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101domain founders suing Afilias over unpaid $1 million after $15.5 million acquisition

The two former owners of 101domain are suing Afilias over an unpaid $1 million portion of their $15.5 million acquisition deal.

And Afilias is suing them right back, claiming it doesn’t have to pay because the deal left it saddled with an undisclosed tax bill in excess of $1 million.

The suit was filed by Anthony Beltran and Wolfgang Reile, who has since died, in February and Afilias counter-sued a couple of weeks ago, but I only recently became aware of the case and I don’t believe it’s been reported elsewhere.

Afilias bought 101domain back in 2015 for a then-undisclosed sum, its first big push into the registrar side of the industry.

Court documents now reveal that the Ireland-registered company gave 90%-owner Reile and 10%-owner Beltran a combined $12.5 million cash, along with a promissory note to pay $3 million more over the next two years.

Afilias paid them the first $2 million owed in September 2016, but when it came to paying the remaining $1 million the company refused, saying it had discovered 101domain had a VAT liability from before the deal closed of around $875,000.

Last month, after the suit was filed, it re-estimated the alleged liability at over $1 million.

Under the terms of the promissory note, Afilias reckons it does not have to pay up. What’s more, it wants the two men to cover the difference between the money it owes them and the amount of the tax bill.

In their initial complaint (pdf), Reile and Beltran disputed whether the liability even exists, saying “Afilias has failed to provide an adequate accounting for the purported pre-closing VAT liability”.

Reile died April 6, but Afilias filed its counter-complaint (pdf) April 19 and the legal wheels still appear to be turning.

Beltran, who declined to comment on the case, is still listed as 101domain’s president on the registrar’s web site.

101domain founder Wolfgang Reile dies at 67

Kevin Murphy, April 14, 2018, Domain Registrars

Wolfgang Reile, founder and former CEO of the registrar 101domain, has died, according to his former business partner and other sources.

He died unexpectedly at 67, April 6, according to Anthony Beltran, who took over the management of 101domain from Reile when Afilias acquired it back in 2015.

Born in Munich, Reile migrated to the US in the early 1990s and founded the registrar in 1999, Beltran said. He told DI:

He was a regular fixture in the ICANN scene, was a fun guy to be around, and was a natural storyteller (once you got used to the authentic German accent)

He was a friend and mentor to many, especially the staff at 101domain, and if you knew him and his straight-forward German fashion — was very opinionated, passionate, and yelling at you only meant he considered you a friend. He brought a passionate and dedicated energy that’s rare these days.

His international business background, including a spell at Disney in Asia, inspired 101domain’s strategy of providing access to the broadest possible range of ccTLDs and gTLDs, Beltran said.

The company currently has close to 140,000 gTLD domains under management and says it has tens of thousands of clients.

After the two men sold 101domain to Afilias, Reile stepped away from the industry to focus on family, travel and other businesses, Beltran said.

He is survived by his wife and three daughters. I gather his funeral will be held in San Diego, California, later today.

Afilias gives its gTLDs a kick up the bum with U-turn 101domain buy

Kevin Murphy, October 16, 2015, Domain Registries

Afilias, once one of the fiercest opponents of registries owning registrars, has acquired 101domain to gain its first significant foothold in the registrar market.

Wolfgang Reile, president and CEO of 101domain, said he would be quitting the company and that COO/CFO Anthony Beltran will be leading the new Afilias unit in future.

The acquisition, which closed September 2, was for an undisclosed amount, but I’d say it was easily a seven-figure deal.

When Afilias rival CentralNic acquired Internet.bs last year, it paid $7.5 million.

California-based 101domain is currently about a quarter of the size that Internet.bs was when it was bought, based on gTLD domains under management, with a little over 120,000 names on its books as of June this year, according to registry reports.

But the company is well known as a go-to registrar if you want a broad choice of TLDs — it says it currently supports over 900. Its ccTLD sales may make the company much bigger.

Getting its stable of registry offerings to market is one of the reasons Afilias was drawn to 101domain.

Afilias’ own portfolio of TLDs contain some semi-restricted strings — such as .vote, which has a no-domaining policy — that would not be automatically attractive to many registrars.

Afilias told DI:

This acquisition furthers our post-vertical integration strategy of establishing a capability that enables us to both service our registry customers and ensure an outlet for TLDs of our own that may not be easy to find at a traditional registrar. 101domain is expected to continue to operate as it does today.

Afilias actually already had a registrar division — Emerald Registrar, which does business from iDomains.com — but had fewer than 1,500 domains under management at the last count.

Its registry business has over 20 million domains.

If you have a long memory, you may recall that Afilias was once dead-set against the concept of vertical integration — registries and registrars under the same ownership — which in the post-2012 new gTLD world has become industry standard.

The ICANN working group that was tasked with reforming ownership rule was held in stalemate by Afilias and Go Daddy back in 2010, before ICANN finally broke the deadlock.

New gTLD portfolio registries including Uniregistry, Google, Minds + Machines and Rightside have registrar businesses already. Famous Four seems to be closely aligned with Alpnames, and Donuts is tight with Rightside.

Guy hit with $1,600 bill a month after registering “premium” name for $12.99

Kevin Murphy, April 23, 2014, Domain Registrars

101domain has sent out almost 50 invoices, believed to total many thousands of dollars, to customers who had bought “premium” domain names for $12.99 well over a month ago.

One DI reader, who said he’d rather not be named, received a bill from the registrar today for $1587.01 for a .みんな domain name he hand-registered March 10 for the base fee of $12.99.

The email from 101domain stated that unless he pays the bill by 5pm PST tomorrow, his domain will be deleted:

It has come to our attention that the .みんな registry considers certain name(s) that you have registered with us as premium names and that there were some intermittent pricing errors on our website allowing you to purchase these name(s) at regular pricing. The cause of this error has been resolved and we sincerely apologize for the error.

In order to correct these pricing errors, the Registry has granted us the option to delete these names if we are unable to collect the premium pricing from our customers.

Due to a short deadline, payment must be received by Thursday, April 24, 2014, 5pm PST in order for deletion of the name not to occur. In the event that payment isn’t received by Thursday, April 24, 2014, 5pm PST the domain name(s) will be deleted, released back into the pool of available domain names, and any payments previously received for the domain names will be fully refunded to you.

The registrar offered a full refund of the $12.99 and a 20% discount coupon as compensation.

“I am not sure what’s the legal status of this,” the registrant told DI. “Also asking for this a more than a month later (purchased on 10th of March), besides being not cool, is just wrong.”

.みんな is one of Google’s new gTLDs. It’s Japanese for “everyone”.

101domain COO Anthony Beltran told DI that “fewer than 50” names were affected by the pricing error, all of them in .みんな.

“Literally every registry is doing things differently, but we have committed to offering them as our customers overwhelmingly demand them,” he said. “Most of them understand, as early adopters, there will be occasional issues, and our disclaimers and T&Cs speak to this.”

He offered the following explanation for the error:

In order to offer pre-paid orders, 101domain’s practice is to put up pricing as soon as it is confirmed and as soon as we receive lists of premium names, reserved names, and name collisions from a registry. This is generally well before EPP is available so there is no live domain:check. Our search queries these lists internally to offer accurate pricing well before most other registrars do so that our clients are well ahead of the curve with plenty of time to research and submit orders. Mistakes do rarely occur; some premium lists are fluid, complications have been introduced with SEDO and AFTERNIC getting exclusive listings of premium names (while we have access through their distribution channels like SEDO MLS), or names are snapped up in Sunrise, EAP, or Landrush. We will typically notify clients prior to names becoming active of any changes in pricing or availability and promptly refund in full if requested. With this TLD, this did not happen properly unfortunately.

Nobody’s claiming Google did anything wrong.

I’m not sure what American or Californian consumer protection law says about this kind of thing, but it is a quite startling situation.

Are there any other fields of commerce where you can be billed a month later because a retailer got confused about its wholesale prices?

Registrant complains to ICANN over Uniregistry’s premium names

Kevin Murphy, April 22, 2014, Domain Registries

A would-be new gTLD registrant has appealed to ICANN over the domain name moviestar.photo, which she was unable to register because Uniregistry had reserved it as a premium name.

Danielle Watson filed a formal Request for Reconsideration (pdf) with ICANN last week, in the mistaken belief that ICANN had placed the domain she wanted on one of its block-lists.

She described her predicament thus:

a. Website Name Registration: I purchased one of the new gTLD domain names ending in .photo from 101domain.com on April 2, 2014. Moviestar.photo

b. I received an email on April 14, 2014 stating that ICANN kept this name from being registered in my name, and I would receive a refund in which I did.

c. I cannot understand why this name is being withheld, and being put into your reserve list.

d. I take very old Movie Stars photos and colorize them and put old fashioned frames around them and sell them at craft fairs locally. This name would have been a perfect fit for my use and sales. Please reconsider my request to be reconsidered and the name moviestar.photo reinstated/registered in my name with 101domain.com

Correspondence from 101domain provided by Watson (pdf) does not mention ICANN, so I’m not sure how she came to the conclusion that ICANN was to blame.

I fear she has targeted ICANN incorrectly.

The DI PRO name collisions database shows that the string “moviestar” has been blocked by ICANN’s policy on collisions in 15 new gTLDs, but Uniregistry’s .photo is not one of them.

Whois records show that moviestar.photo is in fact registered to North Sound Names. That’s the name of the Uniregistry affiliate currently in control of tens of thousands of Uniregistry premium names.

The RfR is not the venue for this kind of complaint and it’s likely to be dismissed for that reason. There’s not much ICANN can do about it.

Perhaps Watson would have better luck writing a begging letter to Uniregistry CEO Frank Schilling, who has indicated his willingness to allocate premium names to deserving users.

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