by a cop, who is really a junior magistrate, a street judge. The courthouse judge never sees crimes that haven’t been worked up initially by a cop. In the mind of a judge, a crime that hasn’t been investigated by a cop essentially hasn’t happened. If you can’t get a cop interested, you’re definitely going nowhere with the courthouse judge. On the other hand, if there was a police report, it would provide prima facie confirmation that Cohen had committed another crime. I knew the Chula Vista police wouldn’t go to Kinko’s at the request of an Oregon lawyer, unless perhaps, I could also offer them free Winchell’s donuts, which seemed too complicated. It would be simpler to get the manager of Kinko’s to report a theft, which would definitely prompt a police investigation.

There was of course a hitch I could foresee, and I bet Cohen had, too. Nothing had been stolen from Kinko’s. They got paid for their copies, albeit with Rich Diestel’s credit card. Thus, Kinko’s couldn’t be the victim of the theft, in much the same way that NSI was not the victim of the theft of Sex.Com. While Cohen had certainly gotten copies at Deistel’s expense by impersonating him and using his credit card, that might be a little abstruse for the Chula Vista cops. Besides, Deistel wouldn’t want to appear as a “victim” on the police report. No victim, no crime. But since I had paid Wells Fargo $700 for the originals that Cohen also stole, I was the biggest loser here, and those documents were my property. I was a victim.

It is the victim’s prerogative to demand that the person who has committed a crime against them be prosecuted. While I did not expect that misdemeanor charges would ever be filed against Cohen, I intended to proceed along that road. One thing you’ll quickly learn in the criminal law business is that positive identification of the subject is key. It’s usually a climactic moment, when a victim or eye witness identifies the defendant from the witness stand, usually in terms of “that man sitting there next to the defense lawyer.” In almost every case where it happens, it is the most compelling, direct evidence. If a woman points to the defendant and says “He stole my purse,” conviction is certain unless the defense attorney can somehow dislodge the solidity of this identification from the jury’s mind. Of course, a surveillance video recording the defendant committing the crime is even more convincing.

Kinko’s, of course, had a security video, and thus we had undeniable evidence out there, and all we had to do was get our hands on it. Suddenly everything was falling into place. It was as if gold had fallen into a sack, and all I had to do was tighten it up. I had only one big worry, and one big question. I was worried that something might happen to that videotape before we got it. And I couldn’t help wondering how Cohen, who installed video surveillance at his Trabuco Canyon squat to monitor visitors, could have overlooked this hole in his plan? I wouldn’t be comfortable until I had my hands on the videotape.

Surveillance videos recording crimes in commercial locations often disappear, probably because business owners often think of crime on the premises as an embarrassment and potential source of liability. I learned this fact at some cost in a case where my client had been shot and her boss murdered in an attempted carjacking at a downtown LA gas station. We’d sued the gas station because there had been two prior murders on the premises, and they had no security guard. The surveillance video should have depicted my client, screaming for help, covered with the blood and brains of her dead boss, staggering into the gas station, her face ripped into hamburger by the blast of a twelve-gauge, sawed-off shotgun. But by the time I got on the case, three years after the shooting, there was no such videotape, nor were there any videos of the numerous shootings, assaults, robberies, and other crimes recorded among the forty or fifty police reports that recorded the sorry history of a hellish location in simple cop-speak. I lost the trial, and forty-seven thousand dollars in costs expended by my firm, after the jury concluded that while the gas station had certainly been negligent with regard to security, the attacker was such a bad man, that even an armed guard wouldn’t have deterred him. I would have won if I’d had that video.

So this time, securing the video was my first priority. During my first conversation with the manager, I had emphasized that he must pull the video from the machine immediately, copy protect it, and give it to the police as evidence when they interviewed him about the theft. He understood, and agreed to do everything I asked. With those wheels in motion, I made another call to Beth Ballerini, and she gave me the phone number for Jerry the videographer down in San Diego, who had recorded all of Cohen’s deposition testimony. I called Jerry and told him the problem. He was delighted to assist me, and said he would immediately make a copy of a video deposition of Cohen and deliver it to the Chula Vista police so that they could make a comparison between Cohen and the thief in the Kinko’s security video.

A day later, Sue told me that Detective King of the Chula Vista Police Department had called to say that, based on his comparison of the man in the Kinko’s security video with the video of Cohen at his deposition, he was “90% sure” they were both the same man. He had prepared a police report, recording this conclusion, and was making a copy of the security video for our own use. When it arrived though, the video was difficult to watch, because the Kinko’s security system actually had seventeen cameras recording a series of one-second images sequentially from each of the seventeen cameras. So images of Cohen were dispersed all over the tape, mingled with irrelevant shots of random people and copy machines. It took a video editor a few days to prepare the edited video, showing only images of Cohen in temporal sequence.

While we were waiting to receive the edited video, Diestel called to say he had received a large packet of Wells Fargo bank documents in a FedEx envelope without a sender’s address. The records appeared to be for Omnitec and other Cohen accounts. The sudden appearance of at least some of the Wells Fargo bank records was almost as disturbing as Cohen’s theft of them. I immediately concluded that Cohen, sniffing the criminal theft charge in the wind, had decided to undo the crime. If Diestel and I got our documents, after only a brief delay, then legally there was no theft, just a deviation from the delivery schedule. Cohen was attempting a pretty clever save, I thought. It hadn’t occurred to me that he might have planned to return the documents even before he stole them.

At last the edited videotape arrived. Sue and Ana were burning with excitement as they led me into their office, and turned on the old Mitsubishi TV. Their faces were filled with joy as Ana pressed play on the remote.

In a series of grainy black and white still pictures, Cohen appeared on the screen looking bored, wearing a sweatshirt and leaning against the cash register. We watched in silence as he claimed a bulky stack of documents, about a foot thick, and tucked it under one arm. We continued watching as he turned away from the counter and walked toward the exit. He pushed his way through the double doors, and they closed behind him. Good stuff, I thought to myself, and leaned forward to hit rewind so I could watch it again, but Sue held me back and said “Wait, watch this!” The doors then opened, and Cohen came back through them. He reached into the FedEx supply rack next to the door, pulled out one large, floppy FedEx envelope, tucked it under his arm with the stolen documents, and walked back out the door. That was obviously the FedEx envelope Cohen planned to use to send the documents on to Deistel. Laughter and high fives were spontaneously shared all around. Peter Carini checked in to see what all the ruckus was about, so we showed him the video and uncorked some red wine. It was absolutely the best short movie I had ever seen, although it helped to know the plot.
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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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