Feeds

Domain auction house wrestles with alleged shill

SnapNames in legal action against ex-exec

  • alert
  • submit to reddit

The Essential Guide to IT Transformation

Oversee.net CEO Jeff Kupietzky has revealed that the company is in active but pending legal action against the former executive who allegedly fixed tens of thousands of its domain-name auctions under the pseudonym “halvarez."

Last week, at the company's Domainfest conference, Kupietzky refused to be drawn on the company’s precise action toward former vice president of engineering Nelson Brady, citing legal constraints. However, he did reveal a number of details surrounding the scandal and its aftermath, including the multimillion-dollar compensation the company has paid out to swindled punters.

Back in November, as we reported here, the company announced that an executive - later identified as Brady - had been using the name “halvarez” for years in his own company’s auctions. It sent letters to every affected bidder explaining the situation and offering compensation.

The company said that an investigation revealed that Halvarez had bid against others, increasing the price, and then dropped out at the last moment ensuring that the Oversee-owned SnapNames made a greater profit. On the occasions that he won the auctions - presumably by mistake - Halvarez would usually seek a partial refund. Oversee bought Snapnames in October 2007 for $25 million – a purchase figure based in large part on auction revenues.

What makes the situation worse in punters’ eyes is that several of them posted their concerns about Halvarez years earlier, some even stating that they believed the bidder worked for SnapNames. According to Kupietzky, the company had retained a major flaw by possessing a “single point of failure:" Brady, says Kupietzky, was in charge of investigating claims of fraud against himself.

Oversee has won praise for its response to the scandal by coming clean and offering to pay anyone involved in a losing bid with Halvarez the difference it what they would have paid without his action, plus 5.22 per cent interest.

Kupietzky declined to give an exact total of the cost of compensation, but said that the full cost was “significantly lower” than our estimate of $7.5 million, which was extrapolated from the details that have emerged so far. The company has so far paid out 55 percent of the compensation pool it created, Kupietzky revealed. It's not known how much of the remaining funds cover those involved in two class-action lawsuits filed against Oversee - lawsuits that Kupietsky says he is confident of beating.

The company has introduced new measures to ensure that the situation doesn't happen again. It is in regular contact with frequent customers and has three people overseeing investigations into unusual behaviour, Kupietzy noted.

Despite the scandal, Oversee held one of the strongest domain-name auctions it has seen in recent years on the last day of Domainfest in Los Angeles. Of 285 domains up for grabs, 122 were sold, netting $1.07 million. The biggest sale of the night was $215,000 for loancalculator.com. ®

Build a business case: developing custom apps

More from The Register

next story
Scotland's BIG question: Will independence cost me my broadband?
They can take our lives, but they'll never take our SPECTRUM
Trying to sell your house? It'd better have KILLER mobile coverage
More NB than transport links to next-gen buyers - study
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
NBN Co adds apartments to FTTP rollout
Commercial trial locations to go live in September
Samsung Z Tizen OS mobe is post-phoned – this time for good?
Russian launch for Sammy's non-droid knocked back
Telstra to KILL 2G network by end of 2016
GSM now stands for Grave-Seeking-Mobile network
Seeking LTE expert to insert small cells into BT customers' places
Is this the first step to a FON-a-like 4G network?
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Backing up Big Data
Solving backup challenges and “protect everything from everywhere,” as we move into the era of big data management and the adoption of BYOD.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.