A class action lawsuit was filed today in Miami-Dade County Circuit Court by an attorney who also seems to be the plaintiff.
The suit was filed on behalf of lead Plaintiff Carlos A. Cueto who says he participated in online auctions for domain names at SnapNames.Com, Inc.
The complaint alleges that , a former vice-president of SnapNames., Nelson Brady secretly bid on fifty thousand domain name auctions over the past four years, driving up costs for other bidders. It is alleged that the company executive set up an account on the Defendants’ system under a false name and, under the name, bid in online domain auctions run by SnapNames.Com, Inc. and Oversee.Net. As a result of the internal employee bidding, the suit alleges the prices to purchase a domain name were falsely inflated, leading to higher costs to buyers and greater profit for the defendants.
The class action lawsuit was brought by the Cueto Law Group law firm, (note the same last name of theplaintiff) is the first to be filed anywhere in the US in this case.
“Domain names are the last frontier for the average person to stake their claim on some very valuable property. The Defendants’ conduct has made it harder for people to do so and we intend to put a stop to this practice, which we perceive as being a major concern in the industry,” added attorney Santiago A. Cueto.
This is the first of what we think will be many suits filed in this action.
Last week e-mail were sent to anyone effected by the shill bidding with a settlement offer. However if you accept the settlement offer you waive your rights to bring any action against Oversee or Snapnames in the future on this set of facts
And the real show begins.
It will be interesting to see how much fraud is involved here.
Did Brady use a fake name to sell to iReit?
Did he set up a bank account or paypal account with fake information to get paid?
What did he put on his W-9 forms that we all have to fill out in order to get paid from the parking companies he used and is still using?
Could be some federal crimes by Brady and I think we need to see a statement from iReit and Craig Snyder as to what they knew or didn’t know and WHY or WHY NOT!
It’s a real shame, as they have been advised over years of this suspicious user.
I wonder what happened to the domains “halvarez” won ?
Assuming domainqueue@gmail.com is Halvarez, he still owns these AT LEAST
ratingyoutube.com
mature-club.com
moslemlink.com
only-maps.com
searchescorts.com
simsextremos.com
jessicasimpsonshoes.com
curlyhair.net
nanotorrent.com
I think the underbidders should get them. Halvarez needs to surrender ALL his domains. I think they should be treated as stolen property.
How to get domains back from iReit and other buyers can be a messy scenario.
Target
There are reports his sold some to Iret and some appear to be still owned by or controlled by him
Rob
These as well:
adultsexmovie.net
bigmommahosting.com
chicastuning.com
freepornxxxx.com
insiteadult.com
sexmags.com
younghotwives.com
halvarez had some crappy taste in domains. just because he had they keys, he obvoiusly was an idiot in the domain world..
This goes beyond Halvarez and Snapnames. Oversee.net is a known spam/phising company. Company has never been up to no good!
@Mike,
“halvarez had some crappy taste in domains. just because he had they keys, he obviously was an idiot in the domain world..”
This has got to be the best quote on the whole “Snapgate” scandal to date. I have managed to see a few of the domains involved, and ALL of the domains I have seen so far are really crappy.
Perhaps Halvarez wasn’t the problem, but the bidders who did not know how to spot quality domains or value domains in the first place. Just because someone else is bidding on a domain name does not make it valuable.
I honestly blame the bidders and have zero sympathy for most of them. Of the 50,000 domains (auctions), I bet less than 10% were worth bidding on. I believe The lack of judgement and inability of domainers to appraise domains had something to do with this whole thing escalating to this level. Just my $0.02 on the Snapgate.
Probably more of a minor concern at this point, but this entire incident really hurt domaining as a legitimate and fun business & pastime for people. The Tech Crunch article (and author, Arrington) were horrible in their representation of the domain industry.
Arrington had some just criticism, but he approached it from one very narrow point of view. Quite honestly, that was not honest journalism but a highly-biased, personalized slant piece against the domain industry.
So the Sanpnames thing, which is actually a small frame inside of a much bigger picture, will be used to tar and feather the entire domain industry. That’s a real shame. The lay person, if they read Arrington’s piece, will walk away with a terrible & distorted picture of domaining.
A big positive however were the numerous comments by domainers addressing the larger issue of domaining’s legitimacy. There were some excellent overview comments both here, and in response to the Tech article.
Max
Like Mr. Schwartz said the other day on his blog, ricksblog.com, this problem which is going to taint domainers, was not created by domainers.
So it would be like blaming the investors of Madoff for his criminal actions
We need to keep that in mind.
UPDATE
It now seems the lawyer and domainer were brothers and the domainer has 3,000 domain names
http://www.pcworld.com/article/181731/domain_auction_site_faces_shill_bidding_lawsuit.html
Oversee…is the name of the game.
Nor Oversee nor Moniker (Auctions) will be able to distance themselves.
(before I get chastised I sya I was going back to the previosu thread ja ja)
I was wondering if someboy could give an opinion on the follwoing:
Say you have a claim against Oversnap (unresolved) …
yet you continue to participate on the Auctions? (call it Greed)
Would you be conceeding something?
Will your right be affected/ legally? or even perception wise in a court precedding/
apologies for my spelling.
I write to fast and just click without checkspelling.
Robbie
Snapnames says they found one person who was involved in the shill bidding and they are no longer involved.
Therefore I don’t see how continued involvement with Snapnames could be used or seen as a wavier of rights, but as always check with your attorney for his opinion
Thanks, In theory sounds right.
I see most of the Domain prominent lawyers are very hush hush about it : JB, Ari et al.
I am sure there is a good reason.
Saviors for the “Domain Industry” Snapnames, Halvarez & Arrington
Everyone is seeing this incident as a very dark day. I say it is one of the brightest day’s and it was what this industry needed.
I do understand that many feel and where betrayed and I would also be pretty much knocking on doorsr if I where using snapnames in the past.
I hope there are many more out there like Arington from TecCrunch.com because if it where not for them, word would not be spreading this quick to the outsiders.. I hope it hits CNN, ABC, Fox and every other major news channel and newspaper.
Why? And why is this positive?
People start discussing this issue and scandal.
People start asking questions. Questions like why would anyone want to pay thousands, 100 K or even millions for a freaking domain.
Why are they so valuable?
Who in there right mind would register or buy thousands, tens or even hundreds of thousands of domains? For what reason?
All of these questions and many more will arrise.
If this works out the way I think it will, it will be the day when many big and small players “ Get It”
At the end I see a much brighter side to this story and a much brighter future for many.
So let people like Arington spread the word. Now there will be many more wanting in on these properties and a investment boom could happen.
I see this more positive than negative for the entire industry.
Thank you Arington, thank you Halvarez and thank you Snapnames for this scandal and the promotion.
It is the best way to spread the word how valuable these assets are and what people are willing to do and pay for a piece of this land.
“I see most of the Domain prominent lawyers are very hush hush about it : JB, Ari et al.
I am sure there is a good reason.”
Oooh, I always love a good conspiracy story.
Quite a few of my clients have been affected by the shill bidding at SnapNames, and quite a few others have contacted me about the situation. This is a large-scale commercial law problem, and I am primarily an intellectual property attorney. As a solo attorney, I would not be qualified to pursue a class action. For the time being, my general answer to all who have inquired is to first determine whether the accounting received from Oversee appears accurate and, if so, to take what is being offered.
If Mr. Brady’s activities constituted a significant portion of SnapNames’ income prior to the purchase by Oversee, then Oversee has been ripped off every bit as much, if not more, than have been the auction participants. The appearance thus far is that Oversee has been relatively open about addressing the situation. Appearance and reality may be two different things, and time will tell as this thing unfolds. On the one hand, these accusations have been on the table for years. On the other hand, as VP of engineering, Mr. Brady was well positioned to derail internal investigations.
In a profession frequently referred to as “ambulance chasing”, it is peculiar to encounter dark hints that something is amiss because I am not running down the street after this one. This situation is a fairly large pot of blood that’s been thrown into the shark tank, and Mike’s use of the word “first” in relation to this particular suit is a clear indication that Mike understands the feeding frenzy that this sort of situation inspires. As most who have offered to build a web site for me over the years have learned, I simply do not chase after engagements or commercially promote my services to any significant degree.
On the other hand, I will be happy to cash a large check, huff and puff, drop all of my other work, tie this thing up in litigation for years before anyone sees a dime, and then make off with a cool 40% of any settlement. By all means, sign up with whichever attorney drives the flashiest car, pays the highest office rent and sends out the most press releases. That money doesn’t come from nowhere.
Michael Arrington has never had anything positive to say about the domain business since leaving Pool.com, of which he was a founder and primary competitor with SnapNames. However, not many people have seen this rare video of Mr. Arrington:
Duane
That maybe one of the most unique and interesting takes on this situation
The video is classic. Agree with BerryHill, except on the part where you give advice to take the offer. If I’d be contradicting myself like you, I would probably not give advice on what to do. 😉
Thanks JB
(I didn’t mean any sarcasm althougth it look that way , I was hoping to hear from any of you guys)
On re to the Class Actions there was a famous BusinessWeek cover a few years back.:
Pennies for you Dollars for us (The Attnys)
****************
I can’t hardly wait for my 50 USD cuopon good at moniker only…
*************
Hi Colombian!
Although I have no names involved (never been a big spender at Snapnames) I’d advise everyone to take the check and run.
Remember folks we’re still peddling through the biggest recession since the biggest depression.
I’d settle and take every penny they offer me because when all is set and done there won’t be much left.
Think rational and don’t let the feelings (anger, mistrust,…) take over you.
What has been done is done.
C.
This is my personal opinion
At the end of the day as I read somewhere else this epsiode hopefully will be a ” Blessing in disguise” for the Industry.
Domain Coop anybody?
“Agree with BerryHill, except on the part where you give advice to take the offer.”
Please… I have no “advice” to offer here. After the fourth phone call in two days asking me what I think about this situation, I believed it appropriate to jot something down here.
As I understand it, the offer being made is good for a year. It may turn out that halvarez was not the only bidding identity. I have no way of knowing what patterns people might be seeing in their bid histories.
To be clear – there is no way to “re-run” an auction. As an approach to settlement, the method proposed – rolling back the price to the last “halvarez” bid – makes some sense. As far as speculative costs, such as “what the revenue would have been if halvarez had not win”, those kinds of what-if damages generally do not get very far in lawsuits. If my aunt had testicles, she’d be my uncle, but it just didn’t work out that way.
Some suspect there may have been additional bidding identities, or else the bidding action in which halvarez took part, inspired others to enter the homestretch bidding duel. If, in your auction history, you see that a lot, then what is being offered may not be reasonable, and it might be a good idea to see whether any additional shoes drop.
What I cannot do, and what I will not do, is to offer some sort of sage “one size fits all” advice here. IF the offer seems reasonable in view of your bidding history, and IF there were no other fake bidders, then only you can determine whether the offer is commercially reasonable in your circumstances. What I will say is that making decisions on the basis of moral outrage or further promises from someone with yet another a hand in your pocket is not the best approach.
John
Appreciate your thoughts
Regarding your comment:
“””As far as speculative costs, such as “what the revenue would have been if halvarez had not win”, those kinds of what-if damages generally do not get very far in lawsuits””
Except we have history in another domain auction platform nameJet.com has often re-auctioned a domain after the winning defaulted failed to pay and in the examples I have written about I have never seen the re-bid come close to the high winning defaulted bidder on the re-bid.
Couldn’t a plaintiff use those re-auctions to prove there is a substantially likelyhood that the auction in which this fraudster bid would not in fact have wound up the same had he not bid and and further damages assessed?
“Domain Coop anybody?”
Among the other vultures circling this carcass are the registries.
Remember Verisign wanted to run the “wait list service” with SnapNames a few years back, and there was little appetite in subsequent variations on proposals for registries to themselves run expired domain name clearinghouse services. The prevailing sentiment seemed to be an aversion to handing the registries yet another lucrative monopoly to go with their primary monopoly in the TLD’s they administer.
For my part, I spent two years as a volunteer on the Domain Deletes Policy Task Force, not on behalf of any client, but simply to establish what was hoped would be uniformity in the domain end-of-life cycle. The Expired Domain Deletion Policy (EDDP) sat on a desk in Marina Del Rey for the better part of a year, and was promptly “contracted around” by the registrars. That was a lot of unpaid time down the tubes.
IMHO, it’s a safe bet that within a couple of months, if not sooner, the “WLS / Expiration Clearinghouse” zombies will rise again and march forth at the behest of the registries, just as soon as they can dance around the relevant patents and figure out a way to give trademark claimants a free pass to the front of the line.
When the dust clears, Verisign will be cashing the checks that SnapNames used to.
“in the examples I have written about I have never seen the re-bid come close to the high winning defaulted bidder on the re-bid.”
That’s why, tattooed on a sensitive part of my body, is the slogan “you can’t re-run an auction.”
Cheesecake, Strudel, or Cider In Your Ear:
John
Nice but that doesn’t answer the question.
If we have example’s where domains were re-auctioned shortly after the original and a history of the re-auction reaching lets say 50% of the previous selling price can we not extrapolate that out to say there are damages well and above those settlements being offered.
Robbie,
It depends. If you accept Snapnames position that it was only one person, and they are no longer involved, than I guess thats ok. but if you think Snapnames involved or responsible, I am not sure.
“If we have example’s where domains were re-auctioned shortly after the original and a history of the re-auction reaching lets say 50% of the previous selling price can we not extrapolate that out to say there are damages well and above those settlements being offered.”
I hit submit before finishing…
IMHO, no you can’t do that. Domain names are unique, auctions are unique. I certainly see your point, but those re-auctions may simply demonstrate that you can’t re-create the same dynamics. The bidders at any given time have a bankroll they are going to allocate to auctions at that time.
I want a painting for my living room. Sotheby’s has two paintings on auction this weekend. My bankroll is 1 million. The first auction comes up, I bid up to a million, you beat me at 1.1 million. So, I re-allocate my bankroll to the second auction, and win it at $500,000.
It turns out that you don’t pay up, and the first painting, which I would have preferred, is re-auctioned. I can’t get my money back from what I spent on the second painting in order to participate up to a million on the re-auction of the first painting. It goes for $750,000.
That re-auction went at $750,000 because I couldn’t go back in time to put myself there with a 1 million bankroll. That, and other bidders were scared off by the aroma left behind by the funny business of a non-performing auction winner the first time. Plus, Merlin Kauffman sobered up, reached puberty, and realized he didn’t want to bid as high as he did the first time either. Any number of external factors can work together to result in dissimilar circumstances in a re-auction.
Before long, a relevant state Attorney General is going to be prodded to investigate how these “auctions” are being conducted in the first place. Auctions are among the oldest methods of conducting sales, and there is a great deal of state-specific law and regulation relating to them, which may end up controlling here.
Thanks…
There is couple of names…
Greedy is getting the best of me.. ja ja.
But if it will affect my rights or if it’s something they will trow to my face later on I will pass…
I am very upset at one of the names that Hanky Panky won..it’s in Dsponsor hands now.
Berryhill, you have to understand, the halvarez scam goes way beyond just the auction prices itself.
Most of the domain names that halvarez won, were sold off by either him or SnapNames or Oversee, and ended up in innocent domainers’ hands. I know that for a fact since I know a few people that have domains that halvarez has won.
Now you have innocent domainers and companies mixed up in the scandal.
This can ONLY be fixed be a class action lawsuit. Sure, a handful will take money when they see it. But the smart ones will sue.
This is one of those things that money itself will not justify the damage, or however you say it.
Matt
“Berryhill, you have to understand…”
I knew there was a reason I wasn’t commenting on this situation…. What I understand is that half my day is about gone. I don’t have domain names making money in the back room while pontificating on forums.
A readily calculable measure based on a disgorgement theory w/r/t domains that “halvarez” won, also makes sense. In other words, the spread between your lowest pre-halvarez bid and whatever his proceeds from the domain were, is a definite number based on demonstrable facts.
But, seriously, if I stop commenting here and move on to something that actually puts food on the table today, it’s not because I’m involved in this matter in any way. Many of my clients are among those most affected by this situation, but I am primarily an IP attorney.
Domain names are the last frontier for the average person to stake their claim on some very valuable property. The Defendants’ conduct has made it harder for people to do so and we intend to put a stop to this practice, which we perceive as being a major concern in the industry,
This line is fucking classic, Frank SCHILLING, Kevin Ham or you Michael are the average person. If we want fair let the names drop and whoever gets them, gets them, the average guy would have a chance.
Thank you John for the most lucid discussion on the topic along with Michael.
And DUANE there is a flip side to your Euphoria, and that is the government gets involved and regulates the industry. Since you want to tell them there is so much money in the domain industry, I think they will “get it”
And for the CNN,Fox route you will have more of the average person not saying “WOW THERE IS SO MUCH MONEY, but another group fucking main street.”
“…Plus, Merlin Kauffman sobered up, reached puberty, and realized he didn’t want to bid as high as he did the first time either…”
now there’s a longshot….
It was either that or “Toonz put down the bong”.
By the way, the headline “First Class Action” is not clear as to whether it is a “first class” action or a “first” class action.
You guys are all, and I mean ALL FOOLS.
You should thank “Halvarez”, drop your knees open wide and thank him the only way mouth wide open and eyes looking up can!
He has been raising prices for domains for the last 4 years, 1 guy has raise this XX industry percentage points!
Think about it. Your domains are worth more because of him. If anything he helped you all get the true value of your domains.
I think “Halvarez” should be domainer of the year!
That is definitely one interesting way to look at it, Bill.
At the end, I think everyone is a loser except Halvarez. Because everyone still refering to him as “Halvarez”, including myself. Half the people won’t make the connection to “Nelson Brady” especially those not in the domain space.
A “class action” is a very complex proceeding. Any attorney who does this type of work can tell you that the expense and time to put together a class action is tremendous. the “class” must be certified by the court as being all persons affected in some way by the action, must be homogenious in the nature of damages and must provide for an opt-out provision for those who do not wish to be part of the action, but rather bring their own action. This just scrapes the surface of the time and energy that must be put in to succeed.
Bill : Seems very experienced in his recommendations , a Master I would say.
I agree that the settlements offered are likely more than one would get through a class action suit. The release attached to that is absurd though as it releases them from all fraud -past and future – no shit, read it.
But the bottom line is this… Before I’m going to be able to trust anything or anyone at SnapNames ever again, I want to see some outside authority fully investigate this scam. Oversee should want this too… Sorry, but it seems all too convenient to point to the “single gunman” theory, especially in light of the fact that the shill bidding actions were raising revenue for the entire company. Follow the money and it does not lead you to Nelson.
Without an investigation into this from outside either Oversee or SnapNames, I doubt full confidence will ever be even partially restored.
ROFLMAO:
The Domain Pope strikes again:
“If my aunt had testicles, she’d be my uncle, but it just didn’t work out that way.”
&
““First Class Action” is not clear as to whether it is a “first class” action or a “first” class action.”
Thank you John I really really needed the laughs..
“…Plus, Merlin Kauffman sobered up, reached puberty, and realized he didn’t want to bid as high as he did the first time either…”
ROFLMAO . . .That’s gotta be one of the top 10 berryhill comments eva.
halvarez domainer of the year.
http://domaingang.com/domain-news/domain-bidder-halvarez-to-be-named-sniper-of-the-year/
Too funny.
Love the Casablanca clip and rare appearance by JB. Berryhill’s comments can be an asset to any domain blog. Wish he’d take more time away from writing those Nigerian letters so he could contribute more. (as Michael Jackson says in This Is It, “this comes only from a place of love”)