Chapter 3: Theft
"So one day, the name disappeared," explains Gary Kremen. "One day it said one thing, one day it said another. I saw some guy's name next to it, but if you looked through it my information was still there. I just thought, you know, it's some bureaucratic screw-up and that eventually they'd figure it out."
It was September 1995 and the new name that had appeared on the electronic ownership records for sex.com was Stephen Cohen and, unknown to Kremen, he had just stolen the domain name after several days of concerted effort. Kremen's email address had also changed from email@example.com to firstname.lastname@example.org.
What gave Kremen peace of mind was that his home address was still there. He decided it was probably an accidental overwrite of information on the database – this was, after all, the early days of the Internet and its systems were still very far from 100 per cent reliable. Kremen reasoned that when the mistake was noticed, the company in charge would simply revert back to an earlier saved version and his name would be restored.
But it was not to be. Kremen kept checking sex.com's details, and for a fortnight it stayed the same: a mix of Kremen and Cohen's information. And then, one day, his address also disappeared, replaced with one he didn't recognize. Shortly after, Stephen Cohen's name also changed, this time to a company name, Sporting Houses Management. And that was it. Gary Kremen had just become one of the first men in the world to be conned over the Internet. He had lost the Net's most valuable property, silently, on a computer screen, right before his very eyes.
So he did what anyone would do and called the number listed as the contact for sex.com to find out what the hell was going on. And he spoke for the first time to the man he would spend the next ten years chasing. According to Kremen, Cohen told him straight off that he had trademark rights in the name sex.com, but Kremen didn't believe him and immediately called the company that ran and sold all dotcoms at the time, Network Solutions, asking to be given the domain back. Cohen recollects an altogether different version of events. "It only lasted maybe ten seconds, the whole call," Cohen says. "He made some off-the-wall comment: ‘I'm sex.com, you're not sex.com.' I told him to go fuck himself and hung up."
Whatever happened, Kremen did call NSI, "and they said they'd investigate and I said fine, get back to me. And then they never got back." But Kremen was persistent and kept calling and arguing, refusing to be put off until he finally reached the head of investigations, Sherry Proehl. Proehl told him that if what he said was true, he shouldn't worry, and the domain name would be returned.
So far, so good. Except Kremen had no idea who he was dealing with. He had blithely entered the foggy world of Stephen Michael Cohen, where nothing is certain except for the fact that Stephen Michael Cohen will come out of it better off. Just two days after discussing the situation with Sherry Proehl, Kremen received a call out of the blue from a Bob Johnson, who identified himself as Proehl's supervisor. Johnson advised Kremen that NSI would not be returning the domain because Stephen Cohen did indeed have a trademark in the name and so possessed greater rights to it.
"This was just when the issue of people registering other people's trademarks hit," Kremen explains years later. It was November 1995, and domain names were just beginning to enter people's consciousness because Network Solutions had started charging $50 a year for them. Thousands of people suddenly all had the same thought: if people were willing to pay money for a space on this computer network, there must be a market for other goods. And so company lawyers started making a lot of noise about how currently anyone could register company names and trademarks as domain names without authorisation. Network Solutions was desperate to avoid a fight with corporate America, and the issue had inevitably found its way into the press. The trademark issue was therefore timely and struck a chord with Kremen. "It was a believable story. I believed it. I didn't realize how dumb that was until later on."
It wasn't really so dumb of Kremen to believe the story, but even so it was baloney. There was no Bob Johnson at NSI – it had been none other than Stephen Cohen on the telephone. Cohen had already spent a decade posing as everyone from government officials to FBI agents to lawyers. He was so good at it that, according to one story, he had even impersonated a judge in Colorado, heard real cases in court, and let people off before he was finally discovered by an embarrassed judiciary. Kremen simply had no idea he was dealing with a master criminal who was prepared to say or do anything, legal or not, in order to keep the property he'd stolen.
And the phone call from "Bob Johnson" was all it took for Cohen to secure ownership of sex.com. It stopped Kremen from chasing NSI for several valuable months, during which time Cohen managed to jump the last hurdle – Proehl's real boss. David Graves was looking at the change in sex.com's ownership and had told Cohen he wanted proof that it was legitimate. Cohen told him he had a signed document that handed over ownership to him, so Graves asked him to send a copy. Nearly three months after he had stolen the domain, and under increasing pressure to prove his claim, Cohen finally faxed NSI what was to become the most controversial and bitterly fought-over document in the battle for sex.com.
How was the most valuable domain name on the Internet stolen? With a one-page forged letter. It was from the president of Online Classifieds Inc., the company name under which Gary Kremen had registered sex.com, and it was addressed to Stephen Cohen. The president, a Sharon Dimmick, wrote that she was handing over ownership of the sex.com domain to Cohen in recognition of his existing trademark for no consideration i.e. for free. She pointed out that Gary Kremen had been fired, and the company had decided not to do anything with sex.com, and so was turning it over to Cohen. The most crucial part of the letter, however, stated that it – the letter itself – should be used as proof of Online Classifieds' intent and should be presented to Network Solutions as evidence of the agreed transfer.
The whole thing was a fake produced on Cohen's home computer, and printed out and faxed to NSI from his workplace. It was sent on 5 December 1995, but dated 15 October of that year – two days before Cohen actually stole sex.com.
It was a cunning ploy, appearing to give Network Solutions all the justification it needed to change ownership, while also explaining why Gary Kremen had complained – because he was an aggrieved ex-employee. However, while the letter was a clever piece of high-wire balancing, it suffered from one major defect that would ultimately lead to Cohen's downfall: it was appallingly written.
Cohen possesses an unnatural gift of persuasion, but he left school early with a poor education, no qualifications and dreadful literacy. He can't spell, and he has never learned the art of writing. As a result, he simply types verbatim what he would say to someone, never fully recognizing the difference between what people say and how they express the same thing in print.
The letter heading itself possessed a glaring mistake. It read: "Online Classifieds, Inc. (For your online ad's)". The extra apostrophe in "ads" is a basic grammatical error, and one that would be understandable in the body of a letter, but almost inconceivable in a company's official letter heading, reproduced thousands of times on company stationery. It also contained no phone number or email address or website. And, as Kremen's lawyers were to discover, the letter heading was printed in an unusual font that Cohen had been using in his letters, both forged and real, for years.
The rest of the letter is just as sloppy, and the syntax frequently childish. It began: "Per our numerous conversations, we understand that you have been using sex.com on your French Connections BBS since 1979 and now you want to use sex.com as a domain name on the internet. Our corporation is the owner of sex.com as it relates to the internet." Would the president of a company really write an important letter so poorly? Cohen also hadn't done his homework – the ".com" extension only came into existence in 1984. Considering that this phoney letter was being faxed as proof to the very company that ran all dotcoms, such a glaring error was bound to raise eyebrows.
It continued just as badly: "At one time, we employed Gary Kremen who was hired for the express purpose of setting up our system. We allowed Mr Kremen to be our administrative and technical contact with the internet, because of his vast experience with computers and their connections to the internet.
"Subsequently, we were forced to dismiss Mr Kremen. At no time was Mr Kremen ever a stockholder, officer nor a director of our corporation and as such, Mr Kremen has no rights, titles or interests in our domain name. Further, the internet shows that sex.com is listed in our corporation and not in Mr Kremen's personal name. In fact, Mr Kremen is the president of a different and unrelated corporation called Electric Classifieds, which is located at 340 Brandon Street in San Francisco, California. Further, Mr Kremen's corporation owns match.com which is listed with the internet registration.
"We never got around to changing our administrative contact with the internet registration and now our Board of Directors has decided to abandon the domain name sex.com."
While the concept behind the letter was brilliant, its execution was poorly handled. What company would claim that it "never got around" to doing something? Why would the president of Online Classifieds talk about match.com? In a phone conversation, the slang would be fine and the tangents about Gary Kremen, complete with precise facts, would give the listener greater confidence in the speaker. But when put down on paper, such persuasive techniques jar. Cohen had completely over-egged it by going on about Kremen when the letter was only supposed to be handing over ownership of rights in sex.com.
The final paragraph in which Cohen sought to have the letter itself act as a passport to the domain change was too blunt and blew the whole scam:
"Because we do not have a direct connection to the internet, we request that you notify the internet registration on our behalf, to delete our domain name sex.com. Further, we have no objections to your use of the domain name sex.com and this letter shall serve as our authorization to the internet registration to transfer sex.com to your organization."
The likelihood that a company called Online Classifieds, which was handing over ownership of an Internet domain, did not have an Internet connection was so remote it would be bound to set off alarm bells. Cohen's motive was also immediately obvious: this was sex.com, the most transparently desirable Internet domain in existence. NSI only had Cohen's word that the transfer was legitimate, and the proof of this was a highly unusual and unorthodox letter sent to Cohen, and faxed by Cohen.
And that should have been the end of the matter. The remarkable tale of sex.com reduced to a few weeks of irritation before Kremen was handed back the domain and things continued as they were previously. The domain transfer had already been flagged up as suspicious. The original owner had complained, and the apparent proof of its legitimate transfer was a transparent forgery. Handing the domain back really was no more than typing a few details into their system and hitting Save.
But it never happened. There was no investigation – not one that NSI has ever admitted to, anyway. Kremen was ignored, and Cohen was allowed to continue running sex.com, which even back in 1995 was making him hundreds of thousands of dollars every month. Why?
That was the question that would haunt Gary Kremen for the next eight years.