Analysis The man who claims he was screwed out of ownership of one of the internet’s most valuable addresses – invest.com – has lost a critical appeals court ruling. He reckons the battle’s not over yet, though.
Here's where we're at: Adam Perzow was trying to sue Moshe Hogeg in California in a row over the ownership of the dotcom, claiming Hogeg double-crossed him. But the Golden State's judges say they have no jurisdiction over Hogeg, which derailed the litigation.
Last week, California’s Ninth Circuit supported [PDF] an earlier district court decision, which said that despite Perzow discussing the sale of his rights in invest.com with Hogeg while in California, it was not sufficient to create a “substantial connection” and so hear the case in the US state.
The appeals court said: “Hogeg and Perzow shared one meal in California to discuss a concluded New York business deal which, at best, possibly included inconclusive discussions over Perzow’s future involvement in a web company headquartered in Israel.”
It went on: “Insofar as the claims in this case are involved, between Hogeg and Perzow, California was little more than a backdrop for one dinner. The district court accordingly did not err in dismissing this case for lack of personal jurisdiction.”
While that is the end of Perzow’s 18-month effort to extract $10m he believes Hogeg owes him, he told The Register the lawsuit was a “gamble” and he knew he had a “50-50” chance of succeeding. The Canadian has a back-up plan, he tells us, and will sue again asserting that there was a “general partnership” between him and Hogeg. In effect, Perzow’s going for full ownership of the domain name itself.
There’s something about high-value dot-com names that drives people crazy, and invest.com is no exception. It was sold in 2008 for just over $1m, making it one of that year’s largest domain sales. Perzow thought the domain was worth more, though, and so agreed to pay double to acquire the name. He didn’t have the cash and so his company, Heath Global, reached an agreement to, according to his lawsuit, “acquire the exclusive right to purchase the www.invest.com domain” for $2m, paid in installments, from the dotcom's owner.
Money to make money
When Heath Global hit hard times and entered Chapter 11 bankruptcy, it had yet to pay off the sum and so still didn’t fully own the name. With invest.com now worth an estimated $5m, Perzow was desperate to find someone to help pay off what he owed so he could then either set up a business on the domain name, or sell it and make millions in profit.
And that was when he was introduced to Israeli entrepreneur Moshe Hogeg. Hogeg had somehow made a name for himself pushing the incomprehensibly stupid Yo! messaging app, which was an April Fool’s joke that got out of hand in 2014. He was at the time CEO of the now-defunct Mobli social network and talked a good game, according to Perzow’s lawsuit [PDF] against Hogeg.
During a call between the pair, "Hogeg also bragged about Mobli, his previous venture which had reached a valuation of over one billion dollars, and his recent acquisition of Pheed for a $40m cash/stock transaction," the lawsuit stated. "Hogeg represented to Perzow that the Pheed founders made ‘tens of millions’ in that deal. Hogeg professed that the Invest.com project would be worth in the billions, more even than Mobli's then-current over $1bn dollar valuation.”
When Mobli filed for bankruptcy in 2016, it became clear the company was not much more than hype built around celebrity endorsements: a reported $4m investment by movie star Leonardo DiCaprio turned out to have been far, far less – less than $10, in fact. Similar claims of Mobli’s user numbers and revenues were equally far-fetched. When Bloomberg did a subsequent piece on Hogeg, it began: “Israel’s most prolific startup hype man.”
When it came to invest.com, Perzow says he was at the end of similar big dreams and broken promises: he agreed to sell his “exclusive right to purchase” the dotcom for just $2.5m, he claims in his lawsuit, in return for being pulled into Hogeg’s larger corporation, given an equity stake in invest.com, and being a key partner in turning the domain into a new business.
Several face-to-face meetings were held in the US and Israel, and despite some reservations, Perzow says he signed over the rights to the name, receiving $3.15m in total. Then, he alleged, Hogeg claimed amnesia of the entire agreement and stopped taking Perzow's calls. So much for the equity stake, and being made a part of the dotcom's future and Hogeg’s enterprise, it seemed. Meanwhile, press reports appeared stating Hogeg’s Singulariteam VC arm had paid $5m for invest.com.
Invest.com did launch – without Perzow. Another Israeli entrepreneur who had appeared alongside Hogeg in a list of “top 25 Israeli influencers in blockchain technologies and cryptocurrencies,” Ophir Gertner, was listed as a founder, and the company claimed to have $20m in investment money backing it.
Like Mobli, however, the business failed, with all its accounts closed in July 2018. But not before the invest.com name was used to form more businesses: Stox, a blockchain company launched in July 2017, again with Hogeg and Gertner in charge.
Stox raised $34m in its initial coin offering, having been promoted by boxing legend Floyd Mayweather, who at the time appeared happy to put his name to new cryptocurrencies, including Centra, which is being investigated by the US government for being an alleged scam.
Stox was also a scam, according to a Chinese investor who sued and claimed Hogeg ran it as a Ponzi scheme. People digging into the company also claimed to have found irregularities in the movement of Stox’s STX tokens.
Hogeg called the lawsuit brought by the investor a “despicable extortion attempt,” and reportedly settled the claim out of court after it went to mediation. Meanwhile, Stox insisted the movement of STX tokens was all above board: “Although this may not have been the best way to manage the wallet, it was done in good faith. Additional Stox tokens were purchased by Moshe as he is a huge fan of Stox who strongly believes in what we are doing as he has said many times. There has been no unethical behavior, nor any dumping of Stox token.”
Invest.com’s name was further dragged into the mud when it acquired another company, Anyoption, in 2017. A year later, the two sides fell out. Hogeg sued Anyoption's shareholders over claims of “fraud, breach of an agreement and threats,” and the stockholders countersued in an Israeli court claiming Hogeg was using tens of millions of dollars of Invest.com money personally, and asked for Invest.com to be liquidated.
With invest.com’s business reputation now having taken a seemingly fatal blow, the domain-investing community was surprised this month to find the still-valuable if tarnished internet address was the subject of a somewhat bizarre article claiming that it was the focus of a bidding war.
On the market
Right-wing conspiracy blog American Thinker drew attention to a Chinese news article that claimed an offer of $20m had been made for the dotcom – and then claimed that the sale worries US security officials who feared it would be used to infiltrate the American financial markets. “The Chinese report seems to flat-out admit that it hopes to trick Americans by describing the development as a win for China, stating that the purchasing of rare domain names by Chinese companies will allow them a ‘shortcut’ into US markets,” read the article.
The domain-name community is united in its view that this was possibly a strange PR effort to boost the sale value of invest.com, which by then had announced itself as being available for $12m. Two weeks later, and invest.com is now offering itself for $8.8m.
But Adam Perzow wants nothing to do with all that and the “weird people and weird things” that have been happening to the domain name ever since he signed over his purchase rights. “I haven’t had anything to do with this since I was screwed,” he told us. “But next month, I will claim dominion over invest.com.”
Hogeg did not respond to requests for comment. Last year, his representatives described Perzow's lawsuit as "a direct continuation of ugly attempts at extortion under cover of a legal proceeding." ®