TRENTON – A Union County man has been sentenced to prison for stealing a company’s Internet domain name and selling it over eBay for more than $110,000 to an unsuspecting buyer, Attorney General Paula T. Dow and Criminal Justice Director Stephen J. Taylor announced this afternoon. This is the first known conviction for a domain name theft
According to Taylor, Daniel Goncalves, 27, of Union Township, was sentenced on Friday, July 22, to five years in state prison by Superior Court Judge Stuart L. Peim in Union County. Goncalves was also ordered to pay restitution in an amount to be determined. Goncalves pleaded guilty on Dec. 13, 2010, to theft by unlawful taking, theft by deception, and computer theft, all in the second degree. The charges were contained in a Nov. 16, 2009 state grand jury indictment.
Goncalves was arrested on July 30, 2009 by members of the New Jersey State Police Cyber Crimes Unit as a result of a State Police investigation into the theft of P2P.com, an Internet domain name. On that same date, troopers executed a search warrant at Goncalves’ residence and seized a large volume of business and computer records relevant to the domain name theft.
The domain naming system is a moderately regulated system of “registrars” who have received authority through ICANN (Internet Corporation for Assigned Names and Numbers) to register domain names for individuals and companies. Domain names are the readable addresses used by individuals and corporations to identify their presence on the Internet. For a set registration fee, the domain names are purchased for periods of up to 10 years by their registrants.
There is a large community of individuals who frequently refer to themselves as “domainers” who buy and sell domain names they speculate will become more valuable over time. Two and three letter domain names are particularly valuable as they are easy to remember and generate larger amounts of traffic, which produces revenue.
P2P.com, LLC, was formed by its owners, Marc Ostrofsky, and husband and wife Albert and Lesli Angel, expressly for the purchase and management of one domain name, P2P.com. Because of its short length and topical relation to the exploding Peer to Peer file sharing phenomenon, the domain name P2P.com was particularly valuable, with an estimated value of between $160,000 and $200,000 at the time of its theft.
The New Jersey State Police Cyber Crimes Unit initiated an investigation in October 2008 when representatives of P2P.com, LLC contacted them and asserted that their domain name had been stolen from their GoDaddy account in May 2006.
Deputy Attorney General Kenneth R. Sharpe prosecuted the case and represented the Division of Criminal Justice Financial and Computer Crimes Bureau at the sentencing hearing. Detective Sgt. John Gorman led the investigation for the New Jersey State Police Cyber Crimes Unit.
P2P.com, LLC began investigating the matter privately in May 2007, when an individual in the “domaining” community observed irregularities in the P2P.com site content and advised the company. A check of the P2P.com, LLC corporate GoDaddy domain account revealed that the domain name had been transferred without their knowledge or consent almost a year earlier.
After investigating privately and consulting with law enforcement, the company concluded that the suspect was in New Jersey. P2P.com, LLC contacted Detective Sgt. Gorman of the New Jersey State Police, who began an in-depth investigation involving the analysis of thousands of pages of evidence.
In pleading guilty, Goncalves admitted that in May 2006, he illegally accessed the GoDaddy account belonging to P2P.com, LLC and initiated a transfer of the domain name to his personal GoDaddy account. Records obtained from GoDaddy verified that the same IP address utilized to log into the P2P.com, LLC account and initiate the transfer was used to log into Goncalves’ own GoDaddy account and receive the transferred domain, completing the theft.
IP addresses are assigned to all Internet users by their service provider and rarely change within a 24-hour period. The investigation found that attempts were made shortly thereafter to transfer the domain away from GoDaddy to a different registrar, but ICANN rules prohibited this transfer for 60 days. Nine days after the 60-day GoDaddy transfer prohibition was concluded, Goncalves moved the domain name to a different registrar.
Goncalves admitted that, after moving the domain name, he again waited the mandatory 60 days and listed the name for sale on eBay in September of 2006, where it was purchased for $111,211. The purchaser, a professional basketball player in the NBA, was unaware that the domain name was stolen.
Private civil litigation is currently active regarding the ownership and money associated with P2P.com. At this time, the site has been returned to the original owners.
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