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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?

New gTLDs slip again in Q1

The number of domains registered in new gTLDs slipped again in the first quarter, but it was not as bad as it could have been.

Verisign’s latest Domain Name Industry Brief, out today, reports that new gTLD domains dropped by 800,000 sequentially to end March at a round 23.0 million.

It could have been worse.

New gTLD regs in Q1 were actually up compared to the same period last year, by 2.8 million.

That’s despite the fact that GRS Domains, the old Famous Four portfolio, has lost about three million domains since last August.

Verisign’s own .com was up sequentially by two million domains and at 141 million, up by 7.1 million compared to Q1 2018. But .net’s decline continued. It was down from 14 million in December to 13.8 million in March.

Here’s a chart (click to enlarge) that may help visualize the respective growth of new gTLDs and .com over the last three years. The Y axes are in the millions of domains.

.com v new gs

New gTLDs have shrunk sequentially in six of the last 12 quarters, while .com has grown in all but two.

The ccTLD world, despite the woes reported by many European registries, was the strongest growth segment. It was up by 2.5 million sequentially and 10 million compared to a year ago to finish the period with 156.8 million.

But once you factor out .tk, the free TLD that does not delete expired or abusive names, ccTLDs were up by 1.4 million sequentially and 7.8 million on last year.

GRS has lost three million domains since Famous Four died

The old Famous Four Media gTLD portfolio has shrunk by roughly 60% since old management were kicked out.

At the same time, the new registry is selling less than one percent of the domains it used to add each month.

The 16 TLDs, now managed by GRS Domains, have a total of approximately 2 million domains in their zone files today, compared to about 5 million at the end of August 2018.

Last August was when GRS, which seems to have taken over the portfolio about a year ago, announced that it was introducing “much more transparent and sensible pricing strategy” of $9.98 per domain per year across the board.

Its 16 TLDs include the likes of .loan, .win and .bid. Many had been offered in the sub-$1 range, largely via former affiliate AlpNames, attracting huge volumes of registrations but low renewals and a lot of spammers.

I compared the zone file counts at the end of August 2018 to yesterday’s numbers, rounding to the nearest thousand, and came up with this:

TLDThenNowChangeChange (%)
TOTAL5,092,0002,010,000-3,082,000-60.53
accountant64,00022,000-42,000-65.63
bid318,000104,000-214,000-67.30
cricket26,0008,000-18,000-69.23
date155,00061,000-94,000-60.65
download146,00046,000-100,000-68.49
faith62,00021,000-41,000-66.13
loan2,200,000990,000-1,210,000-55.00
men421,000144,000-277,000-65.80
party122,00044,000-78,000-63.93
racing81,00033,000-48,000-59.26
review260,00060,000-200,000-76.92
science95,00039,000-56,000-58.95
stream319,000130,000-189,000-59.25
trade182,00068,000-114,000-62.64
webcam60,00027,000-33,000-55.00
win581,000213,000-368,000-63.34

Don’t think for a second that the correction is over. The story of the old FFM portfolio’s decline will roll for many more months. Each TLD is still seeing monthly deletes in the thousands.

The number of new regs across the portfolio every month has dropped off a cliff — a big cliff with jagged rocks and sharks circling at the bottom — since the August price changes.

Whereas in January 2018 the 16 gTLDs saw a combined total of over 400,000 adds, by January 2019 this had dropped to fewer than 1,700, a 99.59% decline.

TLDAdds Jan 18Adds Jan 19ChangeChange (%)
TOTAL400,6921,645-399,047-99.59
accountant6,58222-6,560-99.67
bid2225871-22,187-99.68
cricket3,35713-3,344-99.61
date11,27823-11,255-99.80
download12,83030-12,800-99.77
faith4,44031-4,409-99.30
loan20649936-206,463-99.98
men23,98853-23,935-99.78
party16,862143-16,719-99.15
racing4,27135-4,236-99.18
review16,95649-16,907-99.71
science9,501101-9,400-98.94
stream19,655101-19,554-99.49
trade12,300123-12,177-99.00
webcam5,54127-5,514-99.51
win24,374787-23,587-96.77

In each case, the drop-off in adds started in August last year. Each TLD went almost immediately from thousands of new regs per month, to under 100.

I compared Januaries because January 2019 is the date of the most-recent registry transaction data. January 2018 was not an atypically strong month for sales for any of the TLDs; for many, it was on the slow side.

Famous Four was replaced by GRS about a year ago after investors in Domain Venture Partners, the ultimate owner of the portfolio, fell out with FFM management.

The registrar AlpNames, which was responsible for a huge share of FFM’s sales and was managed by the same people, has also since gone out of business.

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.

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.