News The full tale of Sex.com The legal battles and the law Information on the book and the author
 
Article archive
15 Jun 1999
Sex.com's pipe dream
Craig Bicknell, Wired

The already strange story of Net porn site Sex.com took a bizarre turn on Tuesday when the supposed corporate owner of the site said it planned to buy Caesars Palace and its seven casinos for US$3.6 billion in cash.

In a press release titled "Internet Porn Giant To Buy Caesars Palace," Ocean Fund International, a mysterious British Virgin Island-based company that claims to own Sex.com, said it had submitted the bid to Starwood Hotels and Resorts, the owner of the Caesars chain.

Ocean Fund, the registered owner of the Sex.com domain name, is embroiled in a lawsuit that alleges the site's operator Stephen Cohen, a convicted felon, tricked Internet registrar Network Solutions and stole the lucrative domain name.

The plaintiffs in the case question whether Ocean Fund International actually exists, or is just a shell corporation created by Cohen to place Sex.com and its earnings outside the jurisdiction of US law.

Ocean Fund's announcement Tuesday came as a big surprise to officials at Starwood.

"We've never heard of them, and we've never received any bid from them," said Jim Gallagher, Starwood's senior vice president of public relations.

Starwood (HOT), the biggest hotel owner in the world, is trying to sell the Caesars chain to Park Place Entertainment (PPE) in a $3 billion agreement signed in April. Gallagher said Starwood remains committed to the arrangement. He expects the deal to close by the end of the year.

Still, after learning of Ocean Fund's press release from a reporter, Gallagher pulled a copy off the wire and called the Ocean Fund number at the bottom. Someone identifying himself as a lawyer for Ocean Fund expressed surprise that Starwood hadn't received a faxed bid, and said he would fax it again, Gallagher said.

"I said, 'Don't fax it to me, I'm just the press guy. Fax it to our general counsel!' Obviously, this is not the way these things are usually done," said Gallagher.

Bob Meredith, an attorney who said he works part-time for Ocean Fund, claims he sent the fax and it was received. "I have one of those fax confirmation things in my hand," he said. "We'd love to press forward with this, but the question is whether they're going to even look at it."

When pressed for details about the bid or the strategy behind it, Meredith deferred, saying, "I'm just the messenger." He said he received instructions to send out the press release Sunday night from Ocean Fund, though he couldn't say who sent the message.

"I'd have to look it up in my file -- my Alzheimer's is acting up."

Nor could he offer any more detail about the corporate structure, management, or assets of Ocean Fund. In the release, however, a Sir William Douglas is identified as chairman of Ocean Fund, and boasted of the success of its principal asset, Sex.com.

"There are some people in this industry who claim to make a lot of money. In fact, Sex.com does 86 percent of the sex-related business on the Web. We make more than Penthouse, Hustler, Playboy, and all other major sex Web sites combined," the release gloated. More than 9 million subscribers pay $24.95 a month for subscriptions to the site, the company claimed.

The release then digresses into details about Ocean Fund's plans to spend $100 million to build out the fiber-optic infrastructure of Tijuana, Mexico.
Starwood's Gallagher said the release contains typos and misspellings, including a reference to the riverboat casino Glory of Roam, which Starwood traditionally refers to as the Glory of Rome.

A Sex.com competitor in the online adult industry dismissed the release as nothing more than a cheap publicity stunt.

"Are you writing an article about it?" said Seth Warshavsky, CEO of the Internet Entertainment Group, which operates several adult sites. "That's the motivation. The whole thing is complete bullshit. He doesn't have the money."

Warshavky's company is helping to fund the domain dispute lawsuit against Sex.com.

This isn't the first time that a venture involving Cohen and touting Sex.com as a resource has made a bid for a Nevada landmark.

In January 1996, Cohen and a group of four Orange County, California, entrepreneurs unveiled a bid to buy a Nevada brothel called Sheri's Ranch. They planned to transform it into a $100 million "adult fantasy resort."

Named Wanaleiya, the Polynesian-themed resort would feature 500 exotic women who "would not hesitate to see to your comfort and pleasure." To finance the dream, the parent company, which Cohen called Sporting Houses Management Corporation, would sell shares to the public. It posted the prospectus for its offering on Sex.com.

Cohen had taken control of the domain in late 1995, shortly after he was released from the federal prison in Lompoc, California.

Gary Kremen, the man who claims to be the original owner of Sex.com, sued Cohen and Ocean Fund in 1998 to regain control of the domain.

Cohen allegedly pulled off the domain heist with a forged letter, dated 15 October 1995, to Network Solutions, the Net's registrar. According to Kremen, Cohen duped Network Solutions by ginning up a memo on phony letterhead from a bogus executive at Kremen's company, Online Classifieds, authorizing transfer of Sex.com to Cohen.

According to the US District Court in San Jose, jury selection for the case will begin in June of 2000.

Cohen was convicted in 1991 for posing as a lawyer in a bankruptcy court in a scheme to bilk an elderly woman's creditors out of $200,000. According to court records, Cohen assumed the identity of several attorneys, forged phony deeds and cashier's checks, and attempted to hide the woman's assets.

In 1975, he was found guilty of grand theft and check kiting.

Cohen's big plans for Wanaleiya fell through. According to people familiar with the matter, neither the owner of Sheri's Ranch nor any other brothel owner in Nevada would sell out to the California upstarts.

"They wanted to open the Caesar's Palace of brothels," said one brothel owner who declined to be identified. "But they didn't know their ass from a hole in the ground. It was a little bit like me deciding to build an atom bomb when all I've got is the casing."

Thereafter, Cohen devoted his efforts to building out the Sex.com domain, ownership of which he subsequently transferred to Ocean Fund.

 

Back to top

NEWS | Latest | Article archive | Photos/Interviews