Oversee Uncovers Huge Inside Bidding Scheme At SnapNames.com & Will Offer Refunds

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In a huge breaking story for the industry that will continue to unfold over the next hours and days, Oversee.net the parent company of SnapNames.com, recently discovered that a now former employee has been shill bidding on Snapnames.com auctions in violation of the company’s policy for many years.

This employee who was not identified by name, but is described as a long time employee of Snapnames.com, having worked for them prior to Oversee’s purchase.

This individual appears to be well know, highly trusted former employee of Snapnames.com at the highest level,  and I think most of you could make a good guess as to his identity.

Snapnames first learned about this situation a few weeks ago and hired a lawfirm and a forensic accountant to go back through over 1 Million domain auctions spanning several years and found that this former employee participated in as many as 5% of all SnapNames.com auctions.

Oversee to its credit is being very proactive on this issue and will announce today that it has already set up an escrow fund to be run by a third party administrator, to rebate all effected customers, with the amount overpaid for winning auctions,  due to this former employee’s bidding, plus interest, which customers will be able to take in the form of cash or credit.

Credits will be issued for the buyers that won any auction in which included this ex-employee, and the rebate will be computed by disregarding ex-employee bid for purposes of determining what the actual selling price would have been, resulting in a credit for the overpayment back to the buyers account, plus interest from the date of the auction.

Jeff Kupietzky President of Oversee says that 75% of all of the affected auctions took place before Oversee acquired SnapNames.com.

This now former employee, bid on domains with three results:  Some of the domains in which he was the winning bidder he simply paid for and kept for his own account in violation of company rules; in other instances this former employee requested and received a refund from Snapnames.com for his purchase, and in most cases simply bid to drive up the final prices to meet certain goals and/or bonuses.

If you are a bidder that was effected by this ex-employee’s shill bidding, you will receive an e-mail today from Snapnames.com telling you about this most unfortunate situation and  you will in addition be receiving an e-mail from the third party administrator that has been set up to handle the escrow account.

We have to applaud Oversee for coming public with a solution already in place, especially since they probably could have taken care of this internally and no one would have known.

There has been talk in the domain community for years about shill bidding taking place at all the auction houses, but this is the first time an auction house has gone public with the information and a solution.

I’m sure there will be a ton of news on this today from many sources.

We are on top of it and will be updating this story as additional information becomes available.

About Michael Berkens

Michael Berkens, Esq. is the founder and Editor-in-Chief of TheDomains.com. Michael is also the co-founder of Worldwide Media Inc. which sold around 70K domain to Godaddy.com in December 2015 and now owns around 8K domain names . Michael was also one of the 5 Judges selected for the the Verisign 30th Anniversary .Com contest.

Comments

  1. Domain Investor says

    I use to think Snapnames (before Oversee) was one of the most honorable companies in the industry. Far more trustworthy than Pool and Namejet.

    Now, we learn about shill bidding. I use to tell people that Snapnames would not tolerate shill bidding and they thoroughly investigated any accusations of questionable bidding.

    I guess the fox was guarding the hen house.

    SAD SITUATION.

  3. MHB says

    Domain

    I think your looking at it the wrong way.

    I think Oversee is being quite honorable in coming public not only with the problem but with a solution.

    They probably could have kept this problem in house, private and kept all the millions they are going to offer back as refunds and go on with business as usual.

    I do not think this is the only domain auction house that has been victimized by some form of shill bidding or game playing

  4. Alan says

    I 100% agree with Mike. We all have been in auctions where it seems to have a bad feel but its the name of the game in the auction industry. Domains or foreclosures or whatever your taste is there can be manipulation whether we all want to believe it or not.

    I actually commend Snapnames and Oversee for thier honesty here and addressing an issue like this publicly.

  5. DN says

    Glad to see “HAlveraz” finally caught. He wasted a lot of peoples time, energy, and money. It’s great to see snapnames doing something about this shameful event and makeing sure this type of practice doesn’t continue.

  6. Mark says

    There is definitely more than one account involved in this fraud.

    I can count at least 3 accounts at snapnames that drove up prices on my auctions by tens of thousands of dollars in some cases.

    halavarez, hidden, vaxcis

    I believe this is all the work of Nelson Brady who used some very high pressure techniques to get people to pay on these rigged auctions.

    The shill is most likely him.

  7. MHB says

    Also lets not lose sight of the fact that it would have been a much better business decision to wait until tomorrow after the extended TRAFFIC auction concluded to make this announcement.

    However they wanted to go public as soon as all the information was available and all pieces in place to offer a solution to the problem.

  8. Tony says

    Maybe it’s time all these auction houses require credit card AND picture ID to open an account like NameJet requires for their bidder verification program.

  9. MHB says

    Mark

    Ok now that you said it, I agree it was Nelson he is the only one who fits the description.

    Vaxis is not Nelson

  10. MHB says

    Tony

    Lets remember that this account was set up well before Oversee acquired Snapnames.com.

    This was not a newer account or bidder.

    FYI I never sent my ID to NameJet.com.

  12. MHB says

    Xfire

    I believe although it has not been confirmed the former employee in question as Mark said above was Nelson Brady who was one of the original employees of Snapnames way before it was acquired by Oversee

  15. Matt says

    How do we know Pool and NameJet are not doing the same? Like Tony Montana in Scarface. “I only trust me and my balls”

  16. Matt says

    Every bidder should have full information. Name, address, city, state, phone, email, everything. There is no one in this industry that should have a problem giving this info if they are not scamming. It doesn’t matter if you’re an “domain celebrity” or not. Your info needs to be exposed on every bid.

  18. MHB says

    Matt

    We have no idea of what is really going on in any of these auctions.

    There can be a lot of game playing in online auctions and this is not limited in anyway to domain auctions.

  19. Andrew says

    I think calling it “shill” bidding is inaccurate. Shill bidding is placing bids to drive up auction prices; this guy was placing bids to win domains.

  20. MHB says

    Andrew

    I was told that there were domains that were being bid on that the former employee wanted to keep and there was definitely shill bidding as well to increase revenue.

    Actually the words “shill bidding” were used by Oversee in telling me the details of the scheme.

  21. Andrew says

    MHB – didn’t mean for that to sound harsh. Shill bidding usually means placing bids to boost the eventual sale price of an item for the seller’s gain. Everything Oversee sent to me suggested this was just for the buyer’s enrichment, not for SnapNames. So that’s news to me.

  22. Steve M says

    As serious as this is; and it most certainly is; Snapnames is to be commended for taking swift and concrete actions to deal with this unfortunate situation; with the full knowledge that doing so could cost them some millions of dollars to make things right for their customers.

    No company; of any size or in any industry, field, or profession; can ever be 100% certain, 100% of the time, that 100% of their employees are operating honestly.

    Despite this, Snapnames, Oversee, and their other subsidiaries and divisions; thanks in large part to their excellent, exemplary employees; remain well worth working with.

    Precious few other companies have ever done so much in an attempt to make things right.

  23. XFire says

    Gotta wonder what else Oversee found when looked at his email communications from previous years?

  27. Rob Sequin says

    Snap had to come out otherwise the President of Oversee could probably be found criminally negligent on many counts.

    They are going to have a lot of big checks to write.

    Someone mentioned above that maybe this bidding was done to get up prices so the exec could meet bonus targets which would in turn drive up revenue which in turn would raise the valuation of the company.

    Did Oversee pay an inflated price for Snapnames? Yikes I can hear the lawyers licking their chops. (No offense to any lawyers who run a domain blog 🙂

  28. Rob Sequin says

    Here’s proof that snapnames owes me money. Too bad they took down Order History before November 2007. VERY scummy if you ask me.

    Anyway, this screen cap shows me (I am whatever bidder ID) bidding against Halvarez from $59 to a winning bid of $160 with no other bidders in between.

    http://robsequin.com/images/halvarez-bids.gif

    So, there’s $101 coming my way and I know I bid against Halvarez MANY MANY times.

    The latest that I can find Halvarez in one of my auctions is from March 2009

    http://robsequin.com/images/halvarez-march-2009.gif

    If he is bidder ID ppppp too, I’m gonna be getting an even bigger check.

  29. M. Menius says

    The Washington Post article states …

    “as many as 50,000 domain name auctions may have been affected by the employee’s unauthorized activity”

    Amazing.

  30. MHB says

    Max

    Right

    As my post said Oversee looked at 1m auctions and said 5% were effected by the shill bidding, that’s where the 50,000 auction number comes from.

  31. Tanya says

    No surprise on what is alleged to have happened. But will someone please explain how no one in the accounting/finance department of Snap realized that either Halvarez never paid for his wins, or got discounts. I wish I got discounts. I never saw that in their T&C. And if he truely paid for every win, he must have been highly paid, or as John Gotti used to say, he married rich.

    Additionally, after all the accusations that (justifiably) flew around the boards in the last few years, and were defended a few times by Snap mgt, wouldn’t it be the proper thing to do and check the billing account of Halvarez. Fake the user data all you want, but we need to pay somehow, either check or credit card. Seems only certain elite people could pay by check, and the rest of us do gooders dropped our cards. What about the bidder certifications? Another double standard or oversight. Or accepted fraud/collusion by management.

    In my opinion, this is first rate fraud and racketeering, and secondly, more people in legacy AND current Snapnames management should be fired and held criminally liable. After all, Bernie M owned his company, and got nailed along with a few co-conspirators. This is no different, expect Nelson did not completely own Snap.

  32. AdBlitz says

    I also suspected halvarez was a shill bidder all along. It appeared to me he had some program to identify the better quality names in each auction and then bid the minimum. I think his objective was to not let decent names go for the minimum bid. i.e. He would enter an auction just to insure that it went for at least 72 hours and potentially attract other bidders who would then drive the price up higher. In all my shared auctions with halvarez he never bid higher than me. He was just there to make sure the auction went 3 days in hopes of it attracting more eyeballs. I think this goes deeper and there are more people involved than just one guy. I think it’s a cover up and the company knew about it, condoned it, and now is trying to use this halvarez as the fall guy.

  33. Samir Patel says

    And how do we know 100 other aliases have not been used? I find it hard to believe for a scam as such that this employee would use only 1 to 3 names to cover his tracks.

  34. Happy to see them caught! says

    I predict that this will take snapnames down in the end. I also predict that more people will be implicated and long jail time will follow for those people. This is major fraud.

    I have not bid on auctions on snapnames since 2007 because it was becoming very tough to outbid Halvarez without greatly overpaying for the names I wanted. I find it very funny that we cannot go back and see all of the bidders in our auctions. That info seems to be unavailable now.

  36. Gazzip says

    @ Joe ref – Did anyone have a shill bid involving the name ‘poorman’?

    I don’t know who poorman is but I have also seen him bid up to 20k on a dubai related name ( a great one), I think it was mainly him and one other bidding.

    Is that the name your referring to ?