After almost five years on the run, the conman who stole the most valuable domain name in the world, sex.com, was today handed over to US authorities.

The arrest of Stephen Cohen, 57, is the latest twist in the most extraordinary legal epic from the dot.com boom: a virtual tug-of-war which became a multi-million dollar feud, stretching from the bandit country of Mexico to the tax-exiles' hideaway of Monte Carlo.

In the end, its conclusion was prosaic. Cohen, who has served three prison terms for fraud, was arrested yesterday in Tijuana as he applied for a work permit.

He was turned over to agents of the US Border Patrol, according to Deputy Marshal Tania Tyler, and is being held without bail at the Metropolitan Correctional Centre in San Diego.

Cohen is being questioned over his failure to pay $65 million to entrepreneur Gary Kremen, the original owner of the sex.com domain, in a court judgement reached in April 2001.

"I'm excited, and I'm happy to prepare for the next stage of justice," said Mr Kremen.

The convoluted and long-running legal skirmish began in the early, innocent days at the dawn of the internet.

In 1994, when domain names were given out free to the first person who asked, Mr Kremen had the foresight to register the web addresses sex.com and match.com.

As Mr Kremen busied himself building match.com into what became the world's biggest dating site, sex.com remained a simple advertising portal - hired out to pornography retailers for a monthly fee of around $60,000.

Following his release from his third prison sentence for fraud and forgery in October 1995, Cohen realised the potential of the site which he considered to be under-exploited.

Accounts vary of exactly how he pulled off the elaborate hijack. Some reports suggest that he embarked on a relationship with one of the clerks at Network Solutions, the company which then administrated all dot.coms.

Others suggest that he forged a letter to the domain-name registrar saying that Mr Kremen had been fired. The name was handed over without even cursory checks.

When, some months later, Mr Kremen discovered his profitable sideline had been swiped he contacted Network Solutions; but with no legislation to cover virtual theft the company said it was powerless to intervene.

Mr Kremen sued Cohen, whose lawyers fought back with such ferocity that the federal judge on the case ordered Cohen's arrest for contempt of court. By this time, the rejuvenated sex.com was bringing in tens of millions of dollars and attracting 25 million hits a day.

After five years of litigation, a judge ruled that Cohen had obtained the domain illegally and ordered him to hand it back. The following year he awarded Mr Kremen $65 million in damages and lost revenue. With interest, the amount is now $82 million.

Cohen fled across the border to Tijuana and began to siphon money from US bank accounts to offshore havens through a series of shell companies. In 2001, Cohen was officially made a fugitive from justice.

In response, Mr Kremen offered a reward for his capture which was taken up by a series of bounty hunters. Cohen moved to Monte Carlo after a shoot-out outside his home in Tijuana, on the Mexico border. He has lived on-and-off in Monaco for the past five years.

Reports suggest that he was applying for a work permit in Mexico when he was apprehended yesterday.

The warrant orders Cohen to remain imprisoned until he returns $25 million that the judge said was illegally transferred out of the country.

Through the courts, Mr Kremen has seized several of Cohen's properties, including a mansion in Rancho Santa Fe, a San Diego suburb. He told the LA Times that he now hopes to be able to claim back more of Cohen's assets.

"Hopefully, I'll get to them before the IRS," he said, referring to the US tax office.

A representative for Cohen, who served three years in federal prison in 1993 after he was convicted of bankruptcy fraud in San Diego, did not respond to a message seeking comment.

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