Fund.com never sold for $10 million, but it later sold for $1.5 million

It’s time to update those top sales charts.

I never believed that the fund.com domain name sold for $10 million back in 2008, and now we have proof.

A ruling in the Court of Chancery in Delaware shows that the $10 million sale was fabricated as part of a stock pump and dump scheme. According to court documents, the purchase price was manufactured through fraudulent transactions.

The domain was later offered for sale by domain broker Igloo, and broker Media Options eventually sold the domain in 2018.

The story of the company, which went into receivership, became even more interesting when an investor later claimed a tax loss on the sale of the domain.

Braziela [investor] dopted a tax avoidance strategy that principally relied on the Company claiming an $8.725 million net operating loss (the “NOL”) from its sale of the Website Address. To substantiate the NOL, Braziel started with the $10 million purchase price for the Website Address that Galanis had fabricated. Then he added the commission for selling the Website Address to a third party. Then he subtracted the ultimate sale price of $1.5 million ($10,000,000 + $225,000 -$1,500,000 = $8,725,000)…

…Braziel knew from his investigation into the Company that the $10 million purchase price for the Website Address was not a legitimate number. It was a figure that Galanis had fabricated to support a pump-and-dump scheme, and it was an order of magnitude higher than what the Website Address had actually sold for in three subsequent transactions. Braziel nevertheless used the $10 million figure.

You can read the full decision here (pdf).

No related posts.