Stephen Michael Cohen, a career con man who made a fortune by stealing a pornographic Web domain in the early days of the Internet gold rush, will not be released from jail until he provides the court with a full accounting of the millions he reaped from the pilfered site Sex.com, a federal judge has ruled.
Cohen, 57, who was arrested Oct. 28 after five years on the lam in Mexico, appeared Monday afternoon in San Jose federal court before Judge James Ware — the same judge who in 2001 ordered him to pay $65 million to Internet pioneer Gary Kremen, who registered the Sex.com domain in 1995.
After a 2001 trial, the court found that Cohen stole the Sex.com site by forging a letter from Kremen's company and then turned the URL into a lucrative porno site generating between $40 and $60 million in profits.
In addition to the debt, Cohen faces multiple contempt of court charges for repeatedly ignoring court orders. Ware said it was unusual for a judgment debtor to be jailed, but that in this case it was justified.
"Given the seriousness of the case, it's the court's intention to hold him in custody," Ware said.
Addressing the court Monday, Cohen, who has served prison stints for forgery and impersonating an attorney, said heart problems and an unrelated criminal case in Mexico prevented him from returning to the United States.
He said he had been "physically detained" in Mexico and later "went abroad" for heart surgery. He expressed some remorse.
"I had a duty to appear and I clearly did not appear," he said during a brief statement.
Cohen's attorney John Goalwin said his client "never intended to be contemptuous of this court and wants to do everything he can to comply."
Another defense attorney, Roger Agajanian, who has defended Cohen several times over the past 30 years, said he has agreed to take Cohen into his home and "stand for him" when he is released.
"I've known him for a long time, he has a lot of good qualities," Agajanian said.
But Kremen's attorneys, Timothy Dillon and Richard Idell, argued that the Mexican criminal case was fictitious and that Mexican authorities never detained Cohen.
They contend Cohen has multiple offshore bank accounts and investments in numerous businesses, including a Tijuana strip club and a Mexican shrimp farm operated by convicted drug smuggler and long-time Cohen associate John Hanna Brownfield.
Outside the courtroom, Kremen's attorneys said Cohen's statements in court showed he had no intention of coming clean about his assets.
"I can tell you 20 companies he has started and run money through" during the past several years, Dillon said.
"If there was ever a time to cut the crap and be straight, now is it, because we have been working for five years to get information on this guy," Idell said.
Kremen, who currently generates about $1 million a year through Sex.com, also founded and sold the dating Web site, Match.com. After the 2001 trial, he gained control of Cohen's Rancho Santa Fe home, as well as another warehouse in San Diego near the Mexican border.
But tracking down Cohen and his money — the outstanding settlement, with interest, now stands at $82 million — has become an obsession and high-stakes game for Kremen.
He says he has spent $5 million on lawyers and private investigators — and judging by Monday's court appearance, still faces obstacles before he sees any money from Cohen.
"It's the same circus," he said. "It hasn't changed one iota."