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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.

Famous Four wins .party gTLD contest

Kevin Murphy, April 11, 2014, Domain Registries

Famous Four Media has won the .party new gTLD contention set after coming to a private agreement with the only other applicant for the string, Oriental Trading Company.

Financial details of the arrangement were not disclosed.

Oriental Trading is a supplier of party goods that intended to run the gTLD as closed, single-registrant namespace.

But Famous Four expects the open .party registry to be used for parties in the social gathering and political senses of the word.

It now has 13 uncontested applications and 44 more outstanding.

In related news, Minds + Machines today announced that it intends to take at least three of its applications — .garden, .property, and .yoga — at a private auction April 22 managed by Applicant Auction.

CentralNic gets its foot in the door as Famous Four back-end

Kevin Murphy, February 18, 2014, Domain Registries

New gTLD portfolio applicant Famous Four Media has selected CentralNic to provide back-end registry services, joining existing providers ARI Registry Services and Neustar.

CentralNic will be “a preferred provider” of Domain Venture Partners, which is the parent company of Famous Four’s 60 new gTLD applicants, according to a joint statement issued by the companies today.

Neither firm wanted to give any firm details about how CentralNic fits into Famous Four’s strategy, such as whether CentralNic might replace existing back-ends as it did with 27 formerly GMO Registry bids.

Famous Four is already partnered with Neustar on 52 new gTLD applications and ARI on five more.

DVP chief operating officer Charles Melvin told DI in a statement:

CentralNic will sit as one of our preferred backend technology partners. We are in the process of agreeing terms with a limited number of select providers to sit on our preferred panel. Until such agreements have been put in place it would be inappropriate for us to comment on them.

The deal is related to DVP II, an investment vehicle through which DVP hopes to raise up to $400 million “to acquire Top-Level Domain registries, some of which are already live.”

We were leaked a copy of a June 2013 investor presentation related to DVP II, in which the company said its back-end partner had “the lowest fees in the industry”.

With its new “preferred panel”, it looks like the company is hedging its bets.

New gTLD revenue projections revealed in leaked Famous Four presentation

Kevin Murphy, August 1, 2013, Domain Registries

Famous Four Media expects to make an average of almost $30 million revenue in year one from each of the new gTLDs it secures.

That’s according to a PowerPoint presentation (pdf), written for potential investors, that was provided by an anonymous source (I suspect not a fan of the company) to DI this week.

According to the presentation, “potential year 1 revenues for an average Registry” could amount to $28.4 million, the vast majority of which would come from sunrise, landrush and premium domain sales.

The presentation, dated June 2013, was prepared by Domain Venture Partners, the immediate parent of the 60 shell companies that Famous Four is using to apply for its 60 gTLDs.

The company was unable to provide an executive to discuss this story until August 14.

But according to the PowerPoint, the Domain Venture Partners II fund is an investment vehicle set up to “bridge the gap” in Famous Four’s funding requirements:

Domain Venture Partners II shall provide a unique structured regulated investment opportunity to participate in the new gTLD programme to provide secured fixed annual returns along with additional venture type returns at a time in the process where most of the major risks have been removed.

DVP is looking to raise up to $400 million, having raised £48.3 million ($73.2 million) in 2011 via the Domain Venture Partners I fund, it says. The current round opened in March and is expected to close in November.

Famous Four has applied for 60 gTLDs — mostly highly sought-after strings such as .poker, .music, .shop, .search and .buy — 10 of which were initially uncontested.

According to the presentation, landrush period auctions would account for about a third of year-one revenue in each gTLD: $9.7 million. That’s based on selling 45,697 domains for an average price of $213.34.

Revenue from trademark owners is the second-largest chunk. An average sunrise period could raise $6.9 million, assuming 39,679 domains at an average of $173.5 each, according to the PowerPoint.

Sales of regular domains during the first first year of general availability could raise $4.1 million, based on 225,759 registrations at $18.47 apiece, the presentation says.

Here’s the full slide, one of 33 in the deck:

Domain Venture Partners II presentation

The presentation says that the projections are “based on historical data points established by the existing operational gTLD Registries”, adding:

The figures are averages and therefore would represent projections for a standard gTLD Registry. Potential year 1 revenues for specific Registries may be below or above this average.

Some of the numbers strike me as optimistic. While the likes of .asia and .mobi may have seen these registration volumes due to the novelty and scarcity of new gTLD namespaces, my feeling is that those days are over.

The new gTLD program is likely to see scores of overlapping sunrise and landrush periods; it’s difficult to see registries benefiting from the same focus and excitement as their predecessors.

There’s a limited amount of domainer capital to spread around landrush sales and trademark owners are likely to be much more selective about where they defensively register their brands in a world of 1,300 gTLDs.

That said, Famous Four has applied for some of the nicest strings in the round so I may be wrong.

An appendix to the presentation discussing the first DVP funding round says that while Famous Four hopes to sign contracts for 30 new gTLDs, it has only secured 32% of the money it is looking for.

Securing investment appears to have been tough due in part to the complexity of the ICANN process and investors’ lack of familiarity with it, which looks like risk. It also says:

The costs associated with applications in the new gTLD have increased, the financial strength of most applicants has been reduced and the knowledge barrier to entry is too high to interest large standard venture investors.

Famous Four’s business model is based around consolidation and keeping costs down, according to the pitch. For the most part, this is due to the economies of scale of running a large number of TLDs.

With Neustar as its back-end provider, Famous Four says it has found the “lowest fees in the industry”.

But the model also involves keeping tax to a minimum. Famous Four is based in Gibraltar, where it says it will pay no tax on domain sales:

FFM is operating in a fiscal environment that has multiple advantages over others in the industry. Domain names sales are treated as royalty income which is currently zero rated in Gibraltar. This would result in an instant bottom line gain.

There’s a strong suggestion in the presentation that DVPII is not limiting its ambitions to the new gTLDs it has applied for.

It also seems to discuss acquiring other applicants and ccTLD rights, then bringing them into the Famous Four fold, but the plan was not completely clear to me and executives were unavailable for clarification.