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TRENTON
– Attorney General Paula T. Dow and
Criminal Justice Director Stephen J. Taylor
announced that 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. This is the first known conviction
for a domain name theft.
According
to Director 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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