My Snapnames Theory | DomainInvesting.com
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My Snapnames Theory

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I have no way of knowing what really happened with the Snapnames employee bidding scandal, but I do have a theory, and unlike other theories I’ve read, this doesn’t involve any real conspiracies.  Maybe this happened, and maybe it didn’t, but at least this is what I hope happened, since the implications would be far less reaching across the Oversee.net brands and the domain industry:

“Halvarez” was a domain auction bidding script that placed bids based on a variety of factors set up by its creator, a Snapnames employee. Since the creator worked for the company, he may have had access to domain data (I really don’t know here just guessing), giving him an advantage when buying domain names, as he could justify paying more than others based on assumed PPC revenues. In addition, perhaps there were revenue goals on the line or future compensation tied to company revenue that would have been directly impacted by a bidder of this magnitude, hence the reason he bid in so many auctions but didn’t win.

The creator of “Halvarez” could have established a company and separate bank accounts and credit cards in the company’s name to look more authentic. “Halvarez” probably always paid Snapnames on time, $xx,xxx  (or more) per month, further avoiding suspicion. Because of this, Snapnames looked at this mysterious bidder as one of their top customers, and as a courtesy, the company gave refunds on some names for whatever reason (or maybe they didn’t even know about the refunds).  This may sound shady, but if they are like most companies, the top tier of customers get special treatment when they ask, like returns, favorable payment terms, dinners, event invitations, and other benefits for bidding so much.

Since “Halvarez” was so private, Oversee.net executives would never get a hold of him (assuming they tried to meet with this VIP), but the guy paid on time so they left him alone. There has been at least one extremely private individual who was active in our business for a long time, so it’s not out of the realm of possibility that nobody knows who “Halvarez” really is. In addition, the trusted person who was fired may have told company officials that he had communicated with “Halvarez” in the past, and since the guy was trusted, they took him at his word.

“Halvarez” reached out to iREIT to sell a portfolio of names, and the prices were right for them. Since he was able to score good deals, he could also sell the names at great prices, recouping some of his investment. iREIT paid “Halvarez’s” company, knowing that Snapnames has confirmed that “Halvarez” is a real bidder while not thinking it was any different than any other deal.

I really have no idea if my theory happened, but I am hoping that it is what happened. Things seem so obvious now that this has been revealed, but at the time, there wasn’t much that could have been done. Perhaps someone did do something, and that caused the investigation that revealed the bidding. Only a few people probably know that, and we may find out in time.

I feel badly for the people who lost out on great domain names to “Halvarez,” and I don’t think the rebate offer does anything to compensate them. I think it would be impossible to remunerate them fairly for these potential losses.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (20)

    Yaron

    A script? maybe. but I find it hard to believe nobady at snaopnames didnt know whats going on.
    maybe it was a script by Snapname make sense, because it seems to me that “halvarez” had some inside info, especially in regard to proxy bids.
    maybe this VP was the one who ran this script?

    November 8th, 2009 at 1:48 pm

    Elliot

    I’m not a technical person, so maybe script is the wrong terminology… LOL

    It just seems to be an awful lot of auctions to be hands on every day and still perform daily tasks.

    Again, this is all just my theory.

    November 8th, 2009 at 1:49 pm

    Upsetting

    I go back to the movie casino on this one and this applies to the banking cartels who own our gov anyways and back this good cop/bad cop puppet show behind the scenes..

    Either you were in on it or were too stupid..both are unacceptable possibilities and you should get the boot

    November 8th, 2009 at 1:55 pm

    Michael

    I agree that it was a bidding script, I find it hard to believe their VP of Engineering had time to place hundreds of thousands of bids across tens of thousands of auctions in his spare time.

    However, I don’t agree that this means there wasn’t a conspiracy. It would have been VERY dangerous for him to write a script like that (or even do it manually) without having access to our max proxy bids. If his script was connecting to the database to get our max bids, then Snap definitely should have known about it. It would have either been sitting on their server, or establishing a connection from another server which SHOULD set off some red flags.

    I would bet this was a script, but that there were other high-ups that knew about it and condoned it. I also think there were other usernames involved, it wouldn’t make sense for him to write the script and only have one bot doing the bidding, that would arouse suspicions quicker.

    I don’t think we’re getting the whole story here, not by a long shot.

    November 8th, 2009 at 2:45 pm

    Yaron

    Elliot,
    “halvarez” was Nelson Brady, the VP of Engineering at SnapNames.
    Now think of this: VP OF ENGINEERING !
    so it only make sense that they did have a script. one that place the first bid to begin with, and one that pushed it higher according to proxy bids.
    The only thing that doesnt make sense is that SnapNames were not involved.
    My gut feeling is that SnapNames not only knew about this, but also orchestrated the all operation.
    I have never used SnapNames, but if I did I wouldnt take the “rebate” but instead take them to court.
    I think this is a classic case for a class action, but I wont be surprise if Snap is working with all the big guys on a different settlement than the “rebate” they are offering the small guys…

    November 8th, 2009 at 2:54 pm

    Shane

    I find it hard to believe they didn’t find out who their best customer was. Looking away, yes, not knowing, I doubt it. Curiosity alone would have made them look into it

    November 8th, 2009 at 5:15 pm

    Morgan

    I completely agree that he used a script…what surprises me is that nobody in the company realized this was going on for so long.

    November 8th, 2009 at 7:42 pm

    joe bloe

    nelson couldn’t script himself out of a wet paper bag! he could “drinking bird” like a monkey. you guys are reading _WAY_ too much into his title. he was only involved with concepts, not the gears.

    November 8th, 2009 at 7:56 pm

    Chris Beach

    Elliot, Nelson was not only the VP of Engineering, he actually built the original SnapNames from the ground up back in December 2000.

    What bothers me about this whole thing is, if he just wanted expired domains, he had the know-how to create his own registrars and his own personal backordering system, just for himself, without any risk, but he didn’t. He could have done so behind the scenes, with none of the risks he took (faking account refunds!), while still working for SnapNames and he could have even sabotaged SnapNames ability to catch the names he wanted so he had a better chance of grabbing them for himself, but he didn’t.

    Why take the risk when he didn’t have to? My guess is that SnapNames knew he was doing it. I bet some lowly, pissed off ex-employee has threatened to blow the whistle and SnapNames have been forced to beat them to the punch.

    November 8th, 2009 at 8:16 pm

    Chris Beach

    Joe Bloe, do you know Nelson? Is your statement based on actual knowledge or are you making assumptions?

    “Halvarez” was definitely a script – this was clear to anyone who was watching him closely over the last few years – it simply wasn’t physically possible for a human to bid on that many closing auctions at one time. As the auction time was extended, halvarez would make multiple bids, sometimes on hundreds of domains at once. He was definitely using a script – are you suggesting someone else wrote it for him?

    November 8th, 2009 at 9:39 pm

    joe bloe

    nelson did not “build” snapnames, nor was he a founder (ray and ron were the founders; but he was there from the git-go). nelson did manage the technical staff that built snapnames. writing a “script” to manipulate the snapnames auction platform is beyond nelsons programing abilities. he’s a smart man, but not a programmer.

    November 9th, 2009 at 12:32 am

    Chris Beach

    Hmmm, that doesn’t really sound correct. Nelson has a Doctorate in Computer Science and Engineering from the University of Texas – trust me, you don’t get a degree in computer science (bachelor, master’s or doctorate) without being able to code.

    November 9th, 2009 at 12:42 am

    joe bloe

    he hasn’t coded for over ten years. just because he has a phd in ee and can fly several types of aircraft, he can’t (on his own) code something that would be able to (in real time) manage the concurrency of multiple bids. mutltithreaded apps are beyond his scope. nor the subsecond timing requirements to “sabotage” [sic] the daily drop with vrsn. but to add to your theory: what happened to snapnames accounting department last summer?? what about those kpmg audits??

    November 9th, 2009 at 2:30 am

    Jimbo Jones

    Are there not any detailed logging files that could lead one to know where the IP address was for most of Halvarez’s bids? Would this type of IP logging not be used for most actions (login, bid, pay, refund, support) and traceable over time to the end-user?

    Seems a forensic investigation is in order to really “scrub” the SnapNames systems and uncover the real culprit. If this was in fact fraud, and if the data suggest that SnapNames looked the other way while this was going on, it surely leaves them complicit and seemingly “OK with the bidder’s actions”.

    Throwing one person under the bus (Nelson) does little to alleviate the fact that there is much evidence now that does in fact suggest that this was “a conspiracy to commit fraud”.

    Being a domainner since 1995, and seeing the industry changes throughout that time, it was evident (consistently lower CPC over time, higher, more competitive bidders in drop, and aftermarket auctions, and the hoarding of domains by registrars) it was the right time a few years ago to sell out…

    Warning: If you think this industry will clean it self up because of the SnapNames debacle, think again…this is just the tip of the iceberg, and I expect various “nefarious” anecdotes to surface over the next few months, of registrars, parking companies, or the BIG guys manipulating, and perhaps cheating the smaller guys out of the lions share of the market. I am not making any accusations, but this is probably the largest “black-box” industry going, and to get to the bottom of anything will need the blessing of ICANN, and the justice system – of which neither seem to have given much attention to it so far, as far as I have read…

    Good luck domainners!

    November 9th, 2009 at 8:22 am

    pitbullstew

    Interesting theories here, over thought none the less, this guy Nelson Brady?
    A common pick pocket, not much else.
    Snapnames deserves all it gets for not discovering this when the complaints began to pour in?
    Even mine.
    Why do I get the suspicion this is not the only incident of its kind?

    November 9th, 2009 at 8:53 pm

    pitbullstew

    Can you spell class action suit?
    Michael J. Aschenbrener | KamberEdelson LLC
    350 N. LaSalle St., Suite 1300
    Chicago, IL 60654
    1.312.589.6379 (direct) | 1.312.589.6370 (firm) | 1.312.589.6378 (fax)
    maschenbrener@kamberedelson.com | http://www.kamberedelson.com

    November 10th, 2009 at 8:53 am

    Russ

    Elliott, halvarez had help from another domainer monetizing (via his google feed) and selling the domains. Chances are ireit had no idea it was Brady.

    November 11th, 2009 at 5:00 pm

    anon

    keep moving, keep moving, thats right nothing to see here folks, keep moving-
    > Our File Number: FF++++-09
    > Complaint About: Snapnames.com Inc.
    >
    >
    > Thank you for the information that you sent us. Although there does not now appear to be a need for an investigation or legal action, we will keep your information on file as part of the public record.
    >
    > Our primary goal is to identify and eliminate the most serious marketplace violations, and many factors are considered in determining what cases we should pursue.
    >
    > We appreciate the time that you took to alert us to a possible problem in the marketplace. Your information may prove to be valuable in a future enforcement action.
    >
    > If you need to contact us about your complaint, please write to me and note your file number: FF++++-09, or contact me by phone at 503-934-4400 or e-mail at mailto:heather.j.mcfarlanemartinez@state.or.us
    >
    > Heather McFarlane-Martinez
    > Enforcement Officer
    > Financial Fraud/Consumer Protection Section
    > Oregon Department of Justice

    November 14th, 2009 at 5:31 pm

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