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Sex.com thief arrested

Stephen Cohen nabbed after five years on the run

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The con-man who stole the most valuable domain name in the world, Sex.com, has been arrested by Mexican police and handed over to US agents after nearly six years on the run.

Stephen Michael Cohen was arrested on an immigration violation by Mexican authorities and turned over to the US border patrol yesterday, the LA Times has reported. Cohen is being held without bail at the Metropolitan Correctional Center in San Diego, according to deputy marshal Tania Tyler of the US immigration service.

Cohen is wanted in the US for failure to pay $65m in a court judgement reached in April 2001. The judgement was the result of a five-year court battle by the original owner of the domain, Gary Kremen, which nearly bankrupted the entrepreneur and founder of the net's biggest dating site, Match.com.

Kremen was awarded the sum in compensation after Cohen stole Sex.com in October 1995 through an elaborate scam. Cohen then ran the site at an estimated $100m profit until the domain was finally handed back to Kremen by the court in November 2000.

As soon as he lost the case however, Cohen fled across the US border to Tijuana and refused to return. He then began to illegally siphon his money from US bank accounts to offshore tax havens through a series of ingenious shell companies. In May 2001, Cohen was officially made a fugitive from justice by the US authorities.

It was in Tijuana, sat right on the US border and where Cohen was reportedly living in a mansion, that he was arrested by the Mexican authorities. Tijuana has been used by Cohen and his associates as a base for his diverse business activities for a decade, but he fled it soon after Gary Kremen posted an award for Cohen's detention that attracted the attention of US bounty hunters, back in June 2001.

Cohen claims a shoot-out at his house between bounty hunters and Mexican police had put his life in danger. Kremen claims the event never happened, but Cohen nonetheless bought himself a house in Monte Carlo and has been living there on and off for the past five years.

Kremen has never recouped any money from Cohen but did manage to seize control of two of his houses - a shack perched on the US side of the Mexican border, and a mansion in the exclusive Santa Fe resort in San Diego.

A second court case brought by Kremen against the-then administrator of all dotcoms, Network Solutions, resulted in out-of-court settlement in April 2004 thought to be worth up to $20m.

It is unclear whether that judgement will allow Kremen to chase Cohen for the remainder of the $65m (now increased to $82m with interest). Kremen told the LA Times he hopes to get more of Cohen's assets. "I'm excited, and I'm happy to prepare for the next stage of justice. Hopefully, I'll get to them before the IRS," he said, referring to the US tax office.

During the long court case with Cohen, it was revealed that Cohen had paid almost no tax on his multi-million-dollar annual earnings over 20 years.®

Kieren McCarthy is writing a book on the Sex.com saga. He is currently looking for a publisher.

Related link

LA Times story

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Is this the end of the domain transfer nightmare?
Sex.com could cost VeriSign $100m, says suit
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