My account which only had 21 pages of auction history earlier today when I checked,  now numbers 121 pages or over 12,000 auction

I’m planning on pulling all this info and complying an excel file to examine each auction, the bidders, bidding patterns and will report back with my finding although its going to take a while.

It seems the domain community thinks that Oversee is the only party that can ask for criminal charge to be brought, however, in my opinion, Oversee is not the only party that can ask for criminal charges to be brought.

Isn’t anyone who participated in an auction in which Halvarez bid to simply drive up the price of the auction, in a position to file a complaint with local and possibly federal authorities?

Isn’t anyone who participated in an auction in which there was shill bidding a victim of fraud?

I think so.

I think any bidder who wound up paying more than they should have due to Halvarez’s shill bidding has standing to ask for criminal charges to be brought.

Unlike a civil complain where you can just file a suit and get your day in court, victims of a criminal action can only file a complain with  law enforcement and hope that law enforcement brings the charges.

However if a lot of complaints are received it would be hard for law enforcement to simply ignore all of them.

With 50,000 auctions at issue there are sure plenty of people who were effected by the shill bidding.

Snapnames.com offices are located in Portland Oregon.

The state of Oregon Department of Justice maybe the place to start.

If Halvarez is to face criminal charges it maybe up to domainers to make it happen.

Nonfarm payrolls fell by 190,000 last month, with the largest job losses in construction, manufacturing, and retail trade.

Economists had expected a 175,000 loss.

The unemployment rate is now the highest since April, 1983.

Marchex reported revenue dropped to $22.2 million compared to $37.2 million for the same period of 2008.

Adjusted operating income before amortization fell to  $1.9 million for the quarter, compared to $6.6 million for the same period of 2008.

Adjusted EBITDA was $3.4 million, compared to $8.9 million for the same period of 2008.

According to the earnings report, “”Marchex sold a small number of non-strategic domains that yielded more than $1 million in the 3rd Quarter alone.

“”"There is still significant demand for high quality domains and Marchex believes that will remain the case for the foreseeable future.”"

Nice to hear.

1.  Who It Was:

The most surprising part of the story was the identity of the person involved in shill bidding, Nelson Brady.

Not only was Nelson an employee of Oversee, but he was a former officer (VP) and a shareholder of the company that sold Snapnames.com to Oversee.

Oversee paid reported $25M or more for Snapnames.com and since he was a shareholder,  Mr. Brady should have had a rather large payday when Oversee bought it.  So its even more surprising that he would “risk it all” and continue to engage in this activity long after getting paid on the purchase.

2.  The Company Came Clean.

In the corporate culture that exists, especially in the US, its extremely rare that we see a company stand up, come forward first with an admission of a problem and offering a solution at the same time.

This is a culture where we all have become used to seeing corporations burying the truth, paying people off to keep quite, deny any wrongdoing,  errors or problems and almost always forcing people to spend years and tons of money to seek any compensation and usually years of appeals after that.

We have seen our corporate culture in action over the years in many ways;  During the financial meltdown where companies leveraged assets well beyond any acceptable risk levels their investors we willing to accept; we have seen tobacco companies going decades withholding information that their products could kill their customers; car manufactures continued to produce cars they knew had defects,  for many years after they knew that such defects could cause severe injury or death to their customers; insurance companies ordered employees to simply deny every claim, valid or not,  to save money.

Unfortunately we now expect this type of conduct from corporate America and every “big” and rich company in America.

How refreshing was it to see a company stand up and say “We have a problem, and we are going to make it right, as best as we can.

I know their are those out there that believe there was a “reason” the company came forward, other than what it seems on its face, trying to do the right thing.

At some point we may get information that indicates otherwise, but for now, until and unless we find out differently, I’m satisfied that Oversee is trying to do the right thing to their credit.

3.  The shear numbers of it.

You have to admit the numbers were simply astounding.

1,000,000 auctions held by SnapNames over the years.

50,000 auctions in which Mr. Brady allegedly was involved in.

If everyone of the auctions Mr. Brady was involved in sold just for the minimum of $60, that would be $3 million dollars.

However we know that was not the case.

If the average selling price of an auction on Snapnames Mr. Brady was involved in was  $300your talking about $15,000,000.

If the average was $500 the number becomes $25 Million.

If the average was $1,000 your looking at $50 Million.

That a lot of money.

Huge numbers all around.

4.  The arrogance of NameJet.com

Yesterday’s announcement by NameJet.com, which I’m sure was sent out to assure its customers that there was no shill bidding taking place on their system, came across to me as a reaffirmation of the mentality that caused SnapNames.com to fail to find this problem for years.

When a company thinks that their own employees can’t get around the checks and double checks they have in place, even when they know those same employees created the checks and double checks, its troubling.

I would have rather seen a  statement worded to the effect that NameJet.com monitors every transaction and constantly on alert for shill bidding or other improprieties, be it from employees, customers, networks of bidders, etc., rather than to say simply it “can’t happen here”.

5.  SnapNames gave refunds?

Who Knew?

Over the years I have made plenty of mistakes; bid and won domains that were not spelled correctly (if you don’t know yet, I’m a horrible speller) or otherwise domains I did not really want to own.

I never thought for a second of asking for a refund.

If I made a mistake I just ate it.

I sure never knew bidders had an option of undoing an auction on Snapnames and getting a credit back.

The least surprising thing that came out of the Scandal?

That’s easy, its the same as the most surprising;

Who is was.

Forums for years have been discussing the bidder “Halvarez”

People have complained to SnapNames.

SnapNames was therefore alerted by its own customers as to the questionable bidding patterns and history of this bidder.

As shocking at it was to find out that Mr. Brady was the former employee alleged engaged in this shill bidding, logically he could have been the only employee who could have done it.

Why?

Mr. Brady probably knew the backend of the SnapNames.com bidding system better than anyone on earth.

Any check, double check or triple check that was built into the system,  he either built or was involved in building.

Therefore he was probably the only employee who knew enough about the system to use it for his personal benefit, how to cover his tracks, how not to set off any of the “alarms” built into the system.

It really couldn’t have been anyone else.

In all, 139 domains sold and I’m sure none of you would have picked the highest selling domain as OneOfAKind.com which went from its reserve of $5K all the way up to $26K.

A pretty good results especially considering all of the news surrounding SnapNames.com yesterday and the less than great results of the live auction last week:

oneofakind.com                      $26,000.00
loanofficer.com                       $16,000.00
fda.net                                       $11,550.00
organicchicken.com               $9,420.00
contestants.com                      $7,790.00
jju.com                                      $7,000.00
onlinework.com                      $7,000.00
icecreammaker.com                $6,390.00
insurance.cm                            $5,890.00
restaurantlosangeles.com      $5,890.00
watchcollection.com               $5,890.00
saintnicholas.com                    $5,830.00
ycg.com                                      $5,010.00
helmets.net                               $4,999.00
weightloss.info                         $4,950.00
onlinestockbrokers.com         $4,456.00
istorage.com                             $4,443.00
bestmortgagelenders.com      $4,433.00
nuisance.com                            $4,120.00
mitersaw.com                           $3,930.00
hi.biz                                          $3,300.00
discountsite.com                     $3,200.00
investigates.com                      $3,011.00
drapes.net                                 $3,000.00
ddd.net                                      $2,950.00
equipment.us                           $2,950.00
londonrentalcar.com              $2,950.00
motorcarinsurance.com        $2,870.00
monthlybudget.com               $2,860.00
powersaw.com                         $2,800.00
cocobay.com                             $2,600.00
tx.biz                                          $2,500.00
childcounseling.com              $2,410.00
awnings.org                             $2,360.00
autoloanquote.com                $2,285.00
privatetutoring.com               $2,250.00
eyecorrection.com                  $2,000.00
mobilebrowser.com               $2,000.00
nightcamera.com                    $1,980.00
equestrianboots.com             $1,905.00
cashmeresocks.com               $1,850.00
unread.com                             $1,850.00
compute.org                            $1,770.00
idiamond.com                         $1,770.00
infantseats.com                      $1,770.00
basiccable.com                       $1,750.00
discountfootwear.com          $1,650.00
related.org                               $1,650.00
youfile.com                              $1,555.00
discountinsurance.net          $1,500.00
earlyedition.com                    $1,420.00
searchproperties.com           $1,400.00
restaurantdeals.com             $1,250.00
telemarketing.info                 $1,230.00
kc.biz                                        $1,202.00
5900.com                                $1,180.00
black-jack.net                         $1,180.00
bodypainters.com                  $1,180.00
celebritycollectibles.com      $1,180.00
dolls.info                                  $1,180.00
flourtortillas.com                    $1,180.00
goldsellers.com                       $1,180.00
jets.biz                                       $1,180.00
junebugs.com                          $1,180.00
lunching.com                           $1,180.00
realestateconsultant.com      $1,180.00
silverplated.com                      $1,180.00
swissclocks.com                       $1,180.00
weddingdoves.com                  $1,180.00
babydiapers.net                        $1,120.00
creditreport.biz                         $1,120.00
rentals.biz                                  $1,120.00
lo.biz                                           $1,050.00
cherryhillhotels.com               $1,018.00
bigcities.com                             $1,000.00
speciale.com                             $1,000.00
ur.biz                                          $961.00
xn--4rr36ioqufo5b.net           $890.00
astrologer.net                          $800.00
ha.biz                                         $787.00
charlottevacations.com          $765.00
sssa.com                                    $751.00
savingsaccount.org                 $715.00
armtattoos.com                       $675.00
bestmattresses.com               $640.00
daytrading.info                       $625.00
telemarketing.biz                    $615.00
badcreditfinance.com            $601.00
betteryoga.com                        $590.00
desertclothing.com                 $590.00
fatfreecookies.com                  $590.00
keywesttravel.com                   $590.00
killer.org                                     $590.00
rawsolar.com                            $590.00
therawfooddiet.com                      $590.00
treatmentofdiabetes.com             $590.00
catalogshoppers.com                    $480.00
keepkosher.com                              $480.00
exoticcheese.com                            $460.00
textingabbreviations.com             $426.00
mexicanriviera.org                         $420.00
wirelesschargingsystem.com      $420.00
missourimortgagelenders.com  $360.00
sqqq.com                                        $360.00
repudiation.com                            $350.00
dragging.com                                 $325.00
dullard.com                                   $325.00
petsupplies.info                            $325.00
turnright.com                               $325.00
bypassing.com                              $300.00
careerexploration.com                $300.00
cavityprotection.com                  $300.00
demographics.info                      $300.00
developingapps.com                   $300.00
distanceeducationdegree.com    $300.00
extirpate.com                                $300.00
fanletters.com                               $300.00
financialaidplan.com                  $300.00
firstnovel.com                               $300.00
freestreamingmovies.com          $300.00
glassofmilk.com                           $300.00
heatingandplumbing.com         $300.00
hypnosisclass.com                       $300.00
icecreampops.com                       $300.00
infertilitydrug.com                      $300.00
lasvegasmall.com                        $300.00
learncommoditytrading.com    $300.00
luxurybathrobe.com                   $300.00
luxuryhotelmumbai.com           $300.00
medicalclaimsjobs.com             $300.00
nciv.com                                       $300.00
nudebras.com                               $300.00
orientate.com                               $300.00
pilatesmats.net                             $300.00
samesexparenting.com               $300.00
spas.travel                                      $300.00
tvez.com                                          $300.00
unlimitedcellphoneplans.com    $300.00
venido.com                                     $300.00

There are about 600 domain in the extended auction including those that did not sell in the live auction

To view the full catalog or to bid click here

Here are our top picks for the auction today:

“”"At NameJet we have the necessary security protocols in place to prevent this kind of incident.”"”

“”We have security procedures and policies in place that monitor all activities to ensure that “shill” bidding does not occur. “”

All of the domain community hopes so.

However, its a little disconcerting to me that NameJet.com is taking the position; what happened there can never happen here.

I’m sure if you asked SnapNames.com a few months ago, they would have said the situation they find themselves in today could never happen to them, could never even be imagined.

An employee engaging in shill bidding is just one of the many games and scams that can victimize bidders in an auction.  There are tons more.

I would hope that today’s news from Snapnames.com would cause everyone in the space to open their eyes to all the possibilities that exist and be vigilant to find issues,  rather than close their eyes and say it can’t happen to us.

Here is the full announcement from NameJet.com:

“”"Dear Valued NameJet Customer,

As you may have already heard, another company in our same line of business, SnapNames, was the victim of an internal security breach. We wanted to address any concerns you may have and assure you that at NameJet we have the necessary security protocols in place to prevent this kind of incident.

What Happened at SnapNames:

According to SnapNames, an employee set up an account on SnapNames under a false name. Under this account, the employee bid in SnapNames auctions. In many instances the bidding by this employee caused the ultimate auction winner to pay more for a name than had the employee not participated in the auction. In addition, on certain occasions, when the employee won an auction, the employee secretly arranged for a refund from SnapNames. This was in violation of SnapNames internal policy, and once discovered the company immediately closed the account in question and the employee was dismissed.

We commend SnapNames for taking quick and decisive action once it discovered its security breach.

NameJet has Strict Security to Prevent Anything Similar:

You should have full confidence nothing similar has occurred on NameJet. We have security procedures and policies in place that monitor all activities to ensure that “shill” bidding does not occur. Further, employees are strictly barred from bidding on auctions and NameJet has both internal and external monitoring to ensure all security procedures are enforced. These procedures were developed and are maintained by two of the world’s largest and most trusted registrars.

Thank you for your business and for your ongoing trust in NameJet.

If you have any questions regarding this issue, please contact us at customers@namejet.com.

Sincerely,

Steve Brown
General Manager
NameJet.com”"

“”Anyone who doesn’t know how dirty the domain name business is, just doesn’t know the domain name business.”"

Mr. Arrington says he a consultant to Pool.com years ago when he says it was pulling in over $1 Million dollars a month in revenue from expired domain auctions and concludes about Snapnames:

“It’s inexcusable that they let this happen, and didn’t catch it for years.”

This article has already brought out the domain haters which are quickly filling up the comment section of the TechCrunch post.

Moreover, Michael Arrington is defending his choice of words calling the domain business “dirty” throughout the comment section

Shortly thereafter, Network Solutions its largest registrar partner used the escape clause in their contract with Snapnames.com to pull out of their agreement.

Now it appears that the  former employee of Snapnames engaged in shill bidding was also a shareholder of the company that sold Snapnames.com to Oversee.

If, as we quoted President of Oversee Jeff Kupietzky as saying, 75% of all this shilling bidding took place prior to Oversee’s acquisition of Snapnames.com, it would be logical to conclude that the financial information Oversee received from the company that sold Snapnames,  were inflated by shill bidding.

We inquired as to whether the former employee was also shareholder of the company that sold Snapnames.com to Oversee and received this response:

“”"Yes, the former employee was a shareholder, as were all SnapNames employees.”"

The lawyer in me tells me if the person responsible for the shill bidding was a shareholder of the old company as well, this may  allow Oversee to claim misrepresentation and seek damages against the company that sold them Snapnames.com.

Shill bidding by an employee is bad enough, but it is alleged that this individual engaged in this behavior while he was a shareholder of the company as well.

For the record, when I asked Mr. Kupietzky about this issue his response was:

“”"While SnapNames doesn’t discuss legal issues, we are considering all available legal remedies”"”