SnapNames, an auction house for internet domain names, has sued a former vice president for $33 million, alleging shill bidding and embezzlement.
The company claims that Howard Nelson Brady spent years sneakily bumping up the prices on auctions, using a false persona, “Hank Alvarez”.
The allegations against the user “halvarez” came to light late last year, and while SnapNames has offered refunds to many customers it has also faced two lawsuits as a result.
According to the complaint, filed in Oregon yesterday, Brady would use his access to SnapNames' back-end systems to figure out the maximum amount a buyer was willing to pay for a domain, then use his halvarez account to bid them close to their limit.
His actions artificially increased SnapNames's revenues, boosting the acquisition price when the company was sold to Oversee.net three years ago, according to the suit.
Brady himself stood to make $1.5 million in performance-based “earn-out” bonuses on the deal, the complaint alleges.