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CEO lost millions on Manhattan apartment deal just days before AlpNames went dark

The CEO of AlpNames lost his $2.1 million deposit on a $10.6 million Manhattan apartment just days before his company went belly-up earlier this year, DI can reveal.

ApartmentsA New York District Court judge in February found in favor of property developer Highline Associates, which had sued Iain Roache for his deposit after he failed to pay the balance of the luxury residence’s purchase price in 2017.

The ruling appears to have been published February 25 this year. By March 7, just 10 days later, ICANN had already started compliance proceedings against AlpNames.

The timing could just be a coincidence. Or it might not.

According to Judge Robert Sweet (in what appears to be one of his final decisions before his death at 96 in March this year), Roache agreed in December 2015 to buy a condo, parking space and storage unit at 520 West 28th St, a then under-development luxury apartment complex designed by award-winning architect Zaha Hadid, in Manhattan’s fashionable Chelsea district.

The purchase price of the one-bedroom apartment was an eye-watering $9.8 million. Another $770,000 for the parking space and storage unit brought the total agreed price to $10,565,000. Roache plunked $2,113,000 of that into escrow as a deposit.

At that time, AlpNames, majority-owned by Roache, was quite a young company.

It was on the cusp of selling its millionth domain, and had got to that milestone in just over a year in business. Earlier in 2015, it had been bragging about how it was second only to GoDaddy in terms of new gTLD domains sold.

Famous Four Media, the new gTLD registry that Roache also led (also no longer a going concern), had already launched 10 of its eventual 16 TLDs. In total, the portfolio had roughly 1.5 million domains under management. It was one of the leaders, volume-wise, of the new gTLD industry.

When the apartment was finally ready to move into, in June 2017, Highline approached Roach to close the deal.

According to the court’s findings, Roache declined to immediately pay and seems to have given the developer the runaround for several months, requesting and receiving multiple extensions to the closing date.

It wasn’t until early 2018 that Highline, apparently determining that it was never going to see the money, terminated the contract and attempted to take ownership of the $2.1 million deposit.

But Roache’s lawyers instructed the escrow agent not to release the funds without a court order. Obligingly, Highline sued in February 2018.

During the case, Roache argued among other things that he had been verbally duped into signing the purchase agreement, but the judge wasn’t buying it.

He noted that Roache is a “sophisticated businessman” who had hired an experienced New York real estate lawyer to advise him on the purchase.

He also noted that the contract specifically said that the buyer is buying based on the contents of the agreement and specifically not any prior verbal representations (nice clause for all those bullshit-happy real estate agents out there, I reckon).

The judge finally decided that Highline, and not Roache, was rightfully owed the $2.1 million deposit.

It wasn’t long after the ruling that AlpNames customers started experiencing issues.

I first reported that the web site was offline, and had been offline for at least a few days, on March 12 this year. A NamePros thread first mentioned the downtime March 10.

It later emerged (pdf) that ICANN had already started calling AlpNames on March 7, after receiving complaints from AlpNames’ customers that the site was down.

On March 15, after receiving no response from Roache, ICANN made the decision to immediately terminate its Registrar Accreditation Agreement.

A couple of weeks later, CentralNic took over AlpNames’ customer base and around 600,000 domain names, under ICANN’s De-Accredited Registrar Transition Procedure.

That’s the timeline of events.

Am I saying that there was a causal link between Roache’s real estate deal going south and AlpNames going AWOL within a couple of weeks? Nope. I don’t have any evidence for that.

Am I saying it’s possible? Yup. The timing sure does look fishy, doesn’t it?

Defunct Famous Four ordered to hand $1.5 million back to investors

Former domain registry manager Famous Four Media has been ordered to return money to investors that was being used as insurance against its portfolio of gTLDs going out of business.

In an April 18 ruling (pdf) from Gibraltar’s Supreme Court, FFM and its CEO Iain Roache are told that original investors Domain Venture Partners are the true owners what looks to be about $1.5 million being used to back letters of credit in ICANN’s name.

It’s a very complicated ruling, reflecting the complex structure of the FFM/DVP relationship. It wants for clarity in some areas, and is probably best suited to interpretation by a forensic accountant.

Nevertheless, I’ll give it a shot.

Basically, back in 2011 businessman Iain Roache recruited a bunch of international investors to join him in funding applications for 60 new gTLDs. The investment vehicle was and is called Domain Venture Partners.

Each application had an associated “bid vehicle”, essentially a Gibraltar-based shell company with names along the lines of Dot Science Ltd or Dot Accountant Ltd.

Those of the vehicles that were successful in their applications continue to be the official registry sponsors for 16 active gTLDs. They’re all owned by DVP.

Famous Four was a separate company, owned 80:20 by Roache and business partner Geir Rasmussen, hired by DVP to manage the business of actually selling domains.

For many years, myself and pretty much everybody else covering the domain name industry referred to FFM as if it was the owner of the TLDs, more or less interchangeably with DVP.

In fact, FFM was just a DVP contractor and behind the scenes DVP was growing increasingly unhappy with how the domains were being managed, DVP investor Robert Maroney told DI last August.

For about a year now, FFM has been in liquidation. DVP kicked it out of the registry management business and replaced it with a new company that it controls called GRS Domains, managed by a PricewaterhouseCoopers accountant called Edgar Lavarello.

Thirteen of the DVP bid vehicles sued Famous Four to claim ownership of, among other things, the money backing the so-called “Continuing Operations Instruments” that ICANN demanded from each new gTLD applicant.

The COI, usually a letter of credit from a big bank, were used to give ICANN the confidence that new gTLD domain registrants would not be affected by dodgy registries going out of business and their domains immediately going dark. The money would fund ongoing technical operations for a few years, giving registrants time to find a new home for their web sites.

In this case, Famous Four’s liquidator refused to agree that the money backing the COIs was rightfully DVP’s.

What seems to have happened is that in mid-2016 the DVP letters of credit were hastily switched from Credit Suisse to Barclays, after Credit Suisse closed down its Gibraltar branch.

There was a period in which both sets of LoCs were active, in order to remain compliant with ICANN’s rule that there must be an active COI at all times.

The original Credit Suisse LoCs had been funded by DVP, but the Barclays LoCs were funded by FFM, or quite possibly Roache himself, to the tune of about $1.5 million.

FFM was then repaid by the return of the money backing the Credit Suisse LoCs, when those LoCs were closed, according to Chief Justice Anthony Dudley’s ruling.

After the switch of banks, the LoCs were no longer in the names of the DVP bid vehicles; they belonged to FFM. The money DVP put up to originally secure the COIs was now in FFM’s control.

Dudley now seems to have ruled that FFM now owes DVP this money back, and that the liquidator, Grant Jones of Simmons Gainsford, was wrong to withhold it.

In fact, the judge has some quite stern words for Jones, saying that he was “wholly inappropriate” when he temporarily turned over his responsibilities as liquidator to Roache and his law firm. Dudley wrote:

It may be that it arises as a consequence of the Liquidator having limited funds with which to engage in litigation. But whatever the reason, the position adopted by the liquidator of FFM in these proceedings has been unusual and certainly capable of being construed as running counter to the fundamental principle of objectivity required of a Liquidator, now codified in the Insolvency Practitioner Regulations 2014. Rather than formulate his own view (or as urged by me at a preliminary hearing seek his own independent legal advice) by letter dated 1 March 2019 GJ sought to abrogate his responsibility and authorised IR and JSF to act on behalf of FFM

That aside, the main piece of evidence that appears to have caused Dudley to side with DVP was a set of emails from Famous Four chief legal officer Oliver Smith to DVP investors that were sent at the time the LoCs were switching banks.

Smith confirmed in one of these emails that FFM was basically just acting as a conduit for DVPs bid vehicles, which by that point were operational registries.

The judge noted that the Smith email that confirmed this was submitted in evidence by Lavarello and Maroney only after Roache had submitted the rest of the thread, excluding this email, in his own evidence.

Dudley ruled that the DVP companies should get what they asked for, namely the funds associated with the LoCs. It’s not entirely clear from his ruling how much this is, but by my reading it’s around the $1.5 million mark.

The liquidation, which is ongoing, is to the best of my knowledge unrelated to the still unexplained demise of AlpNames, the registrar and close FFM partner also owned by Roache and Rasmussen.

Finally, a disclaimer.

Because I’ve already had one spurious legal threat related to my ongoing coverage of Famous Four’s demise, and don’t really need the arseache of any more, I’m going to state unequivocally for the record that I’m not alleging any wrongdoing by anyone.

If I’ve got anything wrong, as always I will gladly issue a correction. Just ask, and show your working. No need to sic the lawyers on me.

You can read the judge’s decision (pdf) and decide for yourself what’s been going on.

CentralNic gets 680,000 AlpNames domains for free, kinda

CentralNic has emerged as the gaining registrar for AlpNames’ entire portfolio of gTLD domains.

The company announced late last week that three registrars in its stable — Moniker, Key-Systems LLC and Key-Systems GmbH — will take over roughly 680,000 domains that were left stranded when AlpNames management went AWOL.

US-based Key-Systems LLC appears to be the biggest gainer. It will be taking over domains in every gTLD except .biz, .com, .info, .net, .org, which are going to Moniker, and .pro, which are going to the German Key-Systems division.

While most registrars see their domains under management concentrated in these legacy gTLDs, by volume AlpNames had far more registrations in new 2012-round gTLDs.

It had just 19,000 .com DUM at the last count, compared to hundreds of thousands in new gTLDs such as .top and .gdn.

CentralNic said in a press release that ICANN selected its registrars after a competitive bidding process, which I’ve previously outlined here, but that it did not pay for the names. So AlpNames, presumably, won’t be getting the payday it could have received under the rules.

The transfer won’t be entirely cost-free, of course. CentralNic is going to have to provide support to its incoming customers — who will all be emailed with the details of their new Moniker accounts — for starters.

There’s also the issue of abuse. AlpNames was notorious as a haven for spammers and the like, due to its cheap prices and bulk-registration tools, so CentralNic may find itself having to deal with this legacy.

But CentralNic said it expects these incidental costs to be “minimal”.

The transfers are a big boost for CentralNic’s registrar volume, at least in the short term. The three selected registrars had a combined total of roughly two million gTLD domains at the last count. CentralNic says it acts as registrar for over seven million domains across its 13 accreditations.

For every AlpNames domain that gets renewed, CentralNic gets paid. But if AlpNames’ own track record is any guide, I suspect there’s going to be a lot of drops over the coming year.

AlpNames could get PAID for abandoning its customers

Kevin Murphy, March 15, 2019, Domain Registrars

So it turns out selling domain names for peanuts to spammers isn’t a viable business model. Who’d have thunk?

As you’ll have no doubt already read elsewhere, ICANN has shut down AlpNames, the deep-discounting registrar with an unenviable reputation for attracting abusive registrants.

But there’s a chance that the company might actually get paid for its customer base, under ICANN rules.

ICANN today terminated AlpNames’ contract, effective immediately, having discovered the “discontinuance of its operations”.

It’s a rare case of ICANN going straight to richly deserved termination, skipping over the breach notice phase.

The former registrar’s web site has been down for the best part of a week, resolving to a Cloudflare error message saying the AlpNames web server is missing its SSL certificate.

But it appears its customers may have been experiencing problems accessing their accounts even earlier.

Judging by ICANN’s termination notice, the organization has had just about as much luck contacting AlpNames management as DI, which is to say: none.

CEO Iain Roache appears to have simply stopped paying attention to the company, for reasons unknown, allowing it to simply fade away.

At least three members of senior staff have left the company over the last several months, with former COO Damon Barnard telling DI he was asked to leave as a cost-cutting measure as Roache attempted to relocate the company from Gibraltar to the UK.

I gather that Roache is also currently tied up in litigation related to the failure of his old registry management business, Famous Four Media, which was removed by gTLD portfolio owner Domain Venture Partners last year.

So what happens now to AlpNames customers?

Fortunately, most of them should suffer only minor inconvenience.

ICANN has initiated its De-Accredited Registrar Transition Procedure, which will see all of AlpNames’ domains forcibly transferred to another registrar.

This often uses the data that registrars are obliged to periodically escrow, but in this case AlpNames uses LogicBoxes as a registrar back-end, so presumably LogicBoxes still has fresh, live data.

AlpNames had 532,941 domain names across all gTLDs on its IANA tag at the last official count, at the end of November. It’s believed to be closer to 700,000 today.

In November, its top two gTLDs were .top and .gdn, which had 280,000 names between them. It had over 19,000 .com names under management

Almost 700,000 names is a big deal, making AlpNames a top 40 registrar, and would make a nice growth spurt for any number of struggling registrars.

The portfolio could be a bit of a poisoned chalice, however, containing as it likely does a great many low-quality and some possibly abusive registrations.

At least one registrar, Epik, has publicly stated its desire to take over these domains, but due to the volume of AlpNames DUM it could be a competitive bidding process between multiple registrars.

Under the ICANN rules (pdf), a “full application process” is generally favored for defunct registrars with over 1,000 domains, when the de-accredited registrar has not named a successor.

The scoring system used to pick a winner has many criteria, but it generally favors larger registrars. They have to show they have the scale to handle the extra technical and customer support load required by the transition, for example.

It also favors registrars with breadth of gTLD coverage. They have to be accredited in all the gTLDs the dead registrar was. AlpNames supported 352 gTLDs and had active domains in 270 of them, according to November’s registry reports.

Language support may be an issue too, in case for example a substantial chunk of AlpNames business came from, say, China.

All applying registrars that score above a certain threshold are considered tied, and the tie-breaker is how much they’re willing to pay for the portfolio.

Unlike gTLD auctions, ICANN does not receive the proceeds of this auction, however. According to the policy (with my emphasis):

This procedure is not intended to create a new form of revenue for ICANN. To the extent payment is received as part of a bulk transfer, ICANN will apply funds against any debt owed by the registrar to ICANN and forward the remaining funds, if any, to the de-accredited registrar.

That’s right, there’s a chance AlpNames might actually get a small windfall, despite essentially abandoning its customers.

Think about it like the government using eminent domain to buy a house it wishes to demolish to make way for a new road. Except the house’s cellar is full of kidnapped children. And it’s on fire.

Of course, this might not happen. ICANN might decide that there’s not enough time to run a full application process without risk to AlpNames’ customers and instead simply award the dead registrar’s portfolio to one of the registrars in its pre-approved pool of gaining registrars.

That choice would be partly based on ICANN judgement and partly on which registrar is next in the round-robin queue of pre-qualified registrars.

Here’s a handy diagram that shows the procedure.

Deaccred

Rumors swirl as AlpNames suffers “days” of downtime

Kevin Murphy, March 12, 2019, Domain Registrars

The web site of controversial registrar AlpNames has been offline for “days”, and rumors have started to circulate that it might not just a technical problem.

At time of writing, alpnames.com resolves to a Cloudflare error page, warning that the AlpNames web server has an invalid SSL certificate. Cloudflare may also show an ugly, bare-bones cached version of the site.

This means that AlpNames customers are unable to log in to manage their domains, according to threads on Namepros and Reddit, and conversations I’ve had with some of those affected.

It’s said that customers are able to manage their domains by logging in directly to LogicBoxes, AlpNames’ registrar-in-a-box provider, but I’ve been unable to personally verify this.

AlpNames is believed to have almost 700,000 names under management, double the size it was last June but well below its peak, at the height of its deep-discounting period in 2017, of over three million.

It’s not known how many individual registrants are affected. The company tends to attract what one might charitably call “bulk-buyers”, so it will be substantially lower than the number of registered domains.

It’s also not entirely clear when the web site went down. It’s not been loading here for at least 12 hours, but the first reference to downtime on Namepros was on Sunday. Multiple other sources have told me today that it’s been unavailable “for a few days”.

A separate AlpNames-owned web site focused on marketing .icu domains to the Chinese market is still online.

But it seems a lot of AlpNames customers have been left hanging in uncertainty, unsure how or when they will be able to manage their domains.

I’ve been unable to reach any of AlpNames’ senior executives for comment on the situation today.

An email sent to CEO Iain Roache this morning, at the address he was using in December, bounced back with a “disabled account” error message. I have received no response to messages I sent to two other email addresses he is known to use.

I understand that fellow AlpNames exec Geir Rasmussen who, with Roache, was enthusiastically pitching grand plans for AlpNames as recently as October, is no longer with the company.

Chief operating officer Damon Barnard also left the company last October and ceased work as a director around the same time.

Records show the salesperson due to represent AlpNames at this week’s ICANN 64 meeting in Japan did not show up and is believed to have also left the company in January.

The company’s Twitter and Facebook accounts, which are not usually particularly active anyway, have not yet addressed the downtime problem.

If it is simply a case of an expired or misconfigured SSL cert, why is it taking so long to fix, and why has there been radio silence from AlpNames?

Opponents and competitors are putting the word around that there may be a more serious problem with the company, but I’ve not seen any conclusive evidence that this is the case.

It’s possible there’s some confusion between AlpNames and Famous Four Media, the now-defunct Roache/Rasmussen venture that managed the portfolio of new gTLDs owned by Domain Venture Partners, an investment vehicle set up by Roache prior to ICANN’s 2012 gTLD application round.

DVP is no longer affiliated with AlpNames and its gTLDs are managed by a new DVP-controlled entity, GRS Domains, after an investor revolt.

I was wrong, Famous Four bosses WERE kicked out

Kevin Murphy, August 9, 2018, Domain Registries

Famous Four Media’s portfolio of gTLDs is under new management after an investor rebellion, contrary to what I speculated earlier this week.

FFM’s former stable, which includes the likes of .men and .science, is now being managed by a company calling itself GRS Domains, but this new company has absolutely nothing to do with FFM’s former management.

That’s according to Robert Maroney, founder of Connecticut-based Engineers Gate Investments, which is a shareholder of ultimate portfolio owner Domain Venture Partners.

Maroney got in touch with DI yesterday to explain some of what has recently happened to the ownership and management of the 16 high-volume new gTLDs.

Back in June I speculated based on the quite limited available information that FFM might be bankrupt.

On Tuesday, after GRS Domains announced a relaunch and a rejection of its previous volume-heavy, spam-friendly business plan, I speculated based on slightly more information that management had repurchased the TLD assets after investors forced it into administration.

I was wrong on both counts, according to Maroney. What actually happened is more akin to an investor takeover.

Maroney said he “engineered” the ouster of FFM and its two shareholders/managers, Iain Roache and Geir Rasmussen, after Roache attempted to close down DVP.

DVP is basically a collection of private and institutional investors (brought in by Roache and others) from around the world which, based on the available evidence, have little or no connection to the domain name industry.

It’s a matter of public record that each gTLD contract is owned by a distinct Gibraltar-based shell company — dot Bid Limited owns the ICANN rights to run .bid for example — and that Domain Venture Partners owns these companies.

I’ve previously reported that Famous Four was also owned by DVP, but Maroney said that this was never the case. It was owned 80-20 by Roache and Rasmussen and contracted by DVP to manage the 16 gTLDs.

The affiliated registrar AlpNames, which has been responsible for a very large portion of registrations in the portfolio, had the same ownership structure as FFM and was never directly connected to DVP, Maroney said.

Following a court battle, GRS Domains has replaced FFM as the registry manager.

GRS is owned by DVP, and is currently being managed by court-appointed administrator Edgar Lavarello, a Gibraltar-based accountant at PricewaterhouseCoopers.

Maroney did not want to get into the detailed specifics about what caused the investor revolt, but did say that shareholders were unhappy with how FFM was managing the portfolio.

Its low-price, high-volume strategy had caused its TLDs to become the destinations of choice for spammers and other abusive registrants.

But the court case was brought after Roache attempted to break up DVP, restructure ownership of the 16 individual registries, and “escape the regulation of Gibraltar”, Maroney said.

“Roache wanted to shut down DVP in a way we considered to be unlawful,” he said.

He said DVP shareholders felt Roache’s moves were “inappropriate and unlawful”, which is what caused him to “engineer”, via fellow investor Christina Mattin, DVP being placed into administration.

I have seen no independent evidence that Roache acted or attempted to act unlawfully. The court document I’ve seen appointing Lavarello as administrator contains no finding of wrongdoing by anyone.

The upshot of all this is that the group of TLDs formerly known as Famous Four Media is now GRS Domains — Global Registry Services Ltd — and that Lavarello is currently in charge.

I imagine the company will want to find permanent management at some point, but Maroney did not want to talk about that.

In the meantime, GRS has already made moves to become more transparent and to engage more with the rest of the industry.

Maroney said, and I have independently confirmed, that he was at the ICANN meeting in Panama recently, meeting senior industry figures. Famous Four executives have not been known to attend ICANN meetings or industry events in the past.

GRS has told registrars it intends to have a formal presence at ICANN 63 in Barcelona also.

The company will shortly terminate all of its promotional pricing and introduce a flat $9.98 registry fee, which is very likely to affect its volumes and reduce spamming activity over the next year or so.

Tech giants gunning for AlpNames over new gTLD “abuse”

A small group of large technology companies including Microsoft and Facebook have demanded that ICANN Compliance take a closer look at AlpNames, the budget registrar regularly singled out as a spammers’ favorite.

The ad hoc coalition, calling itself the Independent Compliance Working Party, wrote to ICANN last week to ask why the organization is not making better use of statistical data to bring compliance actions against the small number of companies that see the most abuse.

AlpNames, the Gibraltar-based registrar under common ownership with new gTLD portfolio registry Famous Four Media, is specifically singled out in the group’s letter.

The letter, sourcing the August 2017 Statistical Analysis of DNS Abuse in gTLDs (pdf), says there “is a clear problem with one particular contracted party”.

AlpNames was the registrar behind over half of the new gTLD domains blacklisted by SpamHaus over the study period, for example, the letter states.

The tiny territory of Gibraltar also frequently ranks unusually highly on abuse lists due to AlpNames presence there, the letter and report say.

The ICWP letter also says that the four gTLDs .win, .loan, .top, and .link were used by over three quarters of abusive domains over the SADAG study period.

The letter calls the abuse rates “troublesome” and says:

We are alarmed at the levels of DNS abuse among a few contracted parties, and would appreciate further information about how ICANN Compliance is using available data to proactively address the abusive activity amongst this subset of contracted parties in order to improve the situation before it further deteriorates.

It goes on to wonder whether high levels of unaddressed abuse could amount to violations of new gTLD Registry Agreements and Registrar Accreditation Agreements, and to ask whether there any barriers to ICANN Compliance pursuing breach claims against such potential violations.

The ICWP comprises Adobe, DomainTools, eBay, Facebook, Microsoft and Time Warner. It’s represented by Fabricio Vayra of Perkins Coie.

Other than the letter (pdf), the Independent Compliance Working Party does not appear to have any web presence, and a spokesperson has not yet responded to DI’s request for more information.

The SADAG report also singled out Chinese registrar Nanjing Imperiosus Technology Co, aka DomainersChoice.com, as having particularly egregious levels of abuse, but noted that this abuse disappeared after ICANN terminated its RAA last year.

AlpNames has not to date had any public breach notices issued against it, but this is certainly not the first time it’s been singled out for public censure.

In November last year, ICANN’s Competition, Consumer Trust, and Consumer Choice Review Team (CCT) named it in a report that claimed: “Certain registries and registrars appear to either positively encourage or at the very least willfully ignore DNS abuse.”

AlpNames seems to have been used often by abusers due to its bargain-basement, often sub-$1 prices — making disposable domains more cost effective — and its tool that allowed up to 2,000 domains to be registered simultaneously.

If not actively soliciting abusive behavior, these factors certainly don’t make abuse any more difficult.

But will ICANN Compliance take action in response to the criticism leveled by CCT and now ICWP?

The main problem with the ICWP letter, and the SADAG report it is based upon, is that the data it uses is now rather old.

The SADAG report sourced abuse databases only up to January 2017, a time when AlpNames’ total gTLD domains under management was at its peak of around three million names.

Since then, the company has been hemorrhaging DUM, losing hundreds of thousands of domains every month. At the end of November 2017, the most recent data compiled by DI shows that it was down to around 838,000 domains.

It’s quite possible that AlpNames’ customer base is no longer the den of abuse it once was, whether due to natural attrition or a proactive purge of bad actors.

A month ago, in a press release connected with a $5.4 million buy-out of an co-founder, AlpNames chairman Iain Roache said he has a “10-year strategic plan” to turn AlpNames into a “Tier-1” registrar and “bring the competition to the incumbents”.

Famous Four chair pumps $5.4 million into AlpNames to settle COO lawsuit

Kevin Murphy, February 8, 2018, Domain Registrars

Famous Four Media chair Iain Roache has bought out his former COO’s stake in AlpNames, its affiliated registrar, settling a lawsuit between the two men.

He’s acquired Charles Melvin’s 20% stake in the company for £3.9 million ($5.4 million), according to a press release.

A spokesperson confirmed that the deal settles a lawsuit in the companies’ home territory of Gibraltar, which we reported on in December.

Roache said in the press release that he has a plan to grow AlpNames into a “Tier 1 registrar”:

“I’ve got a 10 year strategic plan, which includes significant additional investment, to set the business up for future growth and success,” he said. “We’re going to bring the competition to the incumbents!”

AlpNames is basically the registrar arm of Famous Four, over the last few years supporting the gTLD portfolio registry’s strategy of selling domains in the sub-$1 range and racking up huge market share as a result.

But it’s on a bit of a slide, volume-wise, right now, as hundreds of thousands of junk domains are allowed to expire.

According to today’s press release, AlpNames has 794,000 gTLD domains under management. That’s a far cry from its peak of 3.1 million just under a year ago.

Seller Melvin, according to the press release, “has decided to pursue other interests outside of the domain name industry”.

It appears he left his COO job at Famous Four some time last year, and then sued Roache and CEO Geir Rasmussen (also an AlpNames investor) over a financial matter. Previous attempts to buy him out were rebuffed.

Last October, the Gibraltar court ruled that the defendants has supplied the court with “forged documents” in the form of inaccurately dated invoices between the registry and AlpNames.

The pair insisted to the court that the documents were an honest mistake and their lawyer told DI that there was no “forgery” in the usual sense of the word.

But it appears that Melvin’s split from the companies was less than friendly and the £3.9 million buyout should probably be viewed in that light.

Famous Four bosses gave “forged documents” to court

Kevin Murphy, December 28, 2017, Domain Registries

The leaders of Famous Four Media produced “forged documents” during a lawsuit filed by the company’s former chief operating officer, according to Gibraltar’s top judge.

The new gTLD registry’s chairman and CEO were both, along with four other unidentified former employees, involved to some degree in “forging” invoices to an affiliated registrar and/or documents relating to a rights issue, according to a ruling by Chief Justice Anthony Dudley.

The ruling was made in October, but appears to have been published more recently.

Former Famous Four COO Charles Melvin is suing CEO Geir Rasmussen and Iain Roache, chair of parent Domain Venture Partners, over a rights issue that diluted his holdings in a related company, according to a court document.

There’s little in the public record about the specifics of the suit. The complaint is not available publicly and neither man wished to comment while the trial is still ongoing.

But Dudley’s ruling shows that the original claims seem to have been sidetracked by Melvin’s new allegations that the “forged” documents demonstrate that Roache, Rasmussen and others engaged in “fraud” and “conspiracy to pervert the course of justice”.

Nick Goldstone, a partner at Gordon Dadds and a lawyer for Rasmussen and Roache, told DI that they both deny any dishonest behavior and that there has been no finding of dishonesty by the court.

He said in an emailed statement: “both of the individual defendants deny (if it be alleged) that they are dishonest and both deny that they have been engaged in the creation of any forged documents in the wider sense, as alleged by counsel for the opponents in the Court case, or at all.”

According to Dudley’s ruling, the defendants’ trial lawyers have claimed that errors in the invoices provided to the court were the result of “honest incompetence”, which the judge said has “a ring of truth” to it.

Dudley, having decided Roache and Rasmussen “have historically been guilty of serious shortcomings in relation to their disclosure obligations” at some point ordered that metadata be gathered from various documents handed over during the disclosure phase of the trial.

This metadata showed that some documents “were created after (in some instances long after) the date on the face of the documents”, which led the judge to conclude they were technically “forged documents”.

But Goldstone told DI that the documents in question were “forged” only in “explicitly a narrow characterisation of the term”, adding that they had been created by former employees who have all since been fired.

The documents included 10 invoices from Famous Four to AlpNames, also based in Gibraltar, the affiliated registrar responsible for selling hundreds of thousands of cheap names in Famous Four gTLDs.

They also included documents concerning a rights issue in a company called Myrtle Holdings that reduced Melvin’s stake to a negligible amount. Again, dating seems to have been an issue.

Dudley wrote in his decision (pdf):

It is accepted by the respondents that the material produced by them contained inaccurate and misleading information; and that the forged documents have been deployed in the litigation and relied upon in pleadings and witness statements. It also formed part of the material provided to the expert witnesses, whose opinions are consequently tainted.

But Goldstone told DI: “no conclusion has been reached in the ruling as to any ‘dishonesty’ or ‘forgeries’ in the wider sense.”

The trial had been due to kick off in October, but it’s been delayed due to the fact that a lot of evidence and testimony has to be reevaluated.

Roache and Rasmussen had proposed to settle the case with a buy-out offer earlier this year, but that offer was rebuffed by Melvin, according to Dudley’s ruling.

Famous Four runs 16 new gTLDs including .science, .download, .loan and .bid.

Many of its TLDs have been offered at super-cheap prices that have boosted sales volumes but have often attracted high levels of abuse.

ICANN urged to crack down on new gTLD abuse

Kevin Murphy, November 29, 2017, Domain Registries

Registries selling dirt-cheap new gTLD domains should be rewarded with lower ICANN fees when they get proactive about abuse, while registrars that turn a blind eye to spammers should be suspended, an ICANN working group will recommend.

In its second batch of findings, the Competition, Consumer Trust, and Consumer Choice Review Team (CCT) said that financial incentives and a new complaints procedure should be used to persuade registries and registrars to fight DNS abuse.

The CCT said it “proposes the development of incentives to reward best practices preventing technical DNS abuse and strengthening the consequences for culpable or complacent conduits of technical DNS abuse” in a paper published today.

The review, which drew on multiple sources of market and abuse data, original research, and analysis of third-party research, is probably the most comprehensive study into the impact of the new gTLD program to date.

It concluded that overall rates of DNS abuse did not increase as a result of the program, but that bad actors are increasingly migrating away from legacy gTLDs such as .com to 2012-round TLDs such as .top, .gdn and Famous Four Media’s stable.

Indeed, much of the paper appears to be a veiled critique of FFM’s practices.

The registrar AlpNames, known to be affiliated with FFM and responsible for most of its retail sales, is singled out as the currently accredited registrar particularly favored by abusers.

The CCT report notes that AlpNames regularly sells domains for under $1, or gives them away for free, and offered a tool allowing registrants to randomly generate up to 2,000 available domains in 27 different gTLDs, pretty much inviting abuse.

“Certain registries and registrars appear to either positively encourage or at the very least willfully ignore DNS abuse. Such behavior needs to be identified rapidly and action
must be taken by ICANN compliance as deemed necessary,” the paper says.

The review found that gTLDs with no registration restrictions and the lowest prices had the most abuse. Duh.

“Generally, the DNS Abuse Study indicates that the introduction of new gTLDs did not increase the total amount of abuse for all gTLDs,” its report says. “[F]actors such as registration restrictions, price, and registrar-specific practices seem more likely to affect abuse rates.”

Drawing on data provided by 11 domain block-lists (SURBL, SpamHaus, etc), the paper states that at least one TLD (FFM’s .science) had an abuse rate excess of 50%.

Using SpamHaus data, the paper identities FFM’s .science, .stream, .trade, .review, .download and .accountant as having over 10% abuse during the period of its study. Also on that list: Uniregistry’s low-price .click and the China-based .top and .gdn.

One thing they all have in common is that AlpNames is a leading registrar, usually accounting for at least a quarter of domains under management.

There’s no way AlpNames/FFM is not aware of the amount of bad actors in its customer base, the question is what can ICANN do about it?

The CCT team recommends that registries and registrars with over 10% of their names used for abusive purposes should be tasked by ICANN with proactively cleaning up their zones. Those that fail to do so should be subject to a new Domain Abuse Dispute Resolution Process, it said.

These companies should have their contracts suspended when they’re “associated with unabated, abnormal and extremely high rates of technical abuse”, the report recommends.

There’s a big boilerplate specifying, tellingly, that registry operators that control registrars are affected by this recommendation too.

It should be noted that there was not a full consensus of support for the idea of a DADRP. Half a dozen working group members filed minority statements opposing it.

It’s not all stick in the report, however. There’s some carrot, too.

The CCT report recommends financial incentives such as fee reductions for registries that have “proactive anti-abuse measures” in place.

It noted that there is precedent for ICANN doing this kind of thing when it implemented an anti-tasting policy that seriously restricted registrars’ ability to get registry refunds.

The CCT Review Team was formed to figure out what impacts the 2012 new gTLD round had on the domain name market.

The completion of its work is one of several gating factors to the next new gTLD application round under ICANN’s new bylaws and the old Affirmation of Commitments with the US government.

It published initial recommendations earlier this year. This new set of recommendations is now open for public comment until January 8.

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