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  • ‘Halvarez’ Caused $2M Loss to SnapNames Customers

    1. BY - Feb 16, 2010
    2. Expired Domains
    3. 10 Comments

    Size of bidding scandal becomes clear.

    A document filed today (pdf) in a lawsuit against Oversee.net and SnapNames shows that the total loss to U.S. customers from the bidding scandal was about $1 million, including interest. The total damages for all customers can be extrapolated to be about $2.0 million.

    The document was a declaration of Lance Martinez, General Counsel of Domain Services for Oversee.net, filed in response to the court questioning if the case was big enough to be certified as class action. In order to be certified as class action, the amount in question must be at least $5 million. Using some opportunistic math, the plaintiff in the case suggested the amount at issue was over $5M.

    Martinez’ declaration shows just how much was lost by U.S. customers, and hints at the total amount overpaid by all customers. Here’s the data:

    -55% of auctions affected by Halvarez involved non-U.S. customers. Therefore, 45% of auctions were U.S. customers.
    -Over 70% of auctions where a U.S. bidder paid more because of halvarez involved overpayment of $20 or less, and 45% involved $5 or less.
    -Total set aside for rebates to U.S. bidders was about $1 million, including about $150,000 in interest.

    If the amount lost in auctions by non-U.S. bidders was equal to the amount lost per auction by U.S. bidders, then the total lost by all bidders excluding interest was less than $2 million, and the total including interest was just over $2 million.

10 Comments
  • If OS says it was only $2M in total I believe them, after all they’ve been so honest and forth coming to this point how can’t you.

  • “If OS says it was only $2M in total I believe them, after all they’ve been so honest and forth coming to this point how can’t you”

    LOL

  • This lawsuit and the settlement offered by Oversee.net both seem to ignore the domains won by Halvarez. I’d like to see the domains he won pulled out of the SnapNames and Oversee “house” portfolios and sold. The profits of course going to the bidders in the auctions.

  • Too bad this got exposed. I knew he was cheating, so it was easy. Namejet and others is more difficult as it’s harder to figure out who the fake bidder is.

  • No offense but this article is misleading.

    1. The domains won by Halvarez were worth a shitload of money. This costs the other bidders not only in foregone profits but in wasted time, which also has significant monetary value.

    2. It is ridiculous to say that Halvarez bidding had 0 effect on auction closing prices unless he was the second highest bidder. Anyone who participates in auctions daily knows that auction psychology is a real phenomenon. Bids placed in the middle of the auction matter too.

    3. Even when Halvarez was only the second highest bidder in a 2 person auction (which was the most common type of Snapnames auction in my experience), Oversee got the parking revenue for 3 extra days because of his ruse.

    I think ~$5M is reasonable. And no, I am not associated with the suit in any way, I’m just one of the many people who got bent over by Halvarez in multiple positions.

    • @ Greg

      You’re speaking like a trial lawyer :)

      In all seriousness, I have no doubt that there are many other ‘costs’ to users who were affected by this. But it’s hard to quantify. You could also argue there were expenses saved. Perhaps halvarez outbid you on a trademark term, and that helped you avoid being named in a lawsuit.

      I think a number of people will be surprised at the relatively small overbidding amount that actually took place. Based on my conversations with a number of large customers, I’m not that surprised.

  • they got off cheap.

  • It seems straightforward to calculate the amount of overbidding from Snap customers based on a Halvarez second bidder position.

    It is way more complex is to calculate the amount paid to Snap by customers when Halvarez was pumping the bidding but ultimately ended in third position. This scenario (which seems to have played out a lot according to forum posts) is not covered by the Oversee compensation offer.

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    They may have gotten off cheap, but they have lost their reputation.

    Even if buyers do bid, they will bid more cautiously, resulting in lost profit for Snapnames.

    IMO, they should have come completely clean by suing Nelson Brady (or is it Brady Nelson?) for all those bogus domain “wins” and then re-auctioning them to the original bidders.

    Naw. I don’t trust any of the dropcatchers. Everytime I bid, I know I’m making a deal with the devil, but now I do so with both eyes wide open.

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  • How could this gentleman’s actions have benefitted himself only? Who benefitted?

    How could Snapname’s principals NOT have taken a leading role in the whole process?

    Why is this not being handled under the Racketeer Influenced and Corrupt Organizations Act?

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