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A bizarre battle over the lucrative domain name sex.com continued to play out in U.S. District Court this week with the plaintiff’s attorneys accusing the defendant of blatantly defying a court in-junction and hiding assets overseas. In response, the judge ordered the ex-convict defendant, who now resides in Mexico, to appear in court in February to show cause for ignoring the injunction. The ongoing legal battle over the domain name for the sex.com Web site — which brings in $17,000 a day — is being closely followed by members of the legal and technology sectors. The fight over control of what some have labeled the most valuable piece of real estate on the Internet began nearly five years ago when defendant Stephen Cohen had the domain name transferred into his name by drafting a fraudulent letter. Cohen, who has been convicted of bankruptcy fraud, then used the sex.com site as the center of his pornography empire. Entrepreneur Gary Kremen had originally registered sex.com in 1994 while a graduate student at Stanford University. Kremen filed suit against Cohen and Network Solutions Inc., which transferred ownership of the site. NSI was dismissed from the suit when U.S. District Court Judge James Ware ruled do-main names are not tangible property, therefore property laws do not apply to domain names. In November, Ware returned the domain name sex.com to Kremen and ordered $25 million of Cohen’s assets frozen in anticipation of a damages award. In court Monday, Kremen’s attorney James Wagstaffe accused the defendant of flouting the judge’s order by transferring at least $1 million to overseas accounts. “I know this is an old movie line, but show us the money,” said Wagstaffe, of San Francisco’s Kerr & Wagstaffe. “Where is the $15 million that went through the (Cohen’s) accounts over the three years?” Wagstaffe also said Cohen had repeatedly thwarted discovery, refusing to turn over business and tax records or appear for dispositions. “You don’t have to do more to convince me that (Cohen’s) credibility should be questioned by the court,” Ware said. The defendant’s attorney, Robert Dorband of DuBoff, Dorband, Cushing & King in Portland, Ore., told the court Cohen and his companies — which are listed as co-defendants — do not have $25 million to freeze and asked the court to stay the order, which was promptly denied. ‘We are not hiding anything,” Dorband said. “This isn’t a scheme for transferring offshore assets.” Dorband then presented the court with two third-party checks drawn on foreign banks totaling a little more than $1 million to comply with the November order. Ware assigned a special master to liquidate the two checks as well as look at taking control of Cohen’s remaining U.S. assets. They include 90 additional domain names including sex.net and real estate in Rancho Santa Fe valued at $4 million. Ware also ordered Cohen, who has been elusive throughout the dispute, to appear in court February 28 to show cause why he did not respond fully to discovery and obey the injunction.

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