Lawsuit sheds more light on bidding scandal.
Earlier today SnapNames and parent company Oversee.net filed a lawsuit against former employee Howard Nelson Brady, Jr. for his alleged scheme of shill bidding and embezzlement.
Much has already been disclosed about Brady’s alleged conduct, but the lawsuit (pdf) provides more details of his alleged deceit.
The suit cites a number of examples of how he tried to dupe other SnapNames employees into thinking that Hank Alvarez was a real customer. In reality, Alvarez was a fictitious person that Brady created, the suit alleges.
In one instance, the suit claims that Brady created a bogus email account for Hank Alvarez and sent an email to his SnapNames email address from that account. He then forwarded that email on to another Snapnames employee to show that Hank Alvarez was a real person.
Much of Brady’s activity was geared toward increasing how much others paid for domain names. He would view their confidential maximum bids and bid a slightly lower amount to increase the amount these other customers paid.
Why the deceit? According to the complaint, Brady earned substantial money by selling SnapNames to Oversee at an inflated price thanks to his revenue-boosting scheme. Additionally, after the company was sold, Brady could have earned up to $1.5 million in an earn out.
Once the earn out period passed, the plaintiffs allege that Brady moved on to embezzle money.
After Oversee completed its purchase of SnapNames and the “earn out” period in which Defendent Brady could have earned additional compensation based on the performance of the SnapNames business expired, Defendant Brady dramatically reduced his shill bidding scheme, and instead started stealing directly from the company.
From August 2005 to Sept 2009, the suit alleges that Brady purchased about 250 domains in which he refunded substantially all of the money — approximately $175,000. Most of this activity occurred in the last year of the period. The embezzlement activity coincided with Brady voluntarily reducing his working hours and taking a pay cut, Oversee claims.
Brady’s lawyer says that they plan to file a full response to the accusations within 30 days.
Brady and his lawyer did not immediately respond to a request from Domain Name Wire for comment about the lawsuit.
Acro says
There is nothing “alleged” when NB himself admitted wrongdoing.
Statton says
Not a bright move on Oversee’s part.
Look for a settlement next week.
Josh says
Hhhmmm earn out sum based on $XM fraud, refunds of $175k… this is stll a far cry from $33M.
John Berryhill, how often do white collar crimes see such huge punitive damages paid out when the shoe is on the other foot (company vs employee) or I should say what are the odds? Do companies really see much beyond loss?
John Berryhill says
“Do companies really see much beyond loss?”
Let me put it this way.
The one sure fire way not to get something is to fail to ask for it.
Josh says
Thanks John, that is what I fugured, ask for a big amount to end up with something. Works better than asking for what you deserve and getting less lol
John Berryhill says
That can backfire in certain situation. Fed. Rules of Civil Procedure 68:
http://www.law.cornell.edu/rules/frcp/Rule68.htm
Basically, if the other side wants to keep litigating after you’ve made an offer of judgment, then the other side pays costs if they don’t win more than you are offering.
Josh says
If you want to play you have to pay!
Steve Mugavero says
@j berryhill
“Do companies really see much beyond loss?”
Let me put it this way.
The one sure fire way not to get something is to fail to ask for it.
————
thanks John for the value beyond legal briefs.