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Internet domain name outlaw faces 20 years in federal prison

By Layer 8 on Mon, 09/10/07 - 2:56pm.

A Las Vegas man faces about 20 years in prison today after he agreed to plead guilty to wire fraud for impersonating an intellectual property lawyer and threatening lawsuits against the owners of Internet domain names.

According to the FBI, David Scali is charged with registering an e-mail account under an alias and then sending e-mails in which he claimed to be the intellectual property lawyer. In the e-mails, which were sent in late June and early July of 2006, Scali threatened to file $100,000 trademark infringement lawsuits against the owners of various Internet website names unless they gave up their domain name registrations within two days.

Published reports said Scali specialized in going after one-off or domain names with nomenclature similar to big name Web sites.

Cybersquatters who routinely snap up these typo-based domain sites looking to make a quick buck off of other people's hard work is one of the unsavory practices on the Internet.

Ron Jackson, editor and publisher of the online magazine Domain Name Journal, said in a recent interview that with a well-known trademark like a Microsoft, where so many people are trying to get on a given day, a good typo - meaning one that a lot of people would make the error of typing in - could generate thousands of dollars a month. There could be one on a lesser-known brand that has less traffic that maybe makes $10 a month, but some of these guys might hold tens of thousands of domains. If it costs them $10 a year to register a domain, and if they make $5 or $10 a month multiplied across thousands of domains, it becomes a significant amount of money, he said.

Microsoft earlier this year filed two new lawsuits against companies it accuses of registering domain names similar to certain of its trademarks. It alleged that the companies intentionally registered domain names with variations of its trademarks, a practice known as cybersquatting, or misspellings of those names, known as typosquatting. Often, domains registered in this way point to Web pages containing advertisements that, if clicked upon, generate revenue for the owner of the domain. Microsoft said the practice is deceptive and confusing for users. Microsoft will receive damages from some companies, it said.

In Scali's case the wire fraud count in the criminal information filed this morning concerns a victim who surrendered an Internet domain name very similar to citysearch.com

The wire fraud charge carries a maximum statutory sentence of 20 years in federal prison. The plea agreement contemplates a sentence ranging from probation to six months in custody, ultimately the sentencing judge will make the final decision as to what Scali's sentence will be, the FBI says.