Company expected to gross $1.5 million per year from website but now only makes hundreds.
Michael Gleissner is keeping his lawyers busy.
I’ve written about Gleissner many times due to his questionable trademark and other activities.
This time one of his firms, Bigfoot Corporation, is suing (pdf) over a website it bought in 2014.
According to the suit, Bigfoot entered into an agreement in November 2014 to buy TheCelebrityCafe.com for $775,000, with $573,500 up front in cash. Bigfoot says the sellers represented to it that the site had annual revenue of $1.5 million and profits of $0.95 million.
First warning sign: someone with a site making about a million dollars in profit a year will sell it for only $775,000?
Bigfoot alleges that only a small fraction of the visits to the site were organic traffic. It implies that it did not know this until after it bought the site. In March 2015, for example, 8.5% of the visits were organic and the rest (19 million+ pageviews) were purchased traffic. Because of the purchased traffic, Google started blocking Adsense ads from displaying on the site shortly thereafter. (Google will not show ads on sites that receive low-quality or unnatural traffic.)
Revenue dropped to just “hundreds of dollars” a year after Google stopped serving ads, Bigfoot states.
Bigfoot alleges that the seller committed fraud. It is asking for the $573,750 it already paid for the acquisition to be paid back as well as $950,000 in consequential damages (that’s about how much it expected to earn in a year).
The dollar figures are pretty big compared to what most websites sell for on sites like Flippa. I’m rather surprised that the methods the site used to generate traffic weren’t discovered during due diligence.