“I’ll get it,” Zappy replied.
Sure enough, Zappy had just the guy: another hyperkinetic domain mogul, Mike “the Man” Mann. A self-described former “juvenile delinquent” from Baltimore who ran away from home and sold Guatemalan stones to hippie shops in L.A., Mann had gotten into the domain business after selling Menus.com, which he had bought for $70 (he’d wanted to open a vegetarian restaurant) and sold in 1998 for $25,000. From there, he became one of the biggest domain speculators online with his company, BuyDomains.com—which he sold in 2005 for $80 million.
On January 20, 2006, Mann and Zappy’s shell company, Escom, bought Sex.com—for $12 million in cash and $2 million in stock, the most money every paid for a domain. Escom released a statement saying they planned to transform the site into what it called, in a statement, “the market-leading adult-entertainment destination.” The Domain Name Journal, a trade publication, heralded it as “a landmark deal. An eight-figure sale has a way of overshadowing everything in its path.”
Kremen had never been one for material things, and the money wasn’t changing him now. When asked how he was going to spend his windfall, he said that, in addition to funding start-ups, he was going to purchase another four thousand domains—and make a donation to IP Justice, a San Francisco–based advocacy group for intellectual property law in emerging countries. As for whether the payout was worth the epic battle against Cohen, he remained optimistic.
“You can look at a glass as half full or half empty,” he told Ron Jackson, a reporter from Domain Name Journal, “I see it as half full. My life could have been much better without Cohen in it, or it could have been much worse. I actually learned a lot as a victim. I learned a lot about people’s character and a lot about the law. My life wouldn’t have been as full if I had not been a victim.” Now that he had let Sex.com go, he went on, he was letting go of some of his animosity against Cohen too. “Actually, I am sorry it has led to anyone being in jail. It’s very sad because it did not have to come to this,” Kremen said. “I don’t believe much in retribution. It doesn’t get you as much as you think it does.”
Despite countless hours of questioning, Cohen never buckled. As much as Kremen’s lawyers poked and prodded and tried to extract where his millions were hidden, they came up empty. And by year’s end, after fourteen months behind bars, there was nothing more the court could do to detain him. “Cohen has been incarcerated for more than one year, during which time Kremen has failed to locate evidence of hidden bank accounts or other assets,” Ware ruled on December 4, 2006. “Under these circumstances, the only purpose of Cohen’s continued incarceration would be punitive—an impermissible purpose for civil contempt sanctions.”
The next day, Cohen exchanged his prison orange for his street clothes, stepped out a free man into the California sun. It was so bright and so warm, like it had risen just for him.
CHAPTER 16
ACROSS THE BORDER
The past was dirty but the future was clean. That’s what Kremen told himself after he’d sold Sex.com. Soon he would part ways with the rest: selling his interest in the shrimp farm, the Bolero, the shack on Rail Court, and the mansion in Rancho Santa Fe too. He was going back to Silicon Valley with millions to bet on the next big thing.
For twenty years, he’d proven his ability to spot and invest in trends before they hit the mainstream. The domain names he once registered for free were now part of a multibillion-dollar business of internet real estate. With Match.com, he started online dating, now a $2 billion business and essential part of love lives around the world. Even the porn business on the net was still booming, despite piracy, bringing in $3 billion a year in new forms that couldn’t be pirated at all, such as live web cams. And with the rise of virtual reality, fully immersive video experiences, sex was predicted to, once again, drive the adoption of new technology just as it had done for so long in the past. The original players ball was over, but new ones would always come.
Kremen hadn’t always been right, he hadn’t always kept his shit together, he’d pissed off his share of people, like anyone, and he’d certainly crashed—personally and professionally—along the way. But he knew the cardinal rules of being a successful serial entrepreneur. You have to keep an open mind, and open wallet, before anyone else cashed in. You have to have the passion to pursue your dream when others don’t see it. You needed to obsessively fight, if and when anyone tried to take it away. And, in the end, you had to master perhaps the toughest challenge of all: knowing when to let go. Because, sometimes, the only way to start something new was to break with the old.
The opportunity he saw now was in clean energy, specifically solar. Despite the fact that people could save money with solar panels on their homes, they were put off by the high price of installation. For $50,000, the average person would rather remodel a kitchen. To Kremen, it didn’t make any sense. Here was a business, solar power, expected to become a $69 billion industry within a decade, and no one had figured out how to make it truly mass-market.
If there was one thing he learned from the porn business, it was “how to get your eye”—how to grab people’s attention and get them to spend money. Solar installers were failing miserably on both counts. Their presentations were unattractive, and their price points intimidating. “Installers are guys with trucks. They’re guys with ladders,” as Kremen told Mother Jones. “They’re not sophisticated marketers.” Buying solar panels, Kremen thought, should be as easy as buying a car: why not just create an easy way for the average person to finance going solar?
The result was Clean Power Finance, his solar financing start-up. The plan was to act as, essentially, a middleman between installers and buyers. Kremen provided two innovations: sales software, which installers could use to estimate and present a customer’s savings, and affordable loans for buyers once they decided to commit. He wasn’t the only one who believed. In September 2011, Kremen closed $25 million in venture capital funding for the start-up, along with the additional $75 million fund from Google. Rick Needham, Google’s director of green business operations, praised Kremen’s “innovative and scalable model” for its potential to “lower costs and accelerate adoption of solar energy.” His alma mater, Northwestern University, invited him back to teach a course on entrepreneurism at the Institute for Sustainability and Energy.
It wasn’t just his business life that was blooming. It was his personal life too. The man once called the “loneliest millionaire” was starting a family. A mutual friend had introduced him to a whip-smart doctor of internal medicine who’d immigrated from Bulgaria. Kremen liked her brains, and she liked his gumption. Plus they both wanted kids and, by 2011, had two bright-eyed boys of their own.
Kremen relished his new life of domesticity, playing with the kids and strolling with them through the Stanford campus, where he had become something of a local legend. Young entrepreneurs sought him out for advice, and investments. To fuel this, he started his own investment group, the Menlo Incubator. He launched CrossCoin Ventures, to help finance start-ups in the burgeoning arena of digital cash, such as bitcoin. He was just as brash about his predictions there as he was in the early days touting online dating. “It is unlikely that the world will ever return to a 20th-century era of paper money and plastic credit cards,” as he told Fast Company magazine. “The future is digital money on smartphones.”
With his investments in new money and green energy, he immersed himself in community service to fix up the environment his kids would be inheriting. He became president of the Purissima Hills Water District in Los Altos Hills, to help bring clean drinking water to the area, and joined the California Clean Energy Jobs Act Citizens Oversight Board, helping oversee the $650 million spent on energy efficiency upgrades to schools and public buildings. His phone was ringing so often he had to create a special message to ward off anyone who might bring him down. “Hi, you’ve reached Gary Kremen,” his chipper message went. “Please leave positive news after the beep, and negative news befor
e the beep.”
By 2014, the man who was known for battling over the dirtiest site online had become Mr. Clean. But it only took one person to rub him the wrong way before Kremen found himself slinging mud again. While in his capacity with the Purissima Hills Water District, he had asked the chair of the Santa Clara Valley Water District, Brian Schmidt, for $5,000 to fund the installation of a pipe over a local creek.
Kremen figured it would be a no-brainer, since his area of the district had put in more than a million dollars in taxes. But to Kremen’s surprise, Schmidt pushed back, suggesting there were enough wealthy people in the area to finance the creek project themselves. Kremen bristled, finding Schmidt smug and out of touch. “He really angered me with the fucking arrogance,” Kremen later recalled. “He wasn’t doing his job.” And if Schmidt wasn’t going to do his job, then Kremen would run against him and do it himself.
Kremen had found his new Stephen Cohen, a rival he became obsessed with beating. It was like he needed the competition, someone he could fight against to bring out the best in himself. He declared his candidacy for the Santa Clara Valley Water District Board, forming a campaign, pouring in his own money, hiring consultants, and going door-to-door. “It was like a start-up,” Kremen said, “a well-funded start-up.” He spent $130,000 on polling, printed up glossy mailers, hired Bill Clinton’s political consultant Rich Robinson. “It’s very unheard of for someone to spend that kind of money in a water district race,” Larry Gerston, a political science professor at San Jose State, told the Mercury News. “I can’t tell you what his reasons are.”
Neither could Schmidt, who found himself not only outspent but outwitted by his unexpected rival. When word spread that Kremen was behind a mailer mocking Schmidt’s plan for recycling waste water into drinking water, Schmidt had enough: firing back with the YouTube video he shot accusing Kremen of dirty tricks. He suggested that Kremen’s investment and board position in WaterSmart, a company that sold software to water districts, could create problems down the road if he won. “His continued involvement with the business could create potential conflicts of interest,” Schmidt said.
Kremen denied any involvement in the toilet water mailer, and stepped down from WaterSmart, offering to donate his shares if they posed a conflict. But there was one thing he had more difficulty shaking: his involvement with Sex.com. At one point, an elderly grande dame of local politics asked him to explain why he would be involved in such a venture. Kremen took a deep breath, and told her the story. “We all have shit in our past,” he concluded. And she agreed, throwing her endorsement behind him.
She was far from alone. Dozens of high-profile political leaders, including the Santa Clara County sheriff Laurie Smith and a former Democratic candidate for governor, Steve Westly, rallied behind him as well. “If he wasn’t qualified and was trying to buy his way in, I would be concerned,” Gilroy mayor Don Gage said of Kremen. “But from what I can tell, he is sincere. He’s a bright young man.” On election day, the votes came in: by 937 votes, Gary Kremen won.
Schmidt, reluctantly, accepted defeat. “I’m proud of what I did,” Schmidt told the Palo Alto Weekly, “running it to a near draw while being outspent 22-to-1.”
And as Kremen told the Palo Alto Weekly, he felt surprised himself. “I guess I’m an idiot to do this,” Kremen said. “All I wanted was to do something about the drought and about water. I didn’t think it would get so personal.” The next thing he knew, he was getting sworn in as the chair of Silicon Valley’s biggest water district. It was a huge responsibility, and one that, he later admitted, he hadn’t fully thought through when he entered the race. But now that he was in the job, he was ready to fight.
Those who knew Kremen best had a feeling that now, with this latest rivalry put to rest, the biggest one of his life might find a way of coming back. As his lawyer Tim Dillon put it, “Steve Cohen will do something, piss somebody off, he’ll make a mistake and expose himself on some assets down the road and then we’ll go after him. I don’t think Gary’s done.”
* * *
On Friday, March 8, 2013, in Sacramento, California, a telephone rang inside the Office of Administrative Hearings, the government organization that handled hearings for more than 1,500 state and local agencies. The caller identified himself as Bob Meredith, an attorney in Utah and friend of Stephen Michael Cohen.
Cohen, Meredith explained, was scheduled for a hearing in three days regarding a private investigator’s license he had held since 1983 and used under the business name The Stephen M. Cohen Investigative Agency. The license was due to expire in January but the Bureau of Security and Investigative Services had found six causes for disciplinary action that would necessitate his license being suspended or revoked.
The complaint read like a greatest hits of Cohen’s con jobs: his 1972 conviction of petty theft, which landed him in county jail; the 1975 conviction of writing bad checks, which earned him another year in the slammer and five years’ probation; the 1977 conviction of grand theft, false personation, and forgery; the 1978 conviction of writing more bad checks; the 1992 conviction of bankruptcy fraud, false statements, and obstruction of justice, which earned him forty-six months in prison.
And then there was his culpability in the case of Gary Kremen v. Stephen Michael Cohen, et al., in which he had been found guilty of “unlawfully taking control of the domain name, Sex.com, and profiting from its use by turning it into a lucrative online porn empire.” In the eight years since he had been jailed for failing to obey the court’s orders, Cohen still had yet to pay a penny of the $82 million he owed Kremen. As Cohen had recently told the bureau investigator when asked about the matter, “I have no intention of satisfying the judgment and I will not pay.”
As Meredith explained on the phone, however, Cohen would not be able to make the upcoming hearing on his PI license case. The night before, he said, Cohen had been rushed to a hospital in Juárez, Mexico, and was now having open heart surgery. The hearing, therefore, would have to be set for another day, assuming Cohen survived.
When Dillon heard this news from the court, however, he arched his brow. It had been Dillon and Kremen who had reported Cohen to the Bureau of Security and Investigative Services. Kremen had long been annoyed that having a PI license was giving Cohen access to databases of personal information he might use to help his cause. But after getting notified about Meredith’s call, something told Dillon that Cohen was just being Cohen again.
When he did a search on attorney Robert Meredith, a name he’d recognized from the annals of Cohen’s cases, he was shocked—even by Cohen standards—to find out just how right he was. As he read on the webpage for the Starks Funeral Parlor in Salt Lake, “Bob passed away quietly on March 7, 2013”—the day before he had allegedly called to delay Cohen’s hearing. This meant one of two things: he had called from the afterlife, or Cohen had called pretending to be him. The court determined the latter. Cohen, indeed, was just being Cohen again.
And he had been since walking out of the Santa Clara County Jail in California seven years before. Buoyed by his release, Cohen was confident that he had, at long last, warded off Kremen for the very last time. But he wasn’t taking any chances. When he crossed back over the border to Tijuana, he knew he would likely never be coming back to live in the United States, anywhere near the reach of Kremen, again.
In the years since, Cohen got back to rebuilding his life—in his own idiosyncratic fashion. Decades before, he had been among the first to see the future of sex online. Now that he was retired from that industry, he was moving on to the next lucrative new frontier: drugs. With the skyrocketing prices of medicines in the United States, so-called e-pharmacies were estimated to reach above $100 billion in sales by 2025. Cohen got into the business with his company Medicina Mexico, and claimed to own more than 250 licensed pharmacies throughout the country. He sold hundreds of drugs for everything from allergies to gout and weight loss through his main website, meds.com.mx. The biggest sellers were erectile dy
sfunction drugs such as generic Viagra and Cialis. The motto on his website: “Take care of your body. It is the only place you have to live in.”
And, like Kremen, he was bullish on the future of cryptocurrency—so much so that he wrote a primer on it for anyone wishing to use it to buy drugs on his site: “BITCOINS AND DIGITAL CURRENCIES By Stephen Cohen. Filed copyright through the U.S. Library of Congress.” He touted the revolutionary aspects of bitcoin: the privacy, the anonymity, the fact that it existed far beyond the reach of banks or courts or greedy tax collectors. “Your money can’t be seized by Governments, banks, creditors, or on judgments,” he wrote. And, just as he predicted sex and dating would drive the internet, he insisted that bitcoin was already an inevitable. “Cash will cease to exist in future,” he wrote. “Digital Currency will continue to exist where cash will not.”
Though his exact earnings remained a mystery, some said he was bringing in millions per month. “I never had problems with money,” as Cohen put it. “Money was never an issue. Certainly isn’t now, but you didn’t hear that from me. I’m set for life.”
When he wasn’t hustling, he was settling into his senior years—“mellowing,” as his old friend Jack Brownfield, who still talked with him three times a week, put it. He was back with his ex-wife, Rosey, grandparents now to Jhuliana’s two children. He’d taken up making his own beef jerky. Chris Jester, who still kept in touch with Cohen, would walk into his office to see strips of meat drying on racks. Cohen still enjoyed a cheap hot dog at Costco in Tijuana, and had become a fixture at TGI Fridays, where he’d come with his coupons and eat alone at his regular booth by the window in the back.
The Players Ball Page 22