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An Oregon attorney who says he salvaged the sex.com case two years ago and was then promised 15 percent ownership in the site is going after a portion of a $65 million judgment won by the site’s owner. A U.S. district judge Tuesday found the former owner of the sex.com domain name liable for fraud and forgery and awarded the judgment to the domain’s original registrar. Attorney Charles Carreon says he is entitled to $9.75 million, or 15 percent, of that award. Carreon also is asking for $60,000 a month, or 15 percent of the estimated $400,000 in profits the site brings in each month, and $82,645 in unpaid hourly fees and expenses. Carreon, who was fired in January by sex.com owner Gary Kremen, filed suit in U.S. district court in San Jose, Calif., on March 8, the day the trial over the domain name began. “It’s pretty clear to me that the retainer agreement should be interpreted to provide 15 percent of revenue derived from sex.com,” said Carreon, who is based in Medford, Ore. The fight over fees could become as much of a spectacle as the domain-name battle itself, because Carreon said sex.com owner Kremen conferred with as many as 20 attorneys throughout the case — a statement that Kremen confirms. U.S. District Judge James Ware, who presided over the domain-name trial, has already rejected a notice of related case, indicating that he may be called to testify in the fee dispute. If the attorneys who advised Kremen are called as witnesses, questions surrounding attorney-client privilege could complicate the dispute. Kremen has denied ever promising Carreon part-ownership in the site and said he hoped the dispute could be solved out of court. “It’s really unfortunate because I like Charles. I am actually saddened,” Kremen said. “I think he’s been paid.” Richard Idell, a partner with San Francisco’s Idell, Berman & Seitel, is representing Kremen in the suit. “We’re still evaluating our response,” Idell said. “There are a lot of things in the case we don’t agree with.” Attorneys at Kerr & Wagstaffe, the San Francisco firm that represented Kremen for the latter part of the case, say they are not involved in the fee dispute. Kerr & Wagstaffe attorneys wouldn’t comment about their fee arrangement, but Kremen said they were paid on a per-hour basis. Kremen first filed suit to reclaim sex.com from defendant Stephen Cohen in July 1998. A year later, Carreon met Kremen, who expressed dissatisfaction with the direction of his case, according to the complaint. “The case was on the rocks. It was just a hair’s width away from being dismissed with prejudice,” Carreon said. “It looked seedy, and it was on the ropes.” Carreon agreed to take over the case. After weathering several stormy months, Carreon was allowed to file a third amended complaint in October 1999, which gave the case a second wind. Carreon, who said he was billing at a reduced rate of $100 per hour, contends the part-ownership deal was negotiated as part of his compensation. Kerr & Wagstaffe was brought into the case to handle an appeal of an earlier ruling that had dismissed Network Solutions Inc. as a defendant in the suit. The San Francisco firm’s reputation in Silicon Valley and with Judge Ware proved valuable, and it eventually took over as trial counsel, Carreon said. In November, after Ware returned the domain name to Kremen, Carreon said he was named in-house counsel for sex.com. Carreon said his first move was to rework the site so it met obscenity laws. Carreon said under Cohen’s ownership, the site featured X-rated photos on its entry page. He wanted to clean up the site to stave off future suits and protect his own reputation. “I was worried that I could be exposed to severe ethical sanctions for allowing sex.com to operate in a way that could burn little Susie’s eyeballs,” Carreon said. “I’ve only got one professional life to live, and I don’t think clients are very sensitive to that.” Carreon said his recommendations to clean up the site were met with resistance and led to his firing as in-house counsel last winter. He said he was paid $45,000 in profits for December and $37,500 in January. Carreon said he doesn’t expect to collect the entire 15 percent from the $65 million judgment, because the defendant Cohen has already transferred most of his fortune overseas. Charles Carreon v. Gary Kremen, 01-20195, is on calendar in U.S. District Judge Ronald Whyte’s courtroom.

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