OnlineDomain.com Domain Name News & Opinions
A comment left by a reader claims that a small but important detail in the bankruptcy law could have helped Grandma Heidi Powell keep her rightfully owned domain name.
Is it possible that Heidi Powell is going to lose her domain name because of bad representation?
On one of the latest updates in August Heidi Powell announced that she had substituted her previous attorney with a new one:
“August 14, 2017
Court Filing
Withdrawal and Substitution of Attorney Jacob DeGraaff to represent us. Involvement of Thomas Lester terminated.”
Then Heidi Powell blamed GoDaddy for loosing her domain name.
Again I would be happy to hear from any lawyer that knows about bankruptcy law.
Here is the comment left by reader Bethy that is an interesting read:
“Seems to me that there was a basic and obvious issue that was ignored that should have shut this down right away. Trainer Heidi went to the bankruptcy trustee and purchased the domain through the court for $20,000… meaning the court agreed the domain was actually worth $20,000 at the time of the bankruptcy filing in 2012. How is that even possible? At the time Grandma Heidi filed her bankruptcy in 2012, it was BEFORE Trainer Heidi had any web presence and long before she filed for her trademark in 2014. That’s two years AFTER the bankruptcy. How can they retroactively value an asset… especially from someone who wasn’t a party to the original bankruptcy? She forced herself into a discharged bankruptcy based on what would have been, at most, a $25 asset and likely exempt. The trustee wouldn’t have even bothered with it back in 2012 because it had no resale value worth the effort or would have fallen under the exemption schemes. But because of a minor issue and a sleazeball lawyer, they force them to reopen and revise a filing and claim it’s actually worth $20,000?? Not only did they manage to steal this woman’s domain name from her… they cost her additional money because of the forced bankruptcy amendments.
I mean, if you think about it this could set a really bad precedent for bankruptcy law. let’s say you had a piece of jewelry… a ring… that, at the time you filed for bankruptcy, was worth about $100. At the time, prices for precious metals were low and the ring needs some repairs because it was missing a stone. The $100 was based on several professional opinions on scrap value. This is a pretty legit value on old/broken jewelry. So… 5 years later, the spot prices of metal are higher and the ring has been repaired, thus, that $100 ring is now worth about $1500. Somebody randomly decides they want your ring and you refuse to sell it to them. They scour through your personal and financial life trying to find a way to get it from you and find that 5 years prior, you claimed the ring was only worth $100 in a bankruptcy filing. They say, “Ah ah! See! They lied to the court about the value of the ring. I’m going to claim they committed fraud to get the case reopened…. and force the court to sell it to me… because that ring is worth at least $1500. I’m going to offer $3,000 though, to the court/trustee to buy the ring… and tell the court that is the retail price of the ring today and what they should have declared 5 years ago as the value. I’m going to insist that they didn’t have enough exemption value to cover the full value of the ring back then, which is why they lied about its’ value… so the trustee wouldn’t take it from them and sell it, hence the lowball $100 value.
So, the trustee sees dollar signs. The trustee gets paid by bringing in as much money as possible. He sees a payday and goes with it…agrees the ring is (or was) actually WAS worth $3,000 5 years ago… and should have been sold by the trustee back then. (Even though there’s no way in any reasonable person’s mind they would have received $3000 for it back then). This ends up costing the debtors even MORE money in court and lawyer fees, as well as possible fines and amended filing fees, etc… and despite documentation that, at the time of the original bankruptcy, the ring really was only worth about $100… he decides to sell it…. because he can…. years later because somebody said it was worth more. So the debtors, who paid to have the ring repaired… now lose it entirely, in addition to all the additional fees paid out.
Seems to me that violates every tenet and purpose of the bankruptcy code, and the reasons for the exemptions and discharge. I can see creditors and other random people…or maybe ex spouses etc, filing similar cases out of spite… to be able to buy otherwise exempt possessions or even force a debtor to pay up on an old debt that was originally discharged years prior because of inflation, repairs, etc. If they think they can sit on an old debt, and go back to court and force the issue years later… I mean, why even bother with the protections of bankruptcy? Frankly… it’s kind of scary and I don’t know why Grandma Heidi didn’t have a lawyer who could argue such a simple concept to get this shut down. I’m not even a lawyer… so all of this is speculation based on my knowledge of the bankruptcy process (help people fill out petitions, work for lawyers, etc). I’m just confused by how it got this far and this messy over something so easy that could have, theoretically, stopped it cold. Of course… this is also why when you file for bankruptcy you list EVERYTHING, including online content like domain names. It’s easily overlooked because it’s not a really tangible items and is often and left off of petitions because most domains are relatively worthless to trustees and would likely fall under any exemption scheme. People just don’t even think to list them because they are so insignificant. Had Grandma had made sure her domain was on the original petition, this might have never been an issue. Still doesn’t sit right with me that somebody can come in years later and claim fraud because they want something and are going to play the rich, spoiled brat and keep them in court long enough until they cave…because they can afford to. I really hope Chris and Heidi Powell are proud of themselves.”
Here is a small history of the HeidiPowell.com case:
Trainer Heidi Powell loses cybersquatting claim (still tries to steal the domain HeidiPowell.com)
Did GoDaddy really cost Heidi Powell her domain name at court?
OnlineDomain.com - © Copyright 2012-2024 - All Rights Reserved
any twitter or facebook handle… hell even an old yahoo email account should invalidate any court procedures where they were left out.
Agree that there was very very poor representation in this case. The entire thing defies common sense in my opinion and sets a bad precedence for domains. Kick in the gut to all industry players. Surprising that even an attorney with little knowledge of domains and IP law could not figure out a better way to approach this judge, who seemed to be, at times, near-begging for a way to not have to rule on it. No one should ever loose a domain under circumstances like this. No one in their right mind would have disclosed the domain as an asset. Bad everything, bad timing, bad representation, lousy judge. Defies logic. Defies basic common sense. I’m embarrassed for all involved and was not even there. What a shame this was.
I never understood how it’s an asset at all, it wasn’t purchased but a hand registered domain from my understanding. It’s not being used as a business to generate income but rather personal use.
The domain is being leased, monthly payments to the register and registry and if those payments stop it’s taken away from Grandma Heidi. Now that 20K or whatever is being paid for the domain it then becomes an asset since actual money traded hands for the rights to the domain and will be used for business purposes.
There was zero value to this domain at the time of bankruptcy and that’s what should be considered.
No jury would ever agree with what’s going on here, to bad this wasn’t an option. Let’s say for the sake of things it is an asset well then it should have been sold off long before Heidi 2 came along and offered 20K for the domain. There’s plenty of venues to sell domains, not wait for a freak of nature like fame to come along and want to take it away with their unlimited funds. JMO…
Her attorneys seem borderline incompetent. I’d sure the attorneys.
Until the bankruptcy is discharged and finalized completely, and the court approves everything with it, assets can be used to pay those owed money. It doesn’t matter if something goes up in value after it is filed. If you win the lottery for 10000 after filing bankruptcy, but before the courts finalized everything, you think the courts will not take that money to pay debts owed just because you only spent $2 on a ticket? You can try and do that but you’ll end up just like that weird dance moms owner, in jail. Additionally if the other heidi powell, or any other of them for that matter, were interested in owning their name for more than what would be considered “worthless” to the court, and she did not want to use it as part of what she could save, then she has to show it as an asset. If it goes up in value before everything is finalized, and those are the key words “before everything is finalized”, then it now is an asset at the new value. If she owed you money, you would want access to the money the asset was sold for just like those she owes money would.
That’s entirely true under most circumstances…however in this case the 2012 bankruptcy *WAS* finalized and discharged. Trainer Heidi wanted the domain sometime in 2014 (or after) and tried to buy it from Grandma Heidi, who refused to sell it. She didn’t have to sell it… it was hers for many years prior. In fact she had the domain YEARS before Trainer Heidi was even Heidi Powell. Then she filed a bogus cybersquatting claim, which was ridiculous, claiming Grandma Heidi was ‘profting’ from Trainer Heidi’s name. That was a joke and went nowhere obviously. What happened after that, though, is why some lawyers are horrible people. I say some since I work for some really honorable lawyers who said it was entirely legal… albeit ethcially disgusting. Trainer Heidi pitched a fit, because she’s a spoiled brat with money (in my opinion of course) and her lawyers, well paid I’m sure, scoured through the old finacial records of Grandma Heidi and found her old bankruptcy. Bankruptcy filings are a matter of public record and they went through it all… realized that the domain name wasn’t listed in the bankruptcy, and realized they had a way in. They forced the bankruptcy court to reopen the case based on a claim of fraud and failing to list the domain as an asset. This forced Grandma Heidi and her husband to amend their previously closed bankpruptcy (that’s not easy, fun or inexpensive, by the way) …and while it was reopened, trainer Heidi then offered an insance amount of cash for this otherwise worthless domain.
Grandma Heidi really should have listed the domain on her original filing. That was the real fatal mistake. Under any other circumstance, nobody would ever care about a lousy worthless domain name not being listed. It’s not worth anyone’s time or money to reopen a case unless the court felt they could benfit from it finacially… and the $20K offer was good enough. Basically, Grandma Heidi was messed over by a greedy trustee, who like Trainer Heidi’s lawyers… saw dollar signs. Money often works, ethical or not. People will do all kinds of things if the price is right.
More than anything, I’m just flabbergasted that Trainer Heidi feels so entitled to her name over anyone else. She wasn’t even legally Heidi Powell until 2010. Yet she claimed she has the rights to something that was purchsed in 2005, five full years prior. It makes zero sense, and it’s said that Grandma Heidi had such cruddy representation until it was too late.
If everything you say is true, fine, it’s wrong, but I have not seen any record of the official original bankruptcy discharge date yet, in official papers, and without that we only really have her side in the media. Additionally, something you own can go up in value over time. Just because you have it before a bankruptcy does not mean you can keep it afterwards. Plus if the bankruptcy suit was still within the statutory period where people can have it reopened or appeal decisions it’s within their legal right to do so. I just tried to find legal papers on it again but only managed to find part of the case vs dept of education and it had a date of Oct 8 2013 meaning things were still ongoing at the time. I think 2012 may have been a start date based on those dates and even if it was not there were still things in the court after that date and very close to when the other heidi wanted the domain name. Yes, this sucks for Grandma but if you were owed the money you wouldn’t be happy if the trustee went against their fiduciary responsibility and sided with the person who filed the bankruptcy to screw you and others owed money over when they had access to $20000 more. It is the way legal systems in most states work and meant to maximize returns to those owed money.
The bankruptcy documents are a matter of public record via PACER. They are there. The original bankruptcy case was, indeed closed and discharged. Once that’s done, if a trustree allowed an asset under the exemption shemes or simply abanonded it during the process (both of which would have very likely been done in this case back in 2012). It doesn’t matter if the domain grew in value or not.. The Trainers’ attorneys realized the Granperents’ major omission and pounced on it. Most people would never even bother to list a domain… it’s just not worth it and many argue that it’s not a true assett anyway…. but that’s another topic. The Trainers went to the bankruptcy court and filed a compalint, basically… saying that the Grandparents failed to list all of their assets in the bankruptcy and petitioned ot have it reopened and the couple sanctioned and/or force the sale of the domain instead. NOrmally, the court would just ignore such a request over a lousy domain name worth nothing. The trainers offered an obscene amount of money to purchase said worthless domain to entice the case ot be reopened. Why? Because that cash would be a nice paycheck for the trustee but it would also for a repayment of the old, previously dicharged debts. The Grandparents were then forced to pay a alot fo money to amned their filing under threat of purjery and jail… they always threaten that , but rarely, if ever does it go that far. Most judges would simply revoke the discharge… thus making it as if the bankruptcy never happened. That’s pretty bad… and I’ve seen it happen, but it only happened to greedy, stupid people who thought they could hide mjaor assets, like boats and vehicles. even real estate and cash.
The trainers had no legal right to the case, though. That’s one of the real kickers. The Trainers were not creditors of the Grandparents nor had any relationship at all. They had no stance to appeal the discharge since they had no part of the case. What they did was get lucky and find a trustee who saw dollar signs and went back and forth several times about lettin git happen. Ultimately, $10,000 wasn’t enough money to do it… but it all of a sudden was after the amount doubled.
It simply doesn’t matter what they claim the domain is worth today. What matters is what it was worth at the time of filing, which still wasn’t worth much of anything. Most experts have said even today it’s not worth anything near what she paid for it. It didn’t actually increase in value at all…. and the Trainers weren’t creditors… so they had no business butting in except to wave as much money as they could under the nose of the court to make it happen. Heid Poweel the trainer didn’t even *want* the domain until well after the 2012 bankruptcy was discharged. Their mistake was not listing it… big mistake. If they’d listed it this would be a non-issue. But honestly, most people don’t list domains on bankruptcies as a general rule becuase nobody cares. But they SHOULD be listed… not just actual tagnbile assets…but *rights* to items, too, like rental properties and yes, domain names.
Legally the grandparents screwed up, but it wouldn’t have gone anywhere…even if the court became aware of the non-diclosure at some point. It isn’t worth the time or money to amend a filing unless there’s an issue like this one. Now if the trainers *were* creditors on the bankruptcy… that’s a different topic. But they had ZERO part in it and the court only allowed the sale because of a payday. It’s just that simple. If one of the attorneys I work with was pulling something like that I probably woud stop worknig with them and their clients… I don’t like unethical moves like this and I really beleive it potentially sets a problem. I can see a lot of people using this case to help them mess over other bankruptcy cases.
PS, sorry for all the typos. I have a neurological condition and don’t always catch them in cases like this where I’m commenting and just writing stuff as I go. If I read it back I’m horribly embarrassed but it is what it is. I never claimed to be a good typist.
The full docs were probably just too far buried under all the other results for me to find in the several google searches I tried. I only got the title and nothing else under it and said I had to register to see them. I understand it’s shady though because most would not get they need to list smaller things like that when they have a right to use it but think it’s not worth anything to them. Problem is for them is it became worth something. Things like leases and similar are especially important since that could be considered a liability or a valuable asset if the value of the location went up but your lease is locked in at a low rate for 15 more years and you can sublet it. This case will make any domainers that are thinking about bankruptcy rethink it since they may think they can slide by and not declare their names as anything of value.
Make the domain worthless. There are ways of making it unusable.
Damaging the value of a domain like that could get her jail time since her creditors would lose out on money they are owed.
She has to do nothing and \i believe she wouldn’t know what to do butthere are a great many people out there that are severely pissed with what has happened. It is theft pure and simple and thieves should never prosper.
But those people are also not looking at what the reality is. If an asset increases in value before the bankruptcy is discharged, or she holds back information regarding anything that can be used as an asset, whether she knows or thinks it has value or not, that can be used to pay down what she owes her creditors. If the name has value to pay the creditors it has to be considered as an asset. Now what truly would be theft is if she had even the slightest idea the name had value and she didn’t claim it as an asset to pay down what she owed others when trying to eliminate her debts. Think about it, if you were a friend she borrowed $10000 from, do you want her to not pay you some of the money she owes you by keeping the name that has value?
The problem is that she didn’t list out the domain as an asset to be abandoned by the trustee during the proceedings. Therefore “trainer Heidi’s” legal team can go back and file a complaint that Heidi left off an asset in her filing. She just got out played by better attorneys, she should of taken the money offered upfront.
I agree. The problem made by the first atty left a huge hole in her case. The second atty. was trying to use a thimble to save the sinking ship when there was really no way to patch the huge hole once it was left out and appreciated in value. Chalk it up to life lessons and move on.