thief faces justice after hiding out in Mexico for four years

The high-stakes manhunt that ended with the cuffing of Internet porn site thief Stephen Cohen last week in Tijuana may seem like the happy conclusion to a sordid tale of greed, sex, and the excesses of the Internet gold rush.

But for Web entrepreneur Gary Kremen, the founder of, the Oct. 28 arrest simply represents the start of a new, difficult chapter: the one in which he and his attorneys try to force Cohen to cough up the millions he owes him.

Four years ago, after a lengthy legal battle, a federal judge found that Cohen — a convicted felon who has served prison stints for forgery and impersonating a lawyer — had hijacked the domain name, which Kremen registered in 1995.

The court found that Cohen stole the URL by forging a letter from Kremen's company, and then turned into a lucrative pornography Web site that generated between $40 and $60 million in profits.

In 2001, U.S. District Court Judge James Ware ordered Cohen to pay $65 million to Kremen. Cohen instead fled to his estate in Tijuana. The settlement figure, with interest, now stands at $82 million.

Cohen is slated to appear before Ware on contempt of court charges Monday in San Jose, Calif.'s home page

The 57-year-old fugitive was arrested Oct. 28 while applying to renew his Mexican work visa. U.S. marshal Don Vazquez said he had a confidential source that provided details of Cohen's whereabouts.

Vazquez said he had chased Cohen in the past, and that his interest in the case was revived on June 28 when Jhuliana Aramis Cohen, the 21-year-old daughter of Cohen's former wife Rosa, was arrested trying to cross San Diego's San Ysidro border crossing with 202 pounds of marijuana. She was sentenced last week to 10 months in federal prison.

Vazquez notified Mexican immigration officials, who were on the lookout for Cohen when he showed up for a routine visa renewal.

"I was at the border waiting for him," Vazquez said. "He tried to talk his way out of it. He was trying very hard to figure out a way not to be expelled from the Republic of Mexico."

'It's classic Steve'

After a jailhouse interview Tuesday, Kremen's attorney Timothy Dillon said Cohen was "heavily medicated and fairly relaxed," but that the discussion was not promising.

"He told me he was flat broke," Dillon said.

The attorney said Cohen offered to settle with Kremen for $100,000 cash, plus three properties. Dillon called the offer laughable — and said it has not improved since the initial discussion.

Stephen Cohen

"I understand his offer is now $75,000 and two pieces of property," Dillon said. "I think it's classic Steve. Here he is sitting in jail, and his offer is decreasing."

Kremen's June 28 lawsuit accuses Cohen of using Jhuliana and six other business associates to fraudulently transfer and conceal his assets in violation of the 2001 judgment.

Dillon said Cohen's money is tied up in ventures including a shrimp farm in Mexico, operated by longtime business associate Jack Hanna Brownfield, and The Bolero strip club in Tijuana, which is in his daughter's name.

Brownfield, who has known Cohen since 1973, said he is not hiding any of his assets.

"Anything that is being hidden is being hidden by Steve for Steve," he said. "I don't know anything about pornography. You want to know something about shrimp, come talk to me."

Sex, schemes and vandalism

Cohen's various frauds and clashes with the law go back at least three decades.

In 1975, he was found guilty of grand theft and check fraud. In 1990, he was arrested for operating a sex club in a residential neighborhood. In 1991, he was sentenced to 46 months in federal prison for posing as a lawyer in a bankruptcy court in an elaborate scheme to bilk an elderly woman's creditors out of $200,000.

In a 1999 interview with Wired News, Cohen denied stealing, claiming that he had been using the business name since 1979 as part of The French Connection, an electronic bulletin board he created for "swingers and nudist camps." He said the "com" in stood for "communications."

"Steve has always operated his businesses on the fringe, the gray area outside the mainstream, because he subscribes to the theory that that is where the money is," Brownfield said. "He has been in the sex business for many, many years and understands it as well as anyone."

Brownfield said he has tried to convince both sides to settle the dispute. He says legally Cohen was wrong to swipe the domain name, but claims that the convicted felon worked hard to build the business.

"I'm not saying he was entitled to it, but he put on the map," Brownfield said.

Meanwhile, Kremen, a recovering speed addict, splits his time between San Francisco, where's office is located, and Rancho Santa Fe, where he lives in Cohen's 9,000 square-foot Spanish-style villa that he took possession of as part of the settlement.

Cohen's mansion in Rancho Santa Fe, Calif.

Besides living in Cohen's house, Kremen has permission to open Cohen's mail in the presence of U.S. marshals. He said the former fugitive maintains between 50 and 60 active credit cards and estimated that he has $25 million in various offshore accounts.

Kremen said Cohen regularly has made harassing phone calls and even threatened to have him killed. He said Cohen also ransacked the Rancho Santa Fe property before going on the lam.

"He vandalized it extensively," Kremen said. "He ripped out the wiring. He removed the vegetation. He took the toilets. He took everything that was not nailed down — and some things that were."