Chapter 19: Charles Carreon

The following is an excerpt from the chapter where Gary Kremen meets the man that goes on to save his failing legal battle, only for them to fall out dramatically when the case finally reaches trial. If you enjoy this and other excerpts, please consider buying the whole book.

Charles Carreon recalls it was a beautiful Saturday morning in June the first time he met Gary Kremen. He had recently moved with his wife and kids from Oregon to Carpinteria in California, on the coast between Los Angeles and Santa Barbara.

Kremen and his girlfriend, Robin Kaufer, were driving from San Francisco to a party in nearby Santa Monica. Robin had been to law school with Carreon, and they arranged to meet up for lunch.

It was a month after Cohen's and NSI's responses, and Kremen was dismayed and angry. Carreon was not very impressed with Kremen's car – a beaten-up grey Honda Accord with wires poking out of the dashboard where the stereo should have been, but he found its occupant much more interesting. "He was overweight, kind of like a lump of clay that had been dropped from table-height and stuffed into a t-shirt," Carreon recalls. "Impish is the only word to describe him in those days. His constant mannerisms were emitting outrageous remarks punctuated by a malevolent smile and questioning eyes. It was impossible not to like him."

Kremen took to Carreon as well. When Kremen then told him over pizza the full details of the case, Carreon knew straight away it was his destiny to represent Kremen. This was the case he had been waiting for – an exciting, high-level challenge that was a million miles from his normal bread-and-butter legal work.

He told Kremen he was interested in taking on the case right there, and so they agreed that Kremen would send him the most relevant files, Carreon would read them, and they would arrange to meet up at the next available opportunity at Kremen's flat in San Francisco. And that's exactly what happened. Carreon was dismayed to read some of Kremen's deposition testimony, but nonetheless was certain that he was looking at a once-in-a-lifetime opportunity. With his mind bubbling with ideas, Carreon took the train up to San Francisco, where he and Kremen spent the day, evening and then the early hours discussing the case and how to win it. Carreon eventually collapsed on Kremen's couch. A friendship had been forged.

That friendship started off as it went on – intensely. Kremen was desperate to get Carreon up to speed and to test his dedication, so he flooded him with dozens of emails and phonecalls every day, covering every aspect of the case. That wasn't the only reason – time was rapidly running out. Kremen and Carreon had devised an entirely new approach to the case. Unless this was introduced to the court before Kremen's existing lawyers got much further, the window of opportunity would close and it would be dismissed by the judge.

In fact, there was a very good chance that the judge would dismiss it anyway – there had already been three different versions of the complaint and the case was clearly foundering. An entirely new complaint with an entirely new lawyer was going to be a hard sell. But Kremen was determined; Carreon even more so. The new, improved Carreon plan was to go in all guns blazing and paint Cohen as a thief, a villain and a liar. Carreon had also decided to go for NSI as well by refuting the idea that Kremen had anything sleazy about his character. It wasn't a fight between two pornographers; it was a battle between a respected businessman and an out-and-out con man – and NSI had taken sides against the businessman.

The modesty affected by Kremen's previous lawyers (sex.com for example was always referred to as "the domain name") had the unfortunate effect of making Kremen look sleazy – and embarrassed about it. Carreon decided the case should acknowledge the fact that they were fighting over sex.com – and do so proudly and unashamedly. After all, sex is the most natural thing in the world. And Gary Kremen never said he intended to post pornography on sex.com.

But what Kremen hadn't done yet was to tell any of the existing lawyers working on the case what his plans were. Communication between Kremen and the legal team had broken down, and the lawyers' belief in the case was almost non-existent, to the extent that Kathryn Diemer failed to file a response to Cohen's motion to dismiss the case. The deadline was 28 May 1999 and Diemer missed it completely.

The case could have collapsed there and then had it not been for a press release put out by Cohen on behalf of his Ocean Fund International company claiming to have bid $3.6 billion for Caesars Palace (except the illiterate Cohen had misspelled Caesars as "Ceasars" and referred to the Nevada Gamming, rather than Gaming, Commission). The whole thing was phoney, and Cohen had even created a fictional company chairman for the occasion, Sir William Douglas. Within hours of the announcement, a spokesman for Starwood Hotels was telling reporters that not only had the company not received an offer from Ocean Fund International but he had never even heard of it. Sir William Douglas, it turned out, was a former chief justice of Barbados and high commissioner to London, and he had even less idea what was going on.

It didn't stop newspapers across the world from reporting the "bid" as fact, however. Douglas ended up forcing an apology out of one UK newspaper ("we wish to make it clear that the article ‘Save the City from Sex.com insanity' contained allegations in relation to Sir William Douglas which were wholly untrue …"). And Cohen was caught posing as his lawyer Bob Meredith on the phone. And yet, despite it all, Cohen claims, years later: "The difference between me and Kremen is that everything we publish, we verify."

The press release reminded everyone on Kremen's side that they were fighting a common enemy. Here was irrefutable evidence that Cohen was a confidence trickster, a man prepared to fashion and promote the most outrageous lies for personal gain. It was also the perfect time for Kremen and Carreon to put their plan into action – they would go for Cohen's jugular and force the court to recognize that here was a thief and a charlatan, a forger and a fraudster. The only difficulty was that Kremen hadn't actually told his current lawyers about Carreon, or that he was going to tear up the current complaint and start again.

What happened next is opaque at best, further complicated by the fact that Levi and Warshavsky stopped paying the legal bills altogether. Carreon's sudden appearance caused consternation and led to a flurry of paper between Kremen's various lawyers and the court, with the judge offering secret meetings so Cohen wouldn't know Kremen's legal team had descended into civil war.

To add to the drama, Kremen's lawyer Joel Dichter received $150,000 in a wire transfer from Stephen Cohen's bagman, Jordan Levinson, around the same time. Charles Carreon believes this is evidence that Cohen found out about the funding problem and picked up Warshavsky's tab in order to undermine Kremen's legal battle. How else could an experienced legal team have completely missed a vital filing deadline? Did his lawyers throw the case? Asked straight out, Kremen gives a long thoughtful pause before answering. "I don't know. I didn't find out about [the $150,000 payment from Levinson] until a long time later."

The court then heard of an extraordinary series of coincidences. According to Diemer's declaration, which appeared three days after the press release, she had "inadvertently calendared the briefing schedule according to state court rules … rather than the correct Northern District deadline".

The story grew more incredible. While playing ice hockey on 25 May, Ms Diemer "sustained a concussion which caused some short term memory deficit". The next day (two days before the real court deadline), Ms Diemer then "believes she discussed the possibility of filing an amended complaint with Cohen's attorney, Mr Dorband". What this amended complaint was going to contain is anyone's guess, especially since no one had discussed any changes to the second amended complaint. The court deadline came and went.

It was only a fortnight later, according to Diemer, that she suddenly realized she had made a mistake. And despite valiant efforts, none of which were recorded, she only reached Bob Dorband on the same day that Cohen put out his press release – a dramatic coincidence if there ever was one.

It would seem that Cohen's approach to problems – throwing as many interrelating facts at the situation as possible in the hope of strolling through the fog unscathed – had become contagious.

What did Kremen make of this strange turn of events? Even years later he is careful: "All the lawyers I know have these case management systems and elaborate diaries. These guys have to know deadlines and it pops up three days before their deadline. That's one of their most important jobs." But he won't say any more than that – perhaps just as well because Judge Ware was well within his rights to kill case 98-20718 right there.

But, by some miracle, four days later Ware agreed to grant an extension, which brought Carreon into the case and gave him just three weeks to rebuild the case. It was, Ware said, "in the interests of justice", but he wisely chose not to go into too much detail.