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TRENTON
- Attorney General Anne Milgram announced
that a Union County man was indicted today
on charges he stole a company’s Internet
domain name and sold it over eBay for more
than $110,000 to an unsuspecting buyer. This
is the first known indictment for a domain
name theft.
According
to Criminal Justice Director Deborah L. Gramiccioni,
the Division of Criminal Justice Major Crimes/Computer
Analysis & Technology Unit obtained a
seven-count state grand jury indictment that
charges Daniel Goncalves, 25, of Union Township,
with theft by unlawful taking, theft by deception,
computer theft, and identity theft, all in
the second degree, and three counts of fourth-degree
falsifying records.
Goncalves
was arrested on July 30 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.
“In
the big money marketplace of the Internet,
a popular domain name is like prime commercial
real estate,” said Attorney General
Milgram. “The indictment charges that
this defendant hacked into an online account
of P2P.com, LLC, stole their domain name,
and sold it to an unsuspecting customer on
eBay for approximately $111,000.”
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.
“This
is a highly complex case involving a theft
of intellectual property on the Internet,”
said Director Gramiccioni. “The New
Jersey State Police Cyber Crimes Unit and
the Division of Criminal Justice Major Crimes/Computer
Analysis & Technology Unit did outstanding
jobs in their respective roles of investigating
this case and presenting it to the state grand
jury.”
Deputy
Attorney General Kenneth R. Sharpe presented
the case to the state grand jury for the Division
of Criminal Justice Major Crimes/Computer
Analysis & Technology Unit. 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.
It
is charged that in May 2006, Goncalves 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, it is charged that Goncalves moved
the domain name to a different registrar.
It
is alleged that, after moving the domain name,
Goncalves 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, Mark Madsen, a professional
basketball player in the NBA, was unaware
that the domain name was stolen.
Civil
litigation is currently active regarding the
ownership and money associated with P2P.com.
At this time, the site has not been returned
to the original owners.
Goncalves
posted $60,000 cash bail after his arrest
and was released.
Second-degree
crimes carry a maximum sentence of 10 years
in state prison and a $150,000 criminal fine,
while fourth-degree crimes carry a maximum
sentence of 18 months in prison and a $10,000
fine. The indictment is merely an accusation
and the defendant is presumed innocent until
proven guilty.
The
indictment
was handed up to Superior Court Judge Linda
R. Feinberg in Mercer County, who assigned
the case to Union County, where the defendant
will be ordered to appear at a later date
to answer the charges.
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