SnapNames Employee Caught Bidding on Auctions | DomainInvesting.com
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SnapNames Employee Caught Bidding on Auctions

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SnapNamesLogoI just received the following statement from Snapnames, and I wanted to share it with readers of my blog, who may have been impacted. Below the statement is some commentary and additional information from Snapnames.

“Recently, SnapNames.com, Inc., discovered that an employee had set up an account on the SnapNames system under a false name and, under this name, bid in SnapNames auctions.  This is a clear violation of our internal policy and was not approved by the company.

Extent of impact

This conduct affected a small percentage of SnapNames auctions:
·         Bidding affected approximately five percent of total SnapNames auctions since 2005, most of which occurred between 2005 and 2007, before SnapNames was acquired by Oversee.  To a much lesser extent, auctions in 2008 and 2009 were also impacted.
o        In less than one percent of these auctions, the employee won the auction
o        In the other four percent, the employee lost the auction
·         The incremental revenue from the bidding represented approximately one percent of SnapNames auction revenues since 2005.

SnapNames further discovered that, on certain recent and limited occasions, when the employee won an auction, the employee secretly arranged to refund from SnapNames to the fictitious account a portion of the winning bid amount.

To avoid any question about whether the company benefited from this conduct, SnapNames will offer a rebate to impacted customers, including 5.22% interest (the highest applicable federal rate during the affected time period), of the difference between the prices they paid in winning auctions, and the prices they would have paid had the employee not bid in the auctions.  Impacted customers will be notified by SnapNames or its representative with instructions for the offer of a rebate.

SnapNames has already begun notifying customers of the situation.

SnapNames also has taken further action to ensure its policies regarding auctions are followed, and the company remains committed to taking whatever action is necessary to protect the integrity of its auction platform.

SnapNames deeply regrets this situation and is committed to addressing its customers’ needs quickly and fairly.

Customers with questions may contact:

By e-mail:                     support@snapnames.com
Phone:                          +1 (866) 690-6279 (toll-free in the U.S.)
+1 (503) 241-8547 (outside the U.S.)”

==========

Last year, there were issues surrounding a Godaddy employee who was bidding on expired domain auctions. At the time Oversee.net told Domain Name Wire, “Oversee.net employees are strictly disallowed from bidding against customers.”

Mason Cole, a spokesman for Snapnames has told me the company will not reveal the name of the employee, but DNN is reporting that the user name involved is “HALVAREZ.” The company will not disclose any legal matters related to whether charges are going to be filed against the employee.

One has to also wonder if Oversee.net has any recourse related to the private Snapnames acquisition. The bidding activity impacted revenues prior to the acquisition, and it also had an impact on bidding activity as well. I want to applaud Oversee.net for taking the actions they did and for coming forward with this information. I am sure it will hurt their bottom line, but their reputation is much more important.

I will post further information as I receive it.


About The Author: Elliot Silver is an Internet entrepreneur and his company earns revenue from domain names. Elliot is President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Elliot is the publisher of DomainInvesting.com. Read this blog's disclaimer for information about the publisher, comment policy, disclosures, and conflicts.

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Comments (50)

    Tony

    I would LOVE to know the Snapnames handle of this person..

    November 4th, 2009 at 1:44 pm

    Kevin M.

    Could this be…..Halvarez????

    November 4th, 2009 at 1:48 pm

    wow

    How many millions customers probably overpaid when this person lost auctions? Unbelievable!

    November 4th, 2009 at 1:49 pm

    Mihai

    These subtle theifs should get at least 20 years of prison, because they will come back and hit you from the back when they’ll have the opportunity.

    November 4th, 2009 at 1:50 pm

    Paul Kapschock

    “This conduct affected a small percentage of SnapNames auctions”….that was said with tongue planted firmly in cheek!

    “Bidding affected approximately five percent of total SnapNames auctions since 2005,……..”…that is huge amount of auctions …going on for years!

    Stay tuned…more to come.

    Paul

    November 4th, 2009 at 1:51 pm

    Rob Sequin

    Five percent of auctions and one percent of revenue over two years? YIKES!

    It’s good they are coming forward but to lead with “This conduct affected a small percentage of SnapNames auctions”?

    We are talking thousands of domain auctions and at least tens of thousands of bids. Since the employee lost most of the auctions, that means that the winning bidders paid a higher price in the tens of thousands of dollars.

    This is a BIG deal. No?

    I can see someone making a bad decision once but over a period of years?

    That’s trading on inside information and/or shill bidding or maybe even something criminal? I wonder what else he/she did from the inside. If this person acted on inside information he could have compromised other components of snapnames and perhaps even shared his inside information with outside parties.

    I would hope that this employee was fired. Odd that it didn’t say that in the email.

    The employee must be fired and even sued for damages.

    As far as the rebates, I’m not sure that’s enough. Sounds like we are talking about hundreds or even thousands of compromised auctions.

    How will the rebate be determined?

    What happens to the domains that the employee won?

    I’m guessing if you accept the rebate you won’t be able to sue for damages?

    Any mention that the employee was fired?

    If snapnames is giving out this information, we should know how they are handling the enforcement of their policies.

    Sounds like it could get messy.

    November 4th, 2009 at 1:57 pm

    Elliot

    @ Rob

    The employee was fired – it says it in the statement.

    November 4th, 2009 at 2:12 pm

    rob sequin

    Thanks. I read the article again and still don’t see that.

    November 4th, 2009 at 2:18 pm

    Tony

    I should be getting a huge rebate in short time…

    That guy was ubiquitous in my BackOrders…

    November 4th, 2009 at 2:25 pm

    JK

    Seriously SnapNames,

    This HALVAREZ guy was in almost EVERY auction we were involved in dating back to sometime in 2003/2004.

    Most times the “entity” was simply doing nothing, however on plenty of occasions they would also bid as well. Bid well into the $300-$500′s, when it was just us and them chasing a domain. This really sucks for them.

    Clearly the have subtracted a number of years in the totals.

    Credibility surely down the drain.

    Best Regards,

    JK
    WebContents, Inc

    November 4th, 2009 at 2:33 pm

    Mike

    There is definitely more than one account involved in this fraud.

    I can count at least 3 accounts at snapnames that drove up prices on my auctions by tens of thousands of dollars in some cases.

    halavarez, hidden, vaxcis

    November 4th, 2009 at 2:59 pm

    rob sequin

    1. Who is the source for halvarez being the bidder ID?

    2. From http://www.snapnames.com/faq.html :

    What methodology did you use to determine the rebate being offered?

    SnapNames retained an experienced, independent accounting forensics firm to calculate the amount on a customer-by-customer basis, the precise amounts due to each. In the communication we’ll send through Rust Consulting, we can provide more detail about how figures were calculated.

    END

    Interesting.

    3. Scenarios:

    If I was the winning bidder, do they take my high bid all the way down to my bid just under Halvarez (if that’s the bidder)?

    What if I lost the auction to Halvarez? Do I get the domain?

    Does Halvarez get to keep all his ill gotten domains?

    I doubt rebates are going to make everybody happy.

    This is appearing to be a REAL mess for snapnames.

    Hey, maybe we all have some money AND domains coming our way. :-)

    I’ve been an active buyer with snap since like 2001 when the started so it’ll be interesting to see what they offer me.

    November 4th, 2009 at 3:17 pm

    equalizer

    Class Action …anybody?
    I’ll bet somehow they were forced to do this.
    Robbie.

    November 4th, 2009 at 3:49 pm

    Tim Davids

    domains lost to him should be classified as stolen and be recaimed and given to the losing party.

    November 4th, 2009 at 3:53 pm

    mike brewster

    Is this the only case of such fraudulent activity?

    We are big buyers and use quite a bit of competitive intelligence to analyze our prospective purchases including bidders and likelihood of acquisition, we found that on more than one instance the same handle was bidding and running up the price on a number of auctions and shifted a lot of our investment to private acquisitions.

    I would venture to say, this is not a one off case of “insider trading” if you would but that there are many cases of such issues particularly in venues such as Snapnames & Namejet.

    Transparency has been a cry for such a long time and for reasons non other than preventing this. Rest assured there is a lot more to come of this and of fraud in domain parking, domain brokering and many other facets of this business.

    It really is sad, as this only confirms what the outside world thinks of us, this industry has so much potential and is the pipeline of a lot of commerce but stories like this and those that are yet to come may be evidence why we are not taken seriously by the outside investment and marketing world.

    November 4th, 2009 at 4:06 pm

    Bob

    @Mike – vaxis = Vertical Axis = Kevin Ham? I think…

    November 4th, 2009 at 4:14 pm

    Kevin

    This is one of those were you just want to say . . . .

    http://www.youtube.com/watch?v=0y4ACGsF_PM

    LOL

    November 4th, 2009 at 4:28 pm

    Steve

    I got the same letter and this portion is telling:

    “SnapNames further discovered that, on certain recent and limited occasions, when the employee won an auction, the employee secretly arranged to refund from SnapNames to the fictitious account a portion of the winning bid amount.”

    To me the criminal is obviously SnapNames because they are benefiting from the shill bidding and condone this behavior through secret, or not, refunds to the employee.

    November 4th, 2009 at 4:30 pm

    wow

    What about names that were going to auction but suddenly “cancelled” because the owner supposedly renewed? Those messages came from Nelson, and the names ended up with a Sedo parked page, and in a Moniker account.

    What happens to the domains now?

    November 4th, 2009 at 4:33 pm

    rob sequin

    Steve,

    I wouldn’t be too hard on snapnames. They are a great group of people.

    What that is referring to is their affiliate program. This bidder had the balls to bid in auctions AND use his affiliate link to get money back.

    The question is why did it take so long for snap to find this guy and has he dealt with anyone else inside or outside of snap?

    November 4th, 2009 at 4:36 pm

    Thomas

    5% of auctions.

    How many auctions does Snapnames have everyday?

    Let’s assume 500 auctions per day. That is 25 auctions per day and over 5 years that is 365*25 = 9125 auctions

    That may just be a low estimate!

    The number of people affected numbers at least in the thousands if not tens of thousands.

    November 4th, 2009 at 5:29 pm

    ILikeInfo

    Remedy is rediculous.

    The moment Halverez entered and auction the auction became poisoned.

    Then, any run ups towards the end due to Halverez should result in a refund of the bid of the PREVIOUS bidder.

    Halverez frequently made very significant run ups. Good faith reimbursement are going to have to go a LOT further than what I’m reading here. The fact the Nelson was know to many in the forums, and personally helped many of us as well, makes this far worse than just a bidding issue.

    This is yet another example of greed and back stabbing that I find very difficult to comprehend. And it seems to be getting more and more common in society in general.

    - Charles Christopher

    November 4th, 2009 at 6:39 pm

    Oscar

    Thomas, Snapnames says there were probably more than 50.000 auctions afected.

    November 4th, 2009 at 7:09 pm

    rob sequin

    http://www.techcrunch.com/2009/11/04/domain-industry-rocked-by-shill-auction-bidding-admission/

    And now we’re all domain squatters. This coming from the former CEO of Pool.com of all people.

    Seems like the shock waves are just getting out to other news sources.

    Great. Thanks douche bag at Snapnames whoever you are.

    You’re damn right I want a rebate but somehow I don’t think Snap is going to get off that easy.

    This could bring down all of Oversee. Of course I don’t want that to happen but one has to ask if this is an isolated case or are there other people acting inappropriately at Oversee?

    Why was this person not caught for MANY years?

    Unfortunately when you find one mouse, there are more.

    November 4th, 2009 at 7:24 pm

    November 4th, 2009 at 7:26 pm

    Elliot

    @fizz

    After reading Domain Name News and other blogs and forums where the person’s name was mentioned, I thought the name of the person had been confirmed officially. I’ve heard from several people that the person named is correct, but I still don’t feel comfortable posting the person’s name yet until I see official confirmation, so I removed the post.

    November 4th, 2009 at 7:31 pm

    ILikeInfo

    “And now we’re all domain squatters. This coming from the former CEO of Pool.com of all people.”

    That was my greatest fear when I first heard about this. That it goes so far that congress gets involved, or even the UN. And no, I’m not joking.

    The desired to control the internet, and thus world commerce, should not be underestimated. People who use this to condemn our industry will do FAR more damage that Nelson. Nelson will just be the “excuse” for more regulations, taxes, etc.

    I don’t know how we do this, but we need to. We need to at least keep this to the current issue and bitch slap anybody that fans this fire!

    - Charles Christopher

    November 4th, 2009 at 7:49 pm

    Steve M

    And; whether we like it or not; the mainline media is now off and running with the story:

    http://voices.washingtonpost.com/securityfix/2009/11/snapnames_former_exec_bid_up_d.html

    November 4th, 2009 at 8:18 pm

    Marcia Lynn

    Sorry, I just don’t believe it.

    I could be wrong, wouldn’t be the first time, but he is
    brilliant enough to make (and did) a great legit income;
    doesn’t need to ripoff, steal, shill, lie, cheat, whatever.
    And certainly doesn’t strike me as greedy or deceitful.

    I’ll believe he was the company’s scapegoat until a court
    (if it comes to that) proves otherwise.

    November 4th, 2009 at 9:32 pm

    Rob Sequin

    Well, here’s proof that snapnames owes me money

    http://robsequin.com/images/halvarez-bids.gif

    This screen cap shows me (I am whatever bidder ID) bidding against Halvarez from $59 to a winning bid of $160 with no other bidders in between. So, there’s $101 coming my way and I know I bid against Halvarez MANY MANY times.

    The latest that I can find Halvarez in one of my auctions is from March 2009

    http://robsequin.com/images/halvarez-march-2009.gif

    If he is bidder ID ppppp too, I’m gonna be getting an even bigger check.

    November 4th, 2009 at 9:50 pm

    Frank Michlick (Domain Name News)

    @Rob: The refunds did not come through an affiliate program, Snapnames only introduced their affiliate program recenly.

    November 4th, 2009 at 10:34 pm

    Russ

    Rust Consulting is a class action settlement firm (check out their website). Oversee’s planning ahead.

    5% interest is laughable. He made A LOT more than that monetizing and selling those domains.

    But I guess they can’t tell us about any pending litigation against Nelson.. yet.

    November 4th, 2009 at 10:36 pm

    ActNow

    Rob,
    The advantage the insider had was that he could see your proxy bid. Using your example, he bid $10. less than your proxy bid.

    I was fortunate that I kept spreadsheets of my winning and losses back to 2003.

    Halvarez did not show up on my radar til May, 2005.

    November 5th, 2009 at 9:47 am

    Adam

    dark days

    November 5th, 2009 at 1:54 pm

    chandan

    they should be sued badly anf kicked form the industry

    November 6th, 2009 at 2:40 pm

    pitbullstew

    doj.state.or.us/help/explain_consumer_complaint.shtml

    November 7th, 2009 at 10:49 am

    Chatsworth Osborne

    Adam Dicker (a VP at Godaddy) bid at TDNAM auction(s) against clueless domainers, and procured at least SPYWARE.US in that fashion. Isn’t that the same thing Nelson did? Dicker keeps his job, and the domain. Godaddy changed their policy about employees bidding against clueless suckers, only after the farce was outed in domain forums. Adam Dicker didn’t get fired. In fact, I notice some of the comments here are by those who participate at dnforum.com, which Dicker owns.

    Why does Dicker get a pass and Nelson doesn’t? My feeling is that if Dicker got caught for one episode, he probably did it numerous times.

    November 8th, 2009 at 11:28 am

    stewart

    seems snapnames isnt the only shady operator at all huh?
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