Man Charged with Bilking Lumber Liquidators with Domain Purchases
Friday, August 28th, 2009
Virginia man allegedly pays himself by selling domains to his employer.
Justin Godfrey, founder of domain name escrow service EscrowDNS, began to think something was wrong.
Joshua Everett, an e-commerce manager with Lumber Liquidators, started doing a lot of business through EscrowDNS.com in November 2008. He purchased a number of domains on behalf of Lumber Liquidators. At first he purchased them from a company called DNS Investing. Later, a company called Delorean Law Group signed up for an account at EscrowDNS and started selling domains to Lumber Liquidators as well.
Oddly, many of the domains Everett was buying for Lumber Liquidators were recently registered typos of Lumber Liquidator’s trademarks. Then, when EscrowDNS sent out a promotional letter to Delorean Law Group, it was returned “No such address”.
Godfrey decided he should look into the company. He worked with his other company, DNinvestigation, to research Delorean.
Using historical whois, the company found an address for Delorean’s domain name that matched that of DNS Investing, linking the two companies together. As a result, Godfrey then believed that the companies were operated by the same person and were potentially set up for the purpose of selling domains to Lumber Liquidators.
Godfrey requested copies of the canceled checks that were sent to both companies. They were signed by the people who set up accounts for each company: Lisa Mendoza and Addison Grace. One of Godfrey’s employees then stumbled upon a blog written by Everett’s wife, Lisa. On the blog, Lisa wrote about their daughter Addison. Then it clicked. Godfrey suspected Everett, the Lumber Liquidators employee, was purchasing domain names from himself with Lumber Liquidators’ funds. He believed Everett used his wife’s and daughter’s names as the contacts for the companies he set up.
In the mean time, Everett was on a buying spree. His wife’s blog chronicled big purchases, including a new home complete with fine leather sofas and flat panel TVs.
But in an instant this past March, everything changed. With much consternation, Godfrey contacted Lumber Liquidators and told them what he had discovered. (Lumber Liquidators declined to comment for this story.)
Everett was arrested on August 17 by James County police for obtaining money by false pretenses, a felony. He is now free on bail. All told, EscrowDNS paid out more than $100,000 to DNS Investing and Delorean Law Group for domain transactions.
Everett’s wife has started a new blog about picking up the pieces. She says she feels betrayed, but is trying to move on.
With every step of his company’s investigation, Godfrey’s heart churned. “By all accounts, Mr. Everett was a stand up guy,” said Godfrey. “I did everything to steer the suspicions away from him as I had created a personal bond with him over time, but the evidence was simply overwhelming. It took a lot of inner strength for me to call Lumber Liquidators. Though it did hurt for me to turn him in, since he has a small child, I knew it was the right thing to do.”
Godfrey recalls his days in the Air Force, when he was taught “Integrity First”, a motto he still tries to live by today. In a statement released to Domain Name Wire, Godfrey wrote:
“We take our customers’ security very seriously at EscrowDNS and we simply cannot facilitate these types of activities. I wish the best to Mr. Everett and his family, and hopefully there are lessons to be learned by everyone involved.”
No related posts.
Why does an escrow service go and investigate it’s clients ? Odd.
This may be an honest thing to do, but is it the escrow company’s job to investigate its clients in this manner?
Let’s hope they don’t start turning people in for buying domain names with money obtained from trademark-infringing domain names.
Escrow company notifies Microsoft that owner of Micorsoft.com purchased $100,000 worth of generic domain names last month, which must have been funded by trademark-infringing domain names ROFLMAO
Don’t really understand domains & the Internet? This is why you should learn: http://bit.ly/XJpfy via @DomainNameWire
I think that if you become aware that your escrow service is being used to perpetuate fraud, you have to get to the bottom of it.
If you follow him on the forums you would come to the conclusion that Escrow.com is the only way to go if your looking for professionalism. Funny EscrowDNS investigates their clients when they themselves had to shut down after launching because they were not a licensed company, maybe they should look in the mirror.
I think you guys are drawing the wrong conclusion from this. They became aware that someone may be using the service to commit a criminal offense, not a civil. I think they had to do something about it. If you knew someone was stealing money, wouldn’t you do something about it?
First of all, We do not investigate our clients. When it came to our attention that the address of someone that was doing $100,000+ in business with us was invalid we had no choice but to question the company. There is a lot more to the story than what is written here, it wasn’t an overnight thing. When the company was unable to provide a valid address, FEIN or even a working telephone number we had to look into them. Do you think that we should’ve facilitated the fraud even after we found out about it?
IMO, this is not the job of the Escrow company. An Escrow company should perform its service to be an Escrow agent, not be a detective. If the Escrow company has a confidentiality clause in its contracts, then this could go against that (making these details public). I hate to say it Justin, but this will probably hurt your business. I would now expect that if I did a deal through you, it could become public info or you could “investigate” things that do not affect you performing a simple task such as being an Escrow Agent. I would never use EscrowDNS after reading this even when doing a perfectly legitimate transaction.
Theo – it’s the job of an escrow company to keep accurate records and not knowingly assist in fraud.
We call that snitchin’ on the Baltimore streets.
I’m amazed at how many people think what escrowdns did was wrong. I’d have done the exact same thing.
They may have done the right thing Gordon but I wasn’t aware that investigating customers was something escrow services did.
“When it came to our attention that the address of someone that was doing $100,000+ in business with us was invalid we had no choice but to question the company.”
And how did this come to your attention ?
@marlo you going to do him like you did Bodie?
@ Bob – I couldn’t include all of the details in my story, but there were other red flags as Justin pointed out. I doubt Justin took the decision to pursue this lightly.
Andrew,
I think the people here just think that an Escrow business shouldn’t be investigating their clients transactions. I absolutely agree that Justin did the right thing here but why deal with a company who is going to police your transactions?
Now people know that EscrowDNS will look into your transactions that you may want to keep private, so they’ll be pushed to use Escrow.com or Moniker bad business decision on Justin’s part imho.
Not only that but by policing these transactions does he open himself to potential legal trouble in the future if the same type of activity or different criminal activity happens in the future. The lawyers for the other side could show this case and show that EscrowDNS is able to police the transactions going through it and should be doing it for all transactions.
Looks like Justin breached his own Privacy Policy found below.
“We will protect personal information by reasonable security safeguards against loss or theft, as well as unauthorized access, disclosure, copying, use or modification.”
Do you think Joshua Everett authorized this disclosure?? I reiterate my position that I would never recommend anyone do business with EscrowDNS. Just seems too small and your confidential information (price details, etc) could be at risk. What if he decided to “investigate” if a domain you are buying could be purchased for a higher price than you are paying after he learns of the details. This whole thing does not sit right with me at all.
https://escrowdns.com/terms.php
The problem is when you run multiple companies duties seem to overlap and all be okay companies as is the case here and when you focus 100% of your energy on 1 company it trumps the competition Escrow.com for the win. No offense Andrew but unless your linking to the blog of this woman then this looks like nothing more than paid self promotion with 2 links to Justin’s sites. Nice to know as well that anything bad that happens while using EscrowDNS will be publicized as I doubt you found this story on your own.
I agree with Justin on this one.
If I have a consignment shop and I found out that a guy was bringing in stolen diamonds once a month for me to sell, should I allow it, even though I never owned any of the diamonds? After all, all I did was just helped facilitate the sale of said stolen merchandise? I never stole the diamonds, so I should keep my mouth shut?
I think that the legalese could, if it is not already written as such, read to not apply to stolen domains or domains transferred to perpetuate fraudulent activity.
I’ll also add that the domain business is all about investigating everyone. How many times have we all investigated someone?
What business does not look at their clients? I think it is natural.
Johnny should they look in to it and then notify the “media” ?
Time for domain title insurance
@ Bob – perhaps by doing this he’s warning off any fraudsters.
I think it is safe to say that nobody will be using EscrowDNS anymore. He just lost most of his clients.
“Godfrey recalls his days in the Air Force”
That is good. Because he is going to have find another job. He will be persona non grada in the domain biz from here on out.
Dub-A,
I am so totally committed to upfront, legit and honest business, it’s a main part of my business expectations. However, I’m not an escrow service, or an ISP, or any company that would “make a decision that someone is doing something illegal.”
The point everyone is trying to say is that it isn’t EscrowDNS’s job to “judge” that a “crime” is being committed. That is up to law enforcement. An escrow service is specifically set up to handle transactions fairly. PERIOD.
If every company that did business with you, and thought, “my god, this guy Andrew is making so much money from selling these things he calls ‘domains’, there must be something illegal about what he is doing.” And then you are reported to a law agency who starts investigating you. Is it the job of the company you’re working with to act as a legal/law interpreter and law enforcement “snitch”?
No, it isn’t. And EscrowDNS had no right to MAKE THAT CALL, even if it was the correct one to make. Their business is to process domain sales to the parties who sell and buy. Nothing more. They shouldn’t be an “investigatory agency” working with law enforcement unless THEY have become the victim. From this story, it doesn’t look like EscrowDNS wasn’t a victim, so they should have kept their nose out of it.
I’d hate to have an escrow service “dissecting” my sales and then calling the cops because they thought something was amiss, based only on THEIR interpretation.
I’ll never use EscrowDNS now.
Isn’t the Escrow company Responsible for the Legitimacy of the transaction? Com’on guys.
I think this will go down as the funniest domain story of the year. Obviously Godfrey contacted Andrew thinking this story would some how help his biz. LOL. He is toast now.
well said, jackcorner!
Hey Godfrey, douchebag, now I hope Lumber liquidators will sue you for all the fees you cashed as well for beeing an accessory to fraud
If this was a stock board, Godfrey’s detractors would have been termed “paid bashers”.
As a citizen of his community and country, he worked in their best interests and took the risk of damaging his company’s reputation to uphold integrity and the law. Bravo! I will consider doing business with him in the future to show my support.
I am disgusted with the detractors.
Good luck on your next transaction RJ. Godfrey thought he would be praised for making this whole thing public and play the “military integrity” card. I would never do business with an Escrow agent that shows blatant disregard for both sides of the transaction by making it public – Lumber Liquidators and Joshua Everett should have the right to settle this between them in private. RJ, perhaps you are a “paid hyper”??
I WILL use EscrowDNS because I feel they are going above and beyond for my best interest. Obviously, non of these “Bashers” have employees.
I have to say, if I came across this thread as an outsider I’d think domainers were all crooks with something to hide.
I don’t know all of the rules and regulations for escrow services, but I suspect they have a legal requirement to make sure financial laws aren’t being broken, similar to with a bank. Keep in mind that Everett is being charged with a criminal offense, not a civil one.
The only thing I think someone can question is whether Justin should have come out with the story. That’s a judgment call, and I’m not going to be the judge. My first point is that all of the info is or will be a matter of public record, so it’s just Justin giving the back story rather than reading it out of a police document.
But I don’t think coming out with the story will hurt Justin’s business. Here’s why:
1. If you aren’t doing anything wrong, why would you worry about using a service that tries to make sure people aren’t getting screwed? Let’s say I was buying a domain for $10k through EscrowDNS. An EscrowDNS.com notices the domain I’m buying is stolen. Should they just keep quite and let me get ripped off for $10k? I would hope not.
2. It’s positive press for his investigation services. If I’m a corporation and come across this thread, I’d be inclined to hire him.
3. All press is good press.
I think Justin’s statement in the story sums it up:
“We take our customers’ security very seriously at EscrowDNS and we simply cannot facilitate these types of activities.”
The message is you shouldn’t use EscrowDNS to commit a crime.
I’ve never used EscrowDNS, but hearing this story gives me a positive reference for the company.
[end soapbox]
@ Theo – put that in context with all of the terms. First, the buyer violated the agreement by not providing true and accurate information. Second, information can be disclosed as required by the law.
Andrew,
1. No offense but I really hate when people make this argument as it is such a crappy you “if you have nothing to hide.” The same argument gets applied to police searches “well if you have nothing to hide then it should be okay for the police to search your house anytime without a warrant.” I’m sure you wouldn’t like that because you value your privacy as most people do, especially in business.
2. You would hire a man who went public with his investigation and made Lumber Liquidators look like a fool? Wow.
3. Not really
Ross,
I’m not here to defend his decision, but…
1. He didn’t start researching it until he had good cause. It’s very different.
2. Obviously, he would sign a confidentiality agreement with them.
3. It’s just a philosophy. Not everyone agrees on it. But some of the comments on this thread show that what Justin did has given them a positive view of EscrowDNS
Generally speaking sellers choose the escrow service. Certainly nobody is going to choose an escrow service that investigates the seller. The fact that this guy is running some kind of domain investigation serivce is very strange. The fact that he was naive enough to go public with this story also speaks volumes about his judgement.
“It took a lot of inner strength for me to call Lumber Liquidators”
Good for you Justin because it is going to take a lot of inner strength to live in a card board box on the streets. The boycott of Escrowdns begins today.
What would Jesus do in this situation ?
Anyone ?
Have used you for a couple of transactions Godfrey.
After reading this post, one thing is for sure, I won’t use you again!
I think your reputation and integrity have been tarnished. No one will apply Mr. before your name anymore.
Andy, Even if he just wanted to stop the fraud, account ban was the way to go. But I guess the greed for publicity took over. How did you came to know about this and blogged about it? Its obvious!
“”"”1. If you aren’t doing anything wrong, why would you worry about using a service that tries to make sure people aren’t getting screwed? Let’s say I was buying a domain for $10k through EscrowDNS. An EscrowDNS.com notices the domain I’m buying is stolen. Should they just keep quite and let me get ripped off for $10k? I would hope not.”"”"
Lol! thats their job. To make the transaction safe and secure. What are you paying them for, huh? But, to act as an investigative authority is not their job.
Also the fact that you are shamelessly defending the decision and advertising his companies makes me wonder if this blog is news or opinions or rather judgments!
This is no fraud guys. This is conspiracy. The best way to deal when you feel anything is wrong is to dial your local police number. But to act as an investigator, is not the job of an escrow company. Wonder is he has a license for that!
Guess what, I just registered escrowdnssucks.com as well.
It will be live soon! Just don’t send me those lowball bulk offers you have been spamming around the Internet. Coz, its not for SALE Godfrey
“Also the fact that you are shamelessly defending the decision and advertising his companies makes me wonder if this blog is news or opinions or rather judgments!”
Now that’s low. Honestly, until you mentioned that, I didn’t realize he was still advertising on the site. I understand your frustration, but c’mon.
Whatever happened between them should be between them and once again unless your going to throw in a link to the other side of this story then it looks like nothing more than paid promotion. This was one of my favorite sites but I have said “why not link to her blog?” twice and it gets glossed over which verifies that he paid for this piece so unfortunately not only will EscrowDNS lose business but I think a few readers with pass on DNW as well if your running paid promos as news.
I am selling every month lots of TM typos via escrow, now if I would use Mr. Douche pseudo-service he would snitch me out too, because well – it is illegal isn’t it…
Dub-A,
Your concerns and “semi” support of EscrowDNS is heroic on its face, but again, I will repeat this:
It is NOT the escrow services to INVESTIGATE the parties, regardless of what they “see” and “question.” Their job is to make sure the PAYMENTS by the BUYER have been made, and the SELLER has put the domain into transfer/push mode for completion of the deal. IF there has been some chicanery, than EscrowDNS can act as an EXPERT WITNESS TO THE CRIME. That’s it.
For them to “police” the deal isn’t what anyone expects them to do, and can create all sorts of issues in the future where NO issue is present, other than EscrowDNS’s new found fame as an extension of law enforcement. They aren’t.
At some point, WITHOUT EscrowDNS’s input, the crook would have been caught, it would only be a matter of time. Then the laws and checks and balances accorded by our beautiful Constitution would come into play.
Dub-A, you’re a smart guy, and a decent guy. Best writer about domain news in the business. However, would you ever suggest that the President of the US would allow law agencies to “spy” on the public, listen to their phone calls and read their emails and watch where they surf online, all without a warrant? HO HO! Like that would ever happen!
ooops… my producer is whispering into my earphone that indeed, the Patriot Act and its addendums have allowed law enforcement to “search out and fish” for crimes by scanning US citizen communications of all types, thanks to ex Prez GWBUSH executive orders.
And we worry about becoming “socialists” for our effort to create a government run health system… lol.
Jay, I’m not going to respond to your ridiculous comment that he paid for this. I did this post because it’s interesting; I’m not aware of any arrest like this.
But, as for not linking to the blog, that’s simple. First, it doesn’t say anything about the other side of the story. Second, the blog is mostly about their toddler daughter, and so for respect of the small child I decided to not link to it. I considered not including her name as well.
Stephen,
Your comments are always inciteful. I’m more frustrated by comments calling him a “snitch”. It shines a negative light on the industry.
Andrew I’m with you.
This is an embarrassment to the Domaining Industry. 90% of these comments are basically saying it’s OK to be dishonest in this industry. All these Domainers are not supporting the Honesty and Integrity of the industry.
Hi Dub-A,
I was wondering how you meant the word “inciteful” about my comments, lol.
My comments can always go both ways and often do.
Did you mean my comments were “insightful” as in “hey, that was deep and relevant”, or “dude, quit “inciting” trouble, you’re always trying to “incite” a riot”. lol
I think your article is well-placed, and for anyone to even suggest you were “paid” for it is ridiculous.
I agree that calling someone a “snitch” and dogging someone about a decision that was made with good intentions, albeit wrong, is “snitching”, and that term does shine a negative light on the industry. Well said.
Stephen – no wonder my spell checker kept telling me the word was spelled wrong. Yes, I meant “insightful”, not inciteful
That’s what you get on a Sunday morning, I guess.
“Now that’s low. Honestly, until you mentioned that, I didn’t realize he was still advertising on the site. I understand your frustration, but c’mon.”
lol! I guess you must have charged $200 per link from him to mark the advertising post as news. Thats cheap! OR that was FREE as included in his “advertising package” which you just mentioned!
“Jay, I’m not going to respond to your ridiculous comment that he paid for this. I did this post because it’s interesting; I’m not aware of any arrest like this”
Of course it was an interesting news. But you made the advertisement out of it for not so obvious reasons.
An Escrow service should never investigate its clients like that. True, the guy didn’t do what he was supposed to. But EscrowDNS getting involved is not any smarter.
PS
I agree with Stephan. That is insane what EscrowDNS has done. Breach of user privacy, if they even have a privacy policy.
Despite the comments, my initial reaction to this article remains: EscrowDNS did the right thing.
Dub – A,
You know my history of late night posting… I forgive anyone who posts at 3am after having a few… but you, I’ve never seen you fall down, like I have seen a few others I won’t name here….lol
I’m on the fence about your position still, but leaning towards the “I HATE BUSINESS INSTITUTIONS WHO THINK THEY ARE LEGAL INVESTIGATORS”. Unless you are caught with stolen credit cards, preaching on a college campus with underage girls and you have a predator “tag”, nobody should take it upon themselves to make a CRIMINAL judgement about their clients.
I could be wrong… but it just seems like Big Brother because every corporation wants to be on good terms with the big law agencies… I’ve seen it///
Bottom line is everyone in this industry probably knows of or has received the hilarious low ball automated email offers from Justin Godfrey. To trust that guy to handle your DNS after this story would just be foolish. They are obviously not a professional company. If he cared about Lumber Liquidators, he should have kept this whole thing quiet to respect their name instead of making them look foolish. All he wanted was free press and more business. I know a lot of people who will never even consider using their service. On top of that, if Godfrey is such a hero, he should return every dime that his company earned from that fradulent transaction back to Lumber Liquidators. Maybe that would make for better PR than shameless self promotion that backfires. Andrew, I like your blog but am not sure why you are fighting so hard to defend his reputation. It is probably better for DNW to have an active thread where the readers make the call without having to argue with the editor.
This thread is like singing cum bye ya at some reality tv tryout. I can screw you over better than you can screw me. And it’s all part of the game. If you don’t like it, you suck.
Let’s get real.
Those against Escrow – are you the people who watch the blind person get shorted on returned change at the store, and say: it’s not my business to call it out. The blind person should be able to distinguish the currency?, or stay at home.
This is America, and it’s litigious. Everyone involved gets sued; why – so the litigant can get some free money. Who cares where it comes from. Who do you think LumbLiq would come after when/if they eventually figured it out? The person with the big pockets (or bigger pockets than the seller).
This whole “industry” is still in wild west mode. Shill bidders, registrars/markets/auctions/promoters(“conference organizers”) who self deal, TM jockies, WIPO leeches…
Register a domain name and do something with it. Stop flipping crap. If you don’t have the talent, find another “industry” to manipulate. If you act fast, you can be the godfather of the next bubble.
“Who do you think LumbLiq would come after when/if they eventually figured it out? The person with the big pockets (or bigger pockets than the seller).”
I doubt that…LumLiq had to agree to the TOS to even use EscrowDNS in the first place which obviously wrote the TOS to have indemnifications in place from both sides…
My concern would be that the company would “investigate” every transaction – especially when a new buyer spends $XXX,000 for a domain name that is similar to a domain name owned by a company principal. Or perhaps a domain owner is selling too cheaply, and someone wants to clean him out while he is eager to sell?
It seems like a conflict of interest when the escrow company is owned by a guy who for all intents and purposes is a competitor of every domain investor. Heck, it seems like the perfect way to get transactional data that otherwise would be confidential. Again, not saying that they do this, but saying that it could be done. All could be above board, but just the impression that the company could be creating a client list leaves a bad taste in my mouth.
Reminds me of my “friend” who gave me the secret link to his analytics software, which almost certainly means he is spying on my searches.
@Kelly
Searched my contact database for “Kelly” and came up with Kelly Lieberman. This can’t be you, is it?
“Shill bidders, registrars/markets/auctions/promoters(“conference organizers”) who self deal, TM jockies, WIPO leeches…”
That’s some cynical talk and finger pointing I wouldn’t expect… but the comments of somebody who thinks they know the inside dealings of big domain sales.
It doesn’t really address the fact that the escrow service isn’t supposed to be an investigatory service for civil attorneys or law enforcement, either. That doesn’t say they can’t bring in the law if they think THEY’VE been cheated, but assessing a business deal themselves is bad news for ANYONE selling something and using their escrow service.
@ Mr. Domains – the issue of conflict of interests within domain companies is something domain companies grapple with all day. When I talk to various large domain companies asking if they’re going to get into “this business” or “that business”, they often say they tread carefully because it might put them into a position to compete with partners.