Sex.com sellers roll eyes at $13m price tag
'A home run. Not a grand slam'
A strange circle of history
All of these shenanigans help obscure some startling facts about the sale and continued controversy surrounding Sex.com.
The domain was famously stolen in 1995 by lifelong con-man Stephen Cohen who then kept it from its rightful owner, Gary Kremen, by moving ownership and funds through a series of shell companies, some in offshore tax havens.
Eventually, Kremen was handed the domain back as well as a $65 million court judgment that he has yet to receive one cent of due to Cohen’s financial hall of mirrors (Kremen is still chasing Cohen to this day).
When Kremen sold Sex.com to Escom LLC in 2006 for $12 million plus $2 million in equity, coverage of the sale itself – the largest ever domain name sale - was such big news that no one questioned who was actually buying the domain.
As the current owners squabble over how much money they will receive from the sale – even arguing that they stand to lose money – everyone has forgotten about who will shortly own what is rapidly becoming a poisoned chalice.
Jeffrey Dulberg, as Escom’s lawyer noted at the very start of the hearing that “the most important person is not here – the buyer”. Nothing is known about Clover Holdings except that it is based in St Vincent, was the highest bidder, and that it is required to deposit $1 million now and the remaining $12 million in a fortnight.
Asked outside the court, Dulberg admitted he has no idea who was behind Clover Holdings. Neither does the bankruptcy lawyer Susan Montgomery. The only company that does appear to know is auction house Sedo.
And in that respect Sedo will shortly be put in the position of trying to find a way to identify the buyer to Escom and possibly the court without breaking its own confidentiality rules if it wants to receive $520,000, rather than $130,000 in commission.
As part of the auction deal, Sedo receives between one and four percent on the total sale, depending on who the final purchaser is. If Clover Holdings was already known to have expressed an interest in buying the domain, Sedo receives just one percent; if it was an entirely new party brought to the table by Sedo, it receives four percent.
Now everyone just has to figure out who was actually behind offers the first time around (when a public auction was suddenly called off), and who is actually behind offers this time around.
And if your head hasn’t exploded after all of that, just consider the fact that Escom – or the group of feuding individuals that make up the corporate entities that make up Escom – is so unsure about the money appearing that they have already lined up a back-up buyer in case the whole deal falls through.
“This is not a complicated transaction,” argued Jeffrey Dulberg with an apparently straight face, “it’s the sale of a domain name; it’s a transaction.”
And so the saga of Sex.com continues. ®
Kieren McCarthy has written a book about the fight for Sex.com (http://sexdotcom.com).