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Registerfly files suit against ousted CEO

ICANN snaps to attention

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The split between the founders of Registerfly.com, the leading domain name registrar, took a tawdry turn last week, as court documents filed by John Naruszewicz and Unifiednames, the corporation that owns Registerfly.com, made some shocking allegations against ousted CEO Kevin Medina.

The complaint seeks compensatory and punitive damages, and alleges that 75,000 domain names were lost in January 2007 alone due to failure to remit registry fees. The complaint goes on to accuse Medina of using corporate accounts as private slush funds, thereby failing to maintain sufficient float to cover registry fees.

The embezzlement alleged includes tens of thousands of dollars for luxuries such as escort services, personal credit card bills and even liposuction. It also alleges that Medina used $10,000 in corporate funds per month to cover rent on a Miami Beach penthouse apartment.

Registerfly is an ICANN-approved provider of internet hosting and domain name registration services based in New Jersey that controls approximately two million domain names for 900,000 different owners. In recent weeks, the service appears to have effectively collapsed, with owners scrambling to recover domains that were not automatically renewed as agreed, or were paid for and for no apparent reason allowed to lapse well before the agreed upon expiration date.

ICANN hits back

Our recent coverage of the Registerfly fiasco has raised some hackles at ICANN.

ICANN's ombudsman, Frank Fowlie, issued a testy response on his blog yesterday. He takes issue with our analysis that ICANN bears some responsibility for supervising the activities of its accredited registrars when those activities impact the integrity of web itself. The loss of tens (hundreds?) of thousands of domains would seem to impact that integrity.

Of course, if such a virtual land grab does not impact the integrity of the web (ICANN’s website lists as 'protecting the integrity of the web" as its primary mission) what is the point of ICANN accreditation? Just what does it mean to be an ICANN accredited registrar?

In his blog posting Fowlie quite rightly notes that ICANN is not responsible for policing all the activities of its registrars. The kind of issues enveloping Registerfly have always been prosecuted at a local level.

Nonetheless, complaints about Registerfly have been aired on the web for at least a year, and there are at least two websites devoted exclusively to Registerfly's problems, www.stopunifiednames.com and www.registerflies.com. The blogs on those sites are filled with complaints about both Registerfly and ICANN’s indifferent response to the complaints of customers burned by Registerfly.

It may be that ICANN is as toothless as Mr. Fowlie claims, but it does not seem unreasonable for ICANN to have some kind of mechanism in place to protect the integrity of the registry system itself – it could be something as simple as threatening to pull the accreditation of registrars failing to fulfill their basic mission, which, after all, is registering domain names. Protecting the property rights of the domain holders should be focus of any kind of ICANN enforcement regime – recovering actual monetary losses can be done at the local level, as Mr. Fowlie would agree.

ICANN may be changing its tune, however. According to Registerflies.com, newly installed CEO John Naruszewicz and Vice President Glenn Stansbury met with ICANN on Tuesday to discuss the situation, and here at El Reg we certainly hope that the Registerfly mess provides the impetus to ICANN to find a way to ensure that domain names are protected in the face of registrar malfeasance. ®

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