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05|04|2010 04:29 pm EDT

Oversee Files Suit Against Nelson Brady for $33 Million in Damages

by Adam Strong in Categories: Legal Issues

SnapNames, and its parent company, Oversee.net, announced today that they have filed suit against Nelson Brady in federal court in Oregon (Portland district).

Brady, a former employee of SnapNames improperly bid in certain SnapNames auctions using the bidder alias “Hank Alvarez” or “halvarez”. The company also claims that Brady also embezzled funds from Oversee by refunding himself a share of the purchase price for domain names he won through the SnapNames system.

Oversee is seeking to recover $33 million of dollars from Brady, including punitive damages. The company claims to have been making an effort to settle privately with Brady to recover losses, including the “rebates” sent to SnapNames customers effected by the activity and the funds he embezzled.

Oversee came under attack for the debacle and had faced several class action lawsuits themselves.  All parties involved by the fraudulent behavior had been offered a “rebate” check by the company.

For several months, the company has in good faith attempted to settle privately with Brady to recover its losses, including the rebate fund established by Oversee to address Brady’s activities and the funds he embezzled from Oversee.  Those settlement efforts have been unsuccessful.  According to the company officials “No amount of money, however, could compensate the damage Brady has caused to SnapNames’ and Oversee’s reputation in the marketplace.”

Company officials have sent DNN the following details of the events :

  • In October 2009, Oversee discovered an employee, Nelson Brady, using an account under the false name “Hank Alvarez,” engaged in improper bidding activities in domain name auctions on the SnapNames platform.
  • Oversee and SnapNames disclosed the situation to its customers and employees in November 2009.  Oversee made available to affected customers a cash rebate in the amount of overpayment, plus 5.22% interest (the highest applicable federal rate during the affected time period), of any amounts paid exceeding what the auction price would have been without employee bidding.
  • Since that time, more than 60% of the aggregate rebate amount has been claimed.

Brady’s conduct affected:

5% of auctions since 2005
75% of total impacted auctions were between 2005 and 2007
Less than 1% of SnapNames auctions during this period were won by the employee
The remaining 4% were won by SnapNames clients.
Brady’s bidding affected approximately 1% of SnapNames’ auction revenue during the full period.

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4 Comments

Chip Meade

May 4, 2010 @ 4:35 pm EDT

What kind of realistic settlement can be expected from this? No way does this guy have this kind of assets. Could this be a way for them to get maximum payment from Nelson in exchange for burying the relevant data for a criminal investigation under a sealed agreement in this case?

Rick Schwartz

May 5, 2010 @ 7:45 am EDT

I don’t think the auctions Brady won is the big problem. It is the thousands, tens of thousands or even hundred thousand auctions he may have tainted over the years. Every bid was a fake bid. That inflated the market. That wasted time that can never be reclaimed. This is a dog and pony show. But maybe in Discovery (Which may never even happen), some things will come to light. But if they were serious, their would be a criminal investigation. Problem with that, I believe this is much wider than anyone knows. IMO extremely STRONG OPINION, other companies and people were involved. It was all hushed up. I believe this was much more organized than we have been led to believe. But if unraveled or it unravels, I guarantee the industry would be stunned by the depth of what REALLY happened. There were just too many UNEXPLAINED coincidences at the time this came to light. Too many cover ups. Too many wholesale changes that were not disclosed. I can’t write more than this. Just been doing this way too long to believe in fairy tales. This is my true GUT take on all this and it is very deep. I could be 100% wrong. But I doubt it. More like 100% right.

Tim

May 5, 2010 @ 12:31 pm EDT

‘customers effected by the activity’..I think you mean affected.

Humor

June 3, 2012 @ 12:37 pm EDT

I am seriously starting this happens again on SnapNames, but at a lower scale.

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