Company Admits That Employee Bid at SnapNames Domain Auctions for Years

November 11, 2009

Few days ago received an email from Snapnames confirming that an employee has been bidding “secretly”, i.e, without corporate knowledge/approval, for years, apparently from 2005 onwards. The employee has been fired. According to Snapnames the employee participated in 5% of auctions since 2005/6.

The email’s content hasn’t been posted at the Snapnames “news” page, however SnapNames has posted a related FAQ here: http://www.snapnames.com/faq.html

Snapnames proposes to make payments, plus interest, in auctions in which the “secret employee bidder” participated. It will be interesting to see exactly how this is worked out as the participation of any one person, at auction, can have a variety of effects. Outcomes are not always a matter of “the last 2 people bidding”. For example, some folks may withdraw from an auction simply based upon the number of people bidding at the outset, i.e., thinking there’s just too much interest. Others may have withdraw based upon seeing a certain nickname in the auction, under the “Oh no! Not him again! He always bids things up!”

So, is the “solution” simply to refund the winning bidder the amount he/she last bid before the insider-bidder jumped in? The “settlement” will include 5.22% interest. Better than bank rates, but what if the winner carried a balance on a credit card at 10%+? What about the opportunity cost for some bidders who may have bid against the insider dozens of times, tying up possibly tens of thousands of dollars?

Also, if the insider-bidder won a domain will he/she be made to turn over the domain names hewon at auction, to the benefit of the next highest bidder? It would seem appropriate that SnapNames should sue the former employee to force/compel him to surrender his “winnings”.

What if the insider-bidder subsequently sold the domains won at auction for a profit? Should the profits all be taken back?

What’s interesting is that there has been buzz on the(message) boards for years about a possible insider-bidder.

My advice: If you participated in a Snapnames action from 2005 onwards be certain that Snapnames has your current info. What I’d like to see is a complete list of all the auctions with the bidders auction-nic. Not sure we’re going to see this. Interesting how this could take place for years with no one – until now – having actual, actionable knowledge of the activity.

I’ve seen comments elsewhere suggesting that the long suspect bidder “Halvarez” was, in fact, the nickname used by the insider-bidder. Again, strange how there could be public buzz about Halvarez for years and yet, only now, is “that person” being exposed by the company. Say it ain’t so!

Some Questions To Ask

1) The bidder was well known in domaining circles. A quick Google search will show that many people thought he was a script or inside man. With all the attention the bidder received, SnapNames never thought about looking into this person?
2) He ended up winning a lot of auctions. Are they saying that he paid for all these domains individually out of his own pocket? If the guys goal was to shill auctions, it would appear that winning it would be a bad thing for a “rogue” employee.
3) This person was in so many auctions that I don’t see how he had any time to work.

According to Domain Name News, the SnapNames User Name “Halvarez” Was Nelson Brady, VP of Engineering. IF Snapnames doesn’t do more than just “fire him” – like sue him, seek to recover all ill-gotten gains and at least investigate criminal sanctions – some/many may infer that silence has a price/value, i.e., only pushing him out the door but not going after him with a vengeance could be seen as a move that might keep him from talking about any other suspect activities he might be tuned in to. Might he know about other bad actors or bad acts? Might he have something to say about who knew what and when they first knew it? These are the types of questions that only get answers, in many cases, when the lawsuits are filed, the prosecutor impanels a grand jury, etc.

Some Sources to read: