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SnapNames Says Former Exec Bid Up 50,000 Auctions

SnapNames Says Former Exec Bid Up 50,000 Auctions
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Nov 6, 2009 3:00 PM PST    Text size: 
PORTLAND, Ore. — SnapNames.com says that a former top executive secretly bid on as many as 50,000 domain name auctions over the past four years with the motive to drive up prices and enrich himself in the process.

The allegations made by officials at Oversee.net, which owns SnapNames and domain auctioneer, registrar and appraiser Moniker.com, are damning.

Oversee said it learned about a month ago that the SnapNames executive had been bidding on its domain auctions in violation of company policy that bars employees from doing so.

According to the Washington Post, the executive who ran up the bids was later fired. He apparently was one of the founding employees of the company.

Oversee this week has been notifying affected customers via email, stating that "in every auction where the employee's fictitious account submitted a bid which resulted in a higher price being paid by the winning bidder, SnapNames will offer a rebate, with 5.22 percent interest (the highest applicable federal rate during the affected time period), to affect customers for the difference between the prices they actually paid and the prices they would have paid, had the employee not bid in the auctions."

The message to customers said the bulk of the bidding occurred on auctions between 2005 and 2007, but that the executive’s bidding affected about 5 percent of total SnapNames auction since 2005.

Oversee also said the incremental value from the bidding represented approximately one percent of SnapNames' auction revenue during that same time.

Oversee alleges that the executive made the bids using an auction account set up under the alias "Hank Alvarez."

In certain cases where the executive won the domain name bid, he paid for the domain and then arranged to refund a portion of the winning bid amount to his account.

The Washington Post, quoting an Oversee spokesman, said that the company hasn’t taken any legal steps as the result of the disclosure.

XBIZ was unable to reach corporate executives late Friday at Oversee, SnapNames and Moniker for comment.

SnapNames is one of the largest auctioneers of expired and deleted domain names. It was purchased by Oversee last year for $35 million.

Moniker, which auctions adult domains, was swallowed last year by Oversee for a reported $65 million.

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