A lawsuit (pdf) was filed at the United States District Court Western District of Washington of Seattle against Epik.
The lawsuit names Epik Holdings, Inc., Masterbucks LLC, Rob Monster and Brian Royce as defendants.
The lawsuit states that Matthew Adkisson paid $327,000 to Epik Escrow service for the purchase of the domain name nourish.com but he never received the domain name. Epik still owes Adkisson $307,000.
Here are some important points from the lawsuit:
“Epik and its executive officers misappropriated funds from numerous consumers, hiding their illicit activity by securing payments from new victims to pay down old debts, and transferring money between the various Epik companies to further obfuscate their fraud.”
“Matthew Adkisson (“Adkisson” or “Plaintiff”) is one of the many individuals that were subject to Defendants’ illegal fraud. In May 2022, Adkisson contacted Epik for what should have been a simple, straightforward domain name purchase. During the transaction, Defendants made several misrepresentations, embezzled or misappropriated Adkisson’s funds, and strung Adkisson along for months with false and empty promises of repayment. Defendants have admitted liability but refuse to make Adkisson whole. Adkisson brings this Complaint to recover what he is owed, and to ensure that this ongoing fraud against consumers is finally put to an end.”
Adkisson’s Purchase of the Domain Name
Before this massive web of fraud came to light, Adkisson contacted Epik to complete a simple domain name purchase.
On May 11, 2022, Adkisson e-mailed Monster seeking to purchase the domain name <nourish.com> which was listed for sale through Epik.
Monster responded that Epik was authorized to sell the domain name for “$300K net to seller, which means $327K gross at our 9% commission.” Monster further claimed that he could complete the sale that day.
Monster informed Adkisson that to complete the sale, Adkisson would need to use Epik’s escrow services.
Adkisson agreed to pay the requested $327,000 and asked Monster to set up the escrow account.
At the time, Epik Inc. and Epik Holdings provided an in-house escrow service named “Epik Escrow.” Monster directed Adkisson to use the Epik Escrow service in connection with Adkisson’s domain name purchase.
That day, May 11, 2022, Adkisson followed the directions provided by Monster and transferred $327,000 to Epik using the Epik Escrow service, to be held in escrow as Monster represented it would be (the “Escrow Funds”).
Despite Monster’s claim that the transaction could be completed the same day payment was transferred, Adkisson did not receive the domain name that day. Indeed, Adkisson never received the domain name.
On June 1, 2022, Monster informed Adkisson that were some issues with the seller of the domain name, but that Epik was “working to get this done asap.”
Defendants continued to string Adkisson along for months, repeatedly promising that they would deliver the domain name.
On November 14, 2022, and because the domain name had still not been transferred to Adkisson, Adkisson requested the return of his Escrow Funds. Royce promised to continue to try to secure the domain name but further promised “if [that] does not work then we of course will return the funds.” On information and belief, when Royce made this promise to “return the funds,” he knew it to be false, that Epik had already spent Adkisson’s Escrow Funds, and that Epik did not intend to return the Escrow Funds to Adkisson.
Nearly three weeks later, Defendants had still not secured the domain name nor returned Adkisson’s Escrow Funds. On December 2, 2022, Adkisson explicitly stated that he would be ending the domain name purchase transaction and again requested that the Escrow Funds be returned.
Adkisson soon discovered that the Escrow Funds he had transferred to be held by Epik in escrow had not, as they were required to be, kept in a separate account pending the sale of the domain name. Instead, Defendants apparently used the Escrow Funds as their personal piggybank and misappropriated the entirety of Adkisson’s $327,000 escrow payment.
For the next six weeks, Adkisson continued to follow up with Defendants attempting to get either the domain transferred to him or his Escrow Funds returned. During that time, he did not receive a substantive response.
On December 2, 2022, Adkisson explicitly stated that he would be ending the domain name purchase transaction and again requested that the Escrow Funds be returned.
On January 11, 2023, Epik, through counsel, sent Adkisson a letter promising to repay Adkisson his escrow funds. Specifically, the letter stated: “On behalf of Epik Holdings, Inc., Epik shall pay the debt owed to Mr. Adkisson in two installments, one on January 12, 2023, in the amount of $20,000, and the other no later than January 31, 2023, in the amount of $307,000.” Adkisson accepted the proposal.
On January 12, 2023, Monster paid Adkisson $20,000. However, no further payments were made.
On January 31, 2023, Monster contacted Adkisson. He confirmed that the amount owed to Adkisson—$327,000—was not in dispute. Further, Monster stated that since Royce became CEO of Epik, Monster “believe[d] the company has had ample opportunity to fund a refund to Mr. Adkisson.” Monster identified several sources of funds available to Epik to repay Adkisson including a $1,000,000 loan, a $1,000,000 divestiture received by Epik in October 2022, and other assets “amount[ing to] more than $600,000 in cash.” Based on these claims, it appears that Epik’s representations that it was “cash strapped” and so unable to repay Adkisson eres false, and Epik knew they were false when they made those representations.
Monster further represented that “in the event that the Company does not, or will not settle the balance due of $307,000, I am committed to covering this personally, and doing so asap.”