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Former Sex.com Owner Still Chasing $65M Unpaid Judgment

Former Sex.com Owner Still Chasing $65M Unpaid Judgment
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Dec 23, 2011 3:30 PM PST    Text size: 

SAN JOSE, Calif. — Former Sex.com owner Gary Kremen is still chasing down that $65 million unpaid judgment from Stephen Michael Cohen, the man who in 1998 fraudulently converted the valuable domain.

And he's had some recent luck connecting the dots, finding a money paper trial and convincing a judge to freeze bank accounts that could be used to help satisy some of the unpaid judgment.

Cohen was ordered to pay in 2005 after a court determined Cohen submitted a forged document to Network Solutions that won him control of Sex.com in 1995.

So far, the bill owed to Kremen amounts to $65 million, plus $3 million in interest.

Kremen won back the domain in 2001 but has had a tough time finding where some of that awarded money is, or where it's been fraudulently transferred to.

According to court transcripts, Cohen allegedly transferred $4.5 million between banks shortly before he was arrested in Mexico.

Cohen denies ownership of these accounts and has cried poverty, telling courts through the years that he has been jobless, broke and unable to locate any of the assets accumulated from his time as the Sex.com hijacker.

But two years ago Kremen was able to obtain judgments and injunctions against Cohen's step daughter ($4.9 million), ex-wife ($1 million) and lawyer ($800,000) after connecting some of the dots to the Sex.com funds.

And now he's followed the paper trail yet one more time, naming in a lawsuit Cohen's cousin and an online bank called FNBPay created by the cousin.

Earlier this month, a federal judge granted a temporary restraining order to freeze assets of both FNBPay and a sister company, FNBMexico, that were allegedly used to funnel money through various websites. Those companies are owned by the cousin.

By showing that Stephen Michael Cohen has in the past used his family to facilitate fraudulent transfers and avoid paying the Sex.com judgment, Kremen was able to convince the judge that he would be able to succeed on this fraudulent transfer claim also, and thus a temporary restraining order was warranted to freeze assets.

FNBPay, according to Kremen's suit against Cohen's cousin, also was used to pay certain of Stephen Michael Cohen's personal expenses, such as his mortgage.

To date, both defendants — Cohen's cousin and FNBPay — have yet to file responses to the court relative to the freezing of a U.S. bank account linked to FNBPay, a Wells Fargo bank account that has $100,000 in funds.  

Kremen is asking the court to order an injunction to restrain the conveyance of property, compensatory damages in the amount of deposit payments at FNBPay and Stephen Michael Cohen's mortgage payments for his Tijuana home and the principle amount of the unpaid judgment.

Kremen in 2006 sold Sex.com for $14 million to Boston-based Escom LLC in 2006. Escom earlier this year sold the domain for $13 million  to Clover Holdings.

Kremen's attorney, Timothy Dillon, was unavailable for XBIZ comment at post time.

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