The Evolution of Crystal Cox: Anatomy of a Scammer

"Does anyone out there want me to write defamatory stuff about them and then buy my reputation management services to remove it? YOU CAN PAY ME IN STRAIGHT CASH HOMIE!"

Today I’m here to shine a little sunlight and tell you the entire story of Obsidian v. Cox, the matter touted as “bloggers aren’t journalists.”

Often, the truth is much stranger, and sicker, than fiction…

This is how Crystal Cox’s scam works generally: Cox calls herself an investigative blogger / journalist. She posts a bunch of negative stuff about you on the internet. Then she buys a bunch of domain names about you, your family, and your business to make sure all her posts are at the top of a Google search. But lucky for you, Cox also happens to be a “reputation management specialist.” Cox then offers to sell you “reputation management services” to clean it all up to the tune of $2500 a month.

As Carlos Miller aptly put it, Crystal Cox “is the cyber equivalent of the mob goons who firebomb your business, before demanding protection money.”

Not surprisingly, a court found this kind of behavior is not protected speech in Obsidian v. Cox.

You may remember that over the weekend I wrote a piece about Crystal Cox, when Cox went after Marc Randazza’s three year old daughter after offering to sell Randazza “reputation management” services which he declined.

Yes, you read that right – apparently Crystal Cox went after a three year old when Randazza wouldn’t buy reputation management services.

At this point, it’s old news that attorney Kevin Padrick and Obsidian Financial got a $2.5m verdict against Cox when she tried the same shakedown on them. In the defamation lawsuit, Padrick and Obsidian contended that Cox made several websites containing false statements about then company and Padrick. Then Cox, in a truly shocking email, offered to sell Obsidian and Padrick “reputation management” services for $2500 a month. The linked email explains in gruesome detail exactly how Crystal Cox’s scam works.

Now Crystal Cox is angry that the email is now in the public domain, and she feels her own words paint her in a bad light:

I assumed our Communication was under these “Rules”, and in December of 2011, David Aman, Tonkon Torp Law Firm emailed this Private, Privileged, Communication between “Counsel” to Forbes and to Seattle Weekly and possibly the New York Times and other Outlets.
…
The motive is certainly with actual malice, certainly is defaming, paints me in False Light, is misleading to the masses in major media publications, violates my rights to privacy, accuses me of a crime, endangers my life, incites a riot against me and puts me under huge duress for no reason as THEY had already WON their Case, and I was not on Trial for that ONE EMAIL in any way. Nor had I been charged with a Crime.

Sadly, some members of the media have played this story out in a way to suggest that bloggers don’t have First Amendment protections. Indeed, this became the “bloggers aren’t journalists” story in some news outlets. But that simply isn’t the case. The truth is that this is the “Crystal Cox is not a journalist story because Cox tried to shake down people down and got burned for it” case.

At first, people were scared to write about Crystal Cox for fear of her doing the same to them. Too bad for Crystal Cox that there are people out there like Scott Greenfield, Popehat, and Mark Bennett, who aren’t exactly scared of dispensing the truth. Scott Greenfield recently broke the silence, and then the rest of the blogosphere followed. Marc Randazza wrote about what Cox did to his wife and 3 year old child. Popehat helped lead the charge to the truth. The New York Times and Forbes followed suit by writing the truth about Crystal Cox – that making defamatory posts and then demanding money for “reputation management” to take it down is not protected speech. David Carr, a writer for the New York Times specifically wrote a piece about how Cox tried the scam on him. Heroically, blogger Kashmir Hill wouldn’t be be silenced when it comes to Crystal Cox, and neither would the Salty Droid or our friends over at the Fraud Files blog.

Crystal Cox’s critics are growing by the day and the truth is coming out.

But I’ve been wondering… just why was Crystal Cox so interested in Obsidian Financial and Kevin Padrick in the first place? How did we get to this point…?

It’s still not entirely clear what Cox’s motivations were. Greed? Love? Perhaps both?

I dunno.

Crystal Cox’s involvement with Kevin Padrick is a kind of a long, weird, and scary story. So pull up a chair, make yourself a cup of coffee, and put on a cheesesteak hat, because I’m going to take you people through a dark and scary trip down the Crystal Cox rabbit hole and you can judge for yourself…

Most of the initial interest in Obsidian Financial and Kevin Padrick starts, and ends, with a woman named Stephanie Studebaker DeYoung. DeYoung had a problem with a finance company called Summit 1031 Exchange, an entity that declared bankruptcy after using millions of its customers’ money to fund its owners’ ventures, allegedly without permission. Summit was accused of running a ponzi scheme, basically.

Stephanie Studebaker DeYoung is the daughter of Mark Neuman, one of the principals of Summit 1031. Mark Neuman, along with the other principals of Summit, was indicted on charges alleging they conspired to defraud customers and misused more than $44 million of their money.

Kevin Padrick, an Oregon attorney who is also the co-founder of Obsidian Finance Group, was appointed as the Trustee of Summit.

Stephanie Studebaker DeYoung

In May of 2009, Stephanie DeYoung started the website www.summit1031bkjustice.com. DeYoung’s website addressed issues she felt were wrong with the Summit bankruptcy. You can pull her website up in the Wayback Machine. Presumably, DeYoung had lost money when Summit went belly up and she was angry about it. DeYoung wrote that she believed Padrick had a conflict as Trustee because of his work with Obsidian. DeYoung later objected to Padrick’s fees in a pro se filing, which she contended were excessive. DeYoung made videos about Summit, and how she felt they were ripping off their creditors:

So what does any of this have to do with Crystal Cox?

Nothing. Yet.

But…

Back on December 12, 2008, Summit announced it was having financial woes. On the same day the announcement was made, Crystal Cox registered searchenginereputationmanager.com. The next day, Summit declared bankruptcy.

Whoa! Coincidence…?

On January 8, 2009, The Oregonian published a story reflecting that Summit had lost money for a lot of people. Crystal Cox then wrote a piece about Summit on January 20, 2009, referencing Summit’s statements made in December of 2008. The statements Summit made right around when Crystal Cox registered searchenginereputationmanager.com.

Interesting…

Fast forward a little to July of 2009. Stephanie DeYoung filed her objections to Padrick’s fees. Right around the same time, Crystal Cox became actively involved in a PR campaign against Padrick, Padrick’s finance company Obsidian, and Summit. Shortly after after Stephanie DeYoung filed objections to Padrick’s fees, websites about Obsidian, maintained by Crystal Cox, as well as a YouTube video channel in the name of Kevin Padrick, began to appear. Crystal Cox registered obsidianfinancesucks.com on July 19, 2009, and wrote wrote several articles about Kevin Padrick. In one article dated July 23, 2009, Cox wrote a blog post about why she cares about Summit:

Well I am a real estate Broker Owner, licensed in Oregon, Montana and Idaho and for 3 years now I have been the Self appointed real estate whistleblower and Consumer Advocate in Real Estate.  I have seen the damage done to the Real Estate Consumer by a severely Broken Real Estate Industry. And I have made a Stand as a Real Estate Consumer Advocate, Self appointed.

With the Summit 1031 Exchange bankruptcy, I read about it in December, I was on the bandwagon of Summit is Evil and took my people’s money. Though when I used my brain, read as much information as I could, I began to see a very different picture of what is happening to the Real Estate Consumer in all this and so I have written a few posts in effort to Wake Up the Real Estate Consumers, Expose the way Bankruptcy Courts Really work and how this all turns Real Estate Consumers into Real Estate Victims.
…
I have no money tied up in all this and no one pays me to write any of this. I am and information Junkie, a Real Estate Industry Whistleblower and a Real Estate Consumer Advocate working for you for Free. Because I cannot STOMACH what is being done to the Real Estate Consumer.

Except, of course, Crystal Cox does get paid from those who purchase” reputation management” from her. And speaking of which, three days later, on July 26, 2009, Crystal Cox bought the following domain names:

liquidationtrustee.com
stevenhedberg.com (involved in the Summit bankruptcy)
anniebuell.com (also involved in the Summit bankruptcy)

But just how and why did Crystal Cox get involved in the Summit bankruptcy? Why was this so important to her?

Although Cox had tried to explain herself in July 2009, perhaps Stephanie DeYoung had some answers…?

On Augst 25, 2009, DeYoung was deposed by David Aman, an attorney from Tonkin Torp who represents Kevin Padrick. Aman asked DeYoung about her relationship with Crystal Cox. According to DeYoung’s testimony, Cox and DeYoung met when DeYoung’s ex-husband contacted Cox in order to “get back” at DeYoung because of custody issues. DeYoung testified that her ex-husband allegedly emailed Crystal Cox to go after Stephanie DeYoung as revenge. (scroll to about 3:30 into the video below). At first, Crystal Cox posted a bunch of mean things about Stephanie DeYoung, which DeYoung discovered via Google alerts. DeYoung contacted Crystal Cox to ask what was going on. Then, DeYoung and Crystal Cox became allies.

Interestingly, a post on April 2, 2012 by Crystal Cox, tells the story quite differently:

The Current Fire Storm Against Blogger Crystal Cox is Whistle Blower Retaliation, Plain and Simple. Thing is, I am NOT the Whistle Blower, I am the Investigative Blogger whom got the Whistle Blowers FOUND in the Search Engines.
Posted by Investigative Blogger Crystal L. Cox at 6:37 PM”

Hmmmmm… that’s a bit different from DeYoung’s testimony.

Think about all this for a second. Cox bought searchenginereputationmanager.com the same day Summit announced it was having financial problems. A month later, Cox blogged about Summit. At some point, Cox was contacted by DeYoung’s ex-husband to start an internet smear campaign against DeYoung. DeYoung had been engaged in a vocal campaign against Summit, something Crystal Cox had been following and perhaps trying to sell reputation management services concerning.

Then, inexplicably, Crystal Cox became DeYoung’s biggest supporter and champion.

Alrighty then…

In December of 2009, Crystal Cox bought  bankruptcycorruption.com and bankruptcytrusteefraud.com, more websites to blog about Summit. In the same month, Cox also wrote another article about Summit, and spoke rather… glowingly.. about Stephanie DeYoung:

One Brilliant Woman, Stephanie Studebaker-DeYoung stepped out and told the story about what was really going on behind the scenes of this bankruptcy case and she suffered dearly for it. One Informed, Passionate and Honest voice among a pack of rabid greedy bloodsucking attorneys, well what you get it shut up, and the TRUTH gets a back burner.
…
My Blog on Obsidian Finance is based mostly on what I learned through reading Stephanie Studebaker DeYoung’s Blog after it was brought to my attention by a disgruntled party.
…
Thank you Stephanie DeYoung for Your Courage, your Intelligence, your attention to detail and to bringing this story to light in effort to help future Real Estate Victims, Creditors and Victims of the Bankruptcy Courts in General.

Cox admits that her opinions and knowledge of the Summit bankruptcy come mostly from Stephanie DeYoung’s blog. As of March 11, 2010, it looks like Stephanie DeYoung might have also been posting stuff on Crystal Cox’s bankruptcycorruption.com blog:

http://web.archive.org/web/20100317101709/http://www.bankruptcycorruption.com

On March 25, 2010, Crystal Cox also had more nice stuff to say about Stephanie DeYoung:

You Can See By Stephanie DeYoung’s Blog Posts that she is a Very Smart Woman. She has all the numbers of the Summit 1031 Exchange Rolling around in her head.
…
Stephanie has tried to bring justice for all and NO one seems to hear her…
…
Stephanie DeYoung is a Hero, Giving True Voice to Victims and Those She Loves want to STOP this Nonsense, STOP her Truth, and Do not Recognize the Value in what Miracle she has Done.
…
she loves her Children, Her Husband and yes even her Father… and that Weakness has Silenced Her..
Mark Neuman has no choice but to Discredit his own daughter, take her power from her, control her business that way if She Tells the TRUTH about him he can claim she is simply out of her mind and that is not true.. To Smart for Daddy.. So Daddy Did a VERY Bad Deed..

While Crystal Cox’s blogging attacks on on Summit were still ongoing, fueled through her website “obsidianfinancialsucks” and other articles, on March 27, 2010, Crystal Cox took out an ad for the following, offering reputation management services to “remove and control negative opinions”, because Cox has to make money, too:

Remove and Control Negative Opinions  By Crystal L. Cox  March 20, 2010

Do you need a Full Time Reputation Manager and Search Engine Reputation Manager to Remove and control negative opinions you find in the Internet Search Results.. I, Crystal L. Cox have found out that I am pretty good at this Search Engine Optimization Stuff. So hire me to watch your reputation online and get your TRUTH out about you.. your company, ..your brand, and your clients …  Crystal@CrystalCox.com – Email me your situation and I can give you a quote of what I can do for you.

9:57 PM  Copyright 2010

http://www.crystalcox.com/

In that time period, on March 25, 2010, and April 1, 2010, Cox found time to buy summitaccommodators.com, summit1031sucks.com, and lanelyons.com. (Lane Lyons was one of the Summit principles indicted).

But Crystal Cox is still looking to make a few dollars, don’t forget. On April 29, 2010, Crystal Cox advertised her Search Engine Reputation Management services again:

if you already have a Search Engine Reputation Manager [ http://www.fightbadpress.com/ ] then let me Challenge them.. If I can’t beat them in the search engines for your Search Engine Reputation [ http://www.reputationmanagementspecialist.com/ ] needs then Don’t Hire me.. But If I can beat your Current Campaign Manager [ http://www.reputationmanagementcampaign.com/ ] – Reputation Manager [ http://www.reputationmanagementcampaign.com/ ] – Search Engine Management [ http://www.reputationmanagementcampaign.com/ ] Team WELL then Hire Me.. Crystal L. Cox [ http://www.fightbadpress.com/ ] – Internet Marketing Search Engine Reputation Management [ http://www.reputationmanagementspecialist.com/ ] Specialist.

Cox advertised her reputation services again on September 16, 2010:

turns Out I am Pretty Good at It.. So .. you May Want to Give me a Try? Let Me Challenge Your PR Firm, your Online Reputation Manager – I WILL Beat them.. then you Can FIRE your Reputation Manager and HIRE Me.. Crystal L. Cox ~ To Market, Promote and Protect your Online Brand – Your Internet Reputation.   Search Engine Manager

Keep in mind that the dispute with Padrick, Obsidian, and Summit was still ongoing. Crystal Cox was still running all of the websites about them while advertising for reputation management services.

David Aman, Kevin Padrick’s attorney, sent a cease and desist letter to Cox on December 22, 2010. Padrick and Obsidian finally filed a lawsuit against Cox alleging defamation on January 14, 2011 in connection with those websites.

Shockingly, on January 19, 2011, just a few days after suit was filed, Cox offered Padrick and Obsidian, through their attorney David Aman, an offer to purchase her reputation management services:

Presumably, the offer was declined.

Then Cox tried this scam again on January 24, 2011. In an email to David Aman, Padrick’s lawyer, Cox wrote:

I do have what seems to be negative posts out there on all parties, however, this is because they are the Truth and I was writing on the Summit 1031 bankruptcy to to Give a Voice to Real Estate Victims and over the Last two years of this writing and other corruption, I have realized I am very good at this and it takes all my time.

So I need to turn it into a business, therefore I am offering PR, SEO, and Search Engine Reputation Management Services.

My rates begin at $2500 a month.
…
Search terms that would be including for $2500 a Month’s Service are “Kevin Padrick”, Obsidian Finance LLC, PLUS 3 other terms, making it a total of 5 search Terms that Client Chooses.
…
This Search Engine Reputation Management Service would be for Obsidian – Kevin as One Fee, and Tonkin Torp – David Aman Negotiated Separate.

Cox wanted $2500 a month to clean up Kevin Padrick / Obsidian’s reputation, which she had smeared, and also wanted an additional $2500 a month from Tonkin Torp and/or David Aman for the same.

In the email, Cox also made it clear that:

I will not take ANY amount of Money to Target any Search Terms to do with Stephanie DeYoung

Stephanie DeYoung is apparently off limits… interesting.

But how does Crystal Cox explain this incredibly damaging email…? By denying she wrote it? Claiming a forgery?

Nope. Cox’s position is: “Hey! No one was supposed to see that! Oh and my own words defamed me!” Indeed, Cox writes:

I did not email David Aman out of the Blue, and I did NOT Extort the Plaintiff in any way.  I certainly assumed these emails were privileged, private correspondence between Crystal Cox, Defendant (Me) in My Pro Se Capacity and Opposing Counsel David Aman, Tonkon Torp Lawyer for Plaintiff Kevin Padrick and Obsidian Finance Group.
…
The motive is certainly with actual malice, certainly is defaming, paints me in False Light, is misleading to the masses in major media publications, violates my rights to privacy, accuses me of a crime, endangers my life, incites a riot against me and puts me under huge duress for no reason as THEY had already WON their Case, and I was not on Trial for that ONE EMAIL in any way. Nor had I been charged with a Crime.

Whoops…

Analogy: “I’m a bank robber. Give me all the money out of the till! Actually, tell you what. Just give me 3/4 of it and we’ll call it a deal. Oh, by the way, these are privileged settlement negotiations!”

And my own words paint me in a bad light.

Errr… yeah.

Oh, and now, in what can only be described as delicious irony, Crystal Cox going to file a criminal complaint against anyone who writes about her for a hate crime:

And now Kashmir Hill of Forbes, David Carr of the New York Times, Marc Randazza, Kenneth P. White of Popehat.com, Tracy Coenen, Randazza Legal Group, have launched a campaign to set up a Blogger for Extortion when I was not accused of Extortion in an Criminal Complaint, nor was I on trial for extortion and now this Lynch Mob has put me under Extreme Duress and ALL will be named in my Federal Hate Crime Filing, Criminal Complaint, Judicial Complaint, FBI Complaint, Attorney General Complaint, Bar Complaint and Department of Justice Complaint.

Cox goes on to ask, oh so ironically:

SO why leak one email in a thread of several emails  between Crystal Cox, Defendant (Me) in My Pro Se Capacity and Opposing Counsel David Aman ?

Could it be that people are interested in the truth? Isn’t that what “investigative bloggers” do?

Just two days after sending the “settlement email” that she thought was private, on January 26, 2011, Crystal Cox bought the following domain names:

kevindpadrick.com
davidsaman.com
tonkontorpsucks.com

You read that right. A few days after offering “reputation management services”, Crystal Cox then bought the domain names of Kevin Padrick and his attorney, David Aman.

Was Cox trying to pressure David Aman and Tonkin Torp, to buy into the shakedown…?

In September 2011, Crystal Cox bought more Obsidian / Tonkin Torp domains, as the litigation went on:

obsidianfinancegroup.com
tonkontorplawfirm.com
obsidiansolarfarms.com
obsidianrenewablessucks.com

Then in December of 2011, with the defamation lawsuit still going on, and no reputation management services purchased, Crystal Cox bought:

kevinpadrick.com
obsidianvcox.com

And you know the rest.

The defamation suit ultimately went to trial. Padrick and Obsidian were awarded a $2.5m verdict against Cox. On December 6, 2011, The Oregonian reported the verdict, stating that:

Padrick says Cox’s accusations of wrongdoing are nonsense. “She’s accused me of bribing the media, of bribing judges and the Deschutes County DA.” Padrick said. “Crystal Cox has no journalistic standards.”   On one of her sites, Cox posed the question: “Did Oregon Attorney Kevin Padrick hire a hit man to kill me?”   When asked if she had evidence to back up her claims, Cox said she didn’t accuse Padrick of committing crimes. “I think I was just calling the question here, calling for an investigation,” she said.

Not surprisingly, the next day Crystal Cox registered oregoniansucks.com.

Where are we today? Crystal Cox wants a new trial, she’s going to appeal the verdict, and she’s also going after Marc Randazza, Marc’s wife, and Marc’s three year old daughter because she’s angry with Randazza. Oh, and she wants to sue David Aman, Tonkon Torp, Forbes, and throw Joseph Rakofsky in there for good measure:

And I plan sue Tonkon Torp Law Firm and their Insurance Provider. As well as Forbes for leaking this email without verifying it with me, accusing me of Criminal Activity when I was not charged with a Crime and not Verify the FACTS in attempt to harass me, defame me with actual malice, flat out lie about me to discredit bloggers in general and incite a riot, ruin my business and deliberately tear me down. If you are an attorney that would like to represent me in this matter, email me at Crystal@CrystalCox.com .

I’m sure attorneys are lining up for this one.

And what of Stephanie DeYoung? DeYoung’s crusade against Summit ended at some point. I don’t know why. According to DeYoung’s website, currently, as of December 2011:

According to the 11/29/11 Defamation Lawsuit Trial between Kevin Padrick and his Company, Obsidian Finance Group, LLC vs. Crystal Cox,   BOTH KEVIN PADRICK AND OBSIDIAN FINANCE GROUP (in their work with the Summit 1031 Bankruptcy)…
1. HAVE NOT AVOIDED TAXES
2. HAVE NOT COMMITTED TAX FRAUD
3. HAVE FILED ALL RELATED TAX DOCUMENTS IN THE SUMMIT LIQUIDATING TRUST AND RELATED ENTITIES ACCORDING TO THE IRS TAX CODE.

So why was Crystal Cox so invested in this, anyway? I don’t think she lost any money in the Summit 1031 Exchange. She met Kevin Padrick for the first time at trial. Why was this narrow issue so important to her?

A post allegedly written by Stephanie DeYoung may shed some light it…

Editor’s Note: Anonymous Insider put up an incredible timeline of all these events. See it all for yourself.

See also: www.jordanrushiesucks.com (Damn you, Tannebaum!)

[UPDATE] To be fair, this is Crystal Cox’s video response to the extortion emails:

“Yeah, I bought the domain name’s of Randazza’s 3 year old, but it’s cool because…”

Um… yeah. Not much of an explanation to justify that one. There’s nothing you can say that will justify going after a 3 year old.

And this is how and why Crystal Cox says she got involved in the Summit / Obsidian thing:

It was all for “the real estate victims.” Interestingly, no direct mention of Stephanie DeYoung.

The trial transcript in Obsidian v. Cox is also now available. At trial, several expert witnesses testified that Kevin Padrick acted entirely appropriately in the Summit bankruptcy. Padrick also explained that when a company goes bankrupt, the money doesn’t get taxed when it goes to the trust. This is because taxing the money when it went into the trust would essentially be taxing Summit’s creditors, who are the victims, for the misdeeds of Summit. The testimony went uncontroverted.

In the closing, David Aman stated:

So what have we seen at this point? Who is the person that’s been damaging my clients’ business? Ms. Cox herself. And so what does she do? She takes the opportunity to say, “You know what, I can use all that proprietary technology that I have. And you know what I’ll do? I’ll cause the search engines — we’ll take you down the list, but I’ll only do it if you pay me. That’s the only way I’m going to do it.”

My client didn’t do it. He instead came to court today, and Obsidian Finance Group came to court today, to protect the business the way that you should do it, not through extortion, by paying extortion, but by using the courts to get people to stop.

Cox responded:

I asked the question of tax fraud. I did not accuse them of tax fraud. Regarding Mr. Aman’s e-mails and new exhibits, he asked me my rates and services, which I can prove via e-mail. I don’t have it as an exhibit. He asked me my rates and services, and I told him; and I didn’t mean any ill will towards anybody in doing so. I do not believe that they proved actual damages, and I do not believe that they proved that the post was false or defamatory in any way.

I don’t believe that they presented information here today that says that anyone saw that post and denied them any jobs or any money or that they proved that it was defamatory or false in any way. Thank you for your services today.

The jury awarded Padrick $1.5m and Obsidian $1m.