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Some gave me a hard time for not including more facts in my previous story that speculated on how the SnapNames scam was uncovered. I admit that my previous article was vague where clear facts would have sufficed. So let me set the record straight and dive into the minutia of whois histories that drove my initial conclusions.

After searching Google, I found the following domains that were identified as won by halvarez (Nelson Brady, ex-VP of Engineering at SnapNames) on a number of websites and forums including dnforum.com and domain.cn. I focused on domains that were said to have been won (instead of lost) by halvarez because they would have a whois history on DomainTools of the winner. Looking at the whois history would prove or disprove the sometimes outlandish claims made in the forums. Here are the  21 domains that were said to be won by halvarez:

hamvuiclub.com
cinemagazine.com
lifeclips.com
searchescorts.com
tvizle.com
googletrends.com
extrawallpapers.com
fashionindia.net
jeniferlopez.com
tinhlathe.com
only-maps.com
hannahmontanna.com
nanotorrent.com
mature-club.com
curlyhair.net
simsextremos.com
moslemlink.com
90523.com
itttech.com
alphadating.com
xxbox.com

All of them except for two had an important commonality: being registered at one point in time by DomainQueue of Tacoma, WA. It was this pattern that proved the Tacoma address was the primary address of halvarez. Of the two domains that I could not link definitively, one I suspect was registered by DomainQueue/halvarez (alphadating.com) because it was eventually registered to iREIT but lacks whois history for all of 2006 and 2007. The other appears to have no link whatsoever (xxbox.com).

Now that we have a list of 19 domains that were won by halvarez, we can look at the acquisition date (when he won the auction at SnapNames), if any were transferred to iREIT, and where they are today. This is the data I used to generate the graphic at the top of this article.

I believe that due diligence for iREIT acquisition of the DomainQueue portfolio began around September 20th, 2006. This is the first date that DomainQueue domains (tvizle.com) began to point their DNS to iREIT DNS servers. This is a common practice for domain owners looking to prove that their domains have traffic to a potential buyer.

Nine days later on September 29th 2006, iREIT issued a press release announcing that Craig Snyder had joined iREIT.

On November 30, 2006 the DomainQueue domains (cinemagazine.com) began changing whois ownership to iREIT.

Looking at all domains acquired by DomainQueue before November 30, 2006, it appears that iREIT bought almost the entire portfolio. Credit should be given to them for avoiding the more controversial adult domains and “celebrity typo name” domains and focusing on the traffic portion of the portfolio.

The reason I am pointing out all of these patterns is to show why I speculated that Craig Snyder was the person who discovered the scam after joining SnapNames. I am not accusing iREIT of any wrongdoing. In fact, they are one of the most risk-averse companies operating in the domain aftermarket and they would not have touched the DomainQueue deal with a 10 foot pole had they been aware of the troubled source of the domains.

As I mentioned in my previous article about the SnapNames fraud, iREIT may have purchased a portfolio of domains from Nelson Brady in late 2006. An iREIT spokesperson declined to speculate on the accuracy of my claim, but whois records indicate that a number of domains were transferred from DomainQueue of Tacoma, WA to iREIT in late 2006.

So how did SnapNames discover the fraud? Craig Snyder may be the missing link.

Craig has been described as a sincerely principaled businessman by those who know him, and is famous for cofounding Marchex. He started working at iREIT in September 2006, just a few months before the DomainQueue domains were transferred to iREIT.

DNW speculated that Snyder may have been hired by Oversee.net in August of this year to “clean up the company.” Given Craig’s deep understanding of the domain industry, his role overseeing SnapNames, and his insider knowledge about the DomainQueue deal, it may have been an easy scam for him to uncover.

UPDATE: I wrote a supplemental article with more details.

In an e-mail this morning, SnapNames CEO Jeff Kupietzky and general manager Craig Snyder notified SnapNames customers that an ex-employee was involved in up to 5% of auctions between 2005 and 2007. They have also announced a reimbursement program for some of the affected customers. Customers who won auctions where the ex-employee is believed to have bid up the price will receive a refund of the difference with interest. I spoke to a SnapNames employee this afternoon who confirmed that the fired employee was in fact Nelson Brady who used the handle ‘halvarez’ when bidding on SnapNames auctions. A photo of Nelson Brady is available on DNjournal here.

For the sake of full disclosure, I have been a customer of SnapNames since 2002 and bid in many auctions against ‘halvarez’.

There are a few questions that were left open by the e-mail from SnapNames, most importantly why they will only be notifying customers who won auctions. It seems to many an equal loss for customers who lost domain auctions to the ex-employee. The other question is whether or not SnapNames will attempt to reclaim the domains won by the ex-employee.

Earlier this morning I spoke to Mason Cole, VP of Communications for Oversee.net. He was unable to comment on many questions because of ongoing legal and criminal actions, but he did reiterate that SnapNames has had an ongoing policy that prohibited employees from participating in SnapNames auctions. I am waiting to hear back from him about whether or not customers who lost to ‘halvarez’ will be notifiied, in addition to customers who won.

It was just last month that we published an article about trusting domain auctioneers, and this timely disclosure by SnapNames must be giving customers pause. The good news is that disclosures such as these, especially if SnapNames discloses to customers the entire extent as it involves that customer, are a very positive sign. Full and relevant disclosures are consistent with ethical business practices and show a strong desire to be honest, regardless of the cost to the organization, and SnapNames should not lose any customers over this incident. In fact, one SnapNames customer I spoke to will be returning to SnapNames because ‘halvarez’ is no longer bidding.

I did some research on domains won by ‘halvarez’ at SnapNames, and they point to two different addresses:

2661 N Pearl St #255
Tacoma, WA 98407

and

2346 NW Clarion Suite 303
New City, NY 10956

The first address located in Tacoma is a UPS store that sells mailboxes. The second address does not appear to be valid, according to Google maps. However, the e-mail address associated with both of those addresses, domainqueue@gmail.com, has 6591 domains associated with it according to DomainTools. The Tacoma address makes geographic sense because SnapNames was based in Portland, OR, only two hours by car from Tacoma.

According to DomainTools, Nelson Brady was listed as the primary whois contact for the snapnames.com domain from 2002 until February 14th, 2007.

Many are speculating about the motivations and strategy employed by Brady. Some have accused him of being involved in auctions for any domain where he saw one other bidder. Others have accused him of utilizing the SnapNames parking statistics to determine which domains to bid on and how much to bid.

Tracking some of the halvarez domains indicates that he may have sold a significant portfolio to iREIT in November 2006, although a call and e-mail to iREIT were not returned as of this writing. If Brady was focusing on traffic domains, purchasing with insider parking information and then flipping them to iREIT would make for a rock-solid business model.

For many customers the SnapNames website has added frustration to the matter. Sometime in the last year SnapNames removed auction history from before December 2007 which prevents customers from conducting their own investigation into the impact of this fraud. Ironically, it was SnapNames saving the auction histories that set a higher standard for transparency in the domain aftermarket. Perhaps SnapNames could continue to show their committment to openness and transparency by re-posting the historic auction data.