Shawn Hogan - CEO of DigitalPoint Solutions sentenced to Federal Prison

[Eric Lyon]

Found this article a pretty interesting read today. I think it definitely qualifies as industry news since Digital Point Forums also has a small hold on domain marketplace selling.

Shawn Hogan, the CEO of a successful online marketing company called Digital Point Solutions, was sentenced to five months in federal prison for his role in defrauding eBay of an alleged $28 million in online marketing fees.

He must remain on three years' probation after that, and was fined $25,000. Hogan will enter prison on July 14, according to federal court records. Hogan previously reached a civil settlement with eBay also.

The sentence brings to a close one of the strangest chapters in eBay's history.

READ MORE: http://www.businessinsider.in/eBays...ederal-Prison/articleshow/34511382.cms#!HtEnR

 

[DomainMagnate]

It wouldn't surprise me that the AFFILIATE managers knew, or at the very least stuck their heads in the sand and looked the other way. Very unlikely that the top brass did. I doubt anyone at eBay (other than the affiliate management team and marketing) was using affiliate performance as a KPI.

He was the top affiliate on ebay for a while. Probably by a significant margin. I'm pretty sure many at ebay knew what he was doing. According to him - they even encouraged it, as that would supposedly help show better financial reports for them.

 

[-EM-]

So they had some kind of agreement and at some point Shawn didn't respect?

 

[Kenny]

Just lookin....

Peace,
Cy

 

[alien51]

I think what Ronald Reagan was arguing back there, was that if you put out a defective machine to your users, and your users exploited the defect to get what is not rightfully theirs (if the machine had no defect), then such users cannot be charged with fraud, since the ability to defraud did not come from them. The opportunity for fraud presented itself, and they took it.

I would think the scenario would be like.... you know this story..... an ATM machine in some supermarket, out of the blue, suddenly started churning out wads and wads of 100 dollar bills when all you wanted to withdraw from the machine was 50 bucks. The machine obviously was defective, and for 10 minutes, it churned out a total of 10,000 dollars.

What would you do with the money ?? You never asked for 10 grand. The machine gave it to you "for free". Ronald Reagan here is saying, you take the money and you cannot be accused with fraud, because it was not your fault that the ATM was defective.

 

[enlytend]

Except that they didn't just "accidently" deposit those commissions into his account - there was deliberate action on his part.

More like the person who rigs up a skimmer on an ATM. Does that mean the ATM's "defective?" Isn't that person showing ingenuity by figuring out details and finding an advantage that can be used to their own benefit? I don't think there are any laws on the books anywhere which are specifically worded to say "It's illegal to attach a skimmer to an ATM", and there are lots of dirty players in banking/credit industry - maybe some of them use that ATM. Does that make it OK?

What he did, did nothing for eBay's bottom line. It detracted from it, because they paid commissions on actions which did not result from bona-fide commissionable referals. The transactions would have still been there, but the fraudulent ones would have been attributed to their proper channels instead of looking like they all came from him.

 

[alien51]

Except that they didn't just "accidently" deposit those commissions into his account - there was deliberate action on his part.

Fraud would need proof that there was "willful intention" to take unlawful advantage. Granting this cookie technology is a flawed system, perhaps Hogan was betting that they have to produce convincing proof that he knew the flaws and exploited the flaws to earn money that was not rightfully his. "Deliberate" would probably be the bone of contention here, in case this went to trial. Just like if you were accused of libel, they have to prove there was "malice" - which is actually a very tricky matter, and which why they would want to take chances to go to trial.

If "deliberate" cannot be proven, Hogan's strategy envisions himself ending up as a civil case, with nothing more that Ebay asking him to just return the money, case closed.

However, given the deal option of 5 months in prison, versus 10 years in jail... and a mere $25,000 fine, i think he got a good deal going.

He doesn't look like someone who is very innocent about this cooking stuffing thing. He's more like testing the limits on how far the scheme would go and testing a legal theory as his exit strategy in case he gets busted. It would have been interesting to watch, had he decided to fight it out Kim Dotcom style.

 

[enlytend]

"Deliberate" would probably be the bone of contention here, in case this went to trial.

Stuffing cookies requires some technical shenanigans on the part of the cookie stuffer - as opposed to posting a normal affiliate link. Pretty much impossible to do it by accident.

All in all, he did get a pretty good deal.

 

[Fonzie]

Fraud would need proof that there was "willful intention" to take unlawful advantage.

This is the sort of internet-lawyer-theorizing that people don't realize will sink their ass in front of an impaneled jury of 6/12 people who get to decide whether they believe your bullshit or not.

What he did was not accidental and by every measure was fraudulent.

 

[crunchyg]

What he did was not accidental and by every measure was fraudulent.

That's not the issue. The issue is that his account managers at eBay encouraged all of this activity and assisted him in covering up the tracks before the auditors. That's his story, and it's actually pretty believable.

 

[Fonzie]

That's not the issue. The issue is that his account managers at eBay encouraged all of this activity and assisted him in covering up the tracks before the auditors. That's his story, and it's actually pretty believable.

Oh, whether or not he perpetrated fraudulent actions against ebay is very much 'the issue'.
Whether he was in collusion with eBay insiders, that's interesting and maybe even likely, but the annals of law are filled with people inside companies who make self-dealing arrangements with people outside the company at the expense of the company itself.

The result is they usually all get prosecuted but prosecutions are inherently selective so its possible that only he takes the bullet.

 

[enlytend]

That's not the issue. The issue is that his account managers at eBay encouraged all of this activity and assisted him in covering up the tracks before the auditors.

Let's say you work in a bank and you found a way to get away with siphoning money from certain transactions into your own account. And your manager knows you're doing it (maybe she's in on the action...)

Aren't you still robbing the bank?

 

[HeyNow]

A guy robs a bank, then gets caught, convicted, and sentenced to prison. Other potential robbers discuss it in a bank-robbers forum and blame the bank for having all that money stored in one place, conveniently waiting to be stolen. That's what some of the posts here sound like.

 

[OhByteMe]

Hey y’all. I know this thread is ages old and I wound up here by happenstance. After reading the convo, I thought it necessary to put my two since worth in. I’ve known Hogan since he was in his very early 20s.... since the mid 90s....IRC days.... when he’s just started DPS in his La Jolla bedroom. We even dated for a minute and during that time, I learned a lot from a dude who is three years my junior. Inadvertently, I am where I am because of his inspiration.

I am a tough nut to impress. Y’all, he’s brilliant.... highly gifted; a prodigy.... and he’s never, EVER set out to do anything shady... not once. An opportunist? Absolutely. But isn’t any built from scratch entrepreneur? They discover (even if by way of a video game convo) and harness what’s not being done then, make it happen. Then, as they should, reap the bennies of it. What he was doing was unprecedented and eBay hated it. They manipulated their own TOS to wrangle in a multi-millionaire and take “back” what they believed should have been theirs. Instead of talking with Hogan and figuring out how to make a partnership of it, they did what 99% of the suits do.... get a hard on for litigation.

Hogan fought as long as he felt it was viable. In his situation, (and I have been there) I would have done the same thing. Say what you will... but out of all of you, who else is a multi-millionaire?

 

[iowadawg]

Someone just happens to come to namepros, and in her first post, drags up a 6 year old thread.
Just to heap praise on a crook.
Got it.

 

[OhByteMe]

Maybe you didn’t read but I said I saw this was an ages old thread... you get all your info based on what the media feeds you. I am speaking from experience and until you walk in his shoes, ease off. He’s a damn good dude. When you read that your friend is getting lambasted by people who hide between their kb and monitor, you’d wanna set the record straight, too; no matter how much time has passed.

peace out.

 

[-EM-]

Maybe you didn’t read but I said I saw this was an ages old thread... you get all your info based on what the media feeds you. I am speaking from experience and until you walk in his shoes, ease off. He’s a damn good dude. When you read that your friend is getting lambasted by people who hide between their kb and monitor, you’d wanna set the record straight, too; no matter how much time has passed.

peace out.

OK, will give to your friend a cookie since he likes them a lot.

 

[OhByteMe]

OK, will give to your friend a cookie since he likes them a lot.

"He" is actually a She. And how gracious you are... *rolling eyes*