Second blow for Bolton as company is banned

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This was published 14 years ago

Second blow for Bolton as company is banned

By Mark Hawthorne

NICHOLAS BOLTON faces losing his multi-million dollar internet empire after the Supreme Court of Victoria upheld a decision by the industry regulator, auDA, to ban one of his companies from selling or administering domain names.

In January the Federal Police discovered that Australian Style's customer database, and that of its subsidiary Bottle Domains, had been hacked into and credit card numbers had been put up for sale on the internet.

Personal details from 40,000 of Mr Bolton's 60,000 customers were downloaded in total, including the complete credit card details of 25,000 people.

A 22-year-old Perth man has been arrested over the theft and has been charged with dishonestly dealing in personal financial information.

During its investigation, the Australian Domain Name Administrator (auDA) learned that the first security breach of the Bottle Domains customer database had occurred in 2007, and Mr Bolton had failed to notify the regulator of that breach. As a result, auDA terminated the accreditation of Bottle Domains in April this year ''due to a serious breach of its obligations under the registrar agreement''.

Mr Bolton, 27, started Bottle Domains at the age of 19 and became a millionaire before his 21st birthday. He has found fame this year by investing in embattled BrisConnections and Multiplex Prime Property Fund and calling shareholder meetings to have the companies wound-up.

After Bottle's accreditation was terminated, Mr Bolton took auDA to court, but yesterday lost the fight. Bottle Domains will no longer be able to sell or register domain names. Three other domain name registry companies owned by Mr Bolton will now be reviewed by auDA, after Justice Kim Hargrave questioned Mr Bolton's actions after the discovery of three separate security breaches.

In February this year, auDA ordered Mr Bolton to warn his customers of security breaches.

Justice Hargrave found that Mr Bolton changed the agreed wording of that letter, and he deliberately omitted a warning for customers to monitor their credit card details and accounts.

Justice Hargrave said the changes ''had the obvious intention of downplaying the seriousness of the security breach''.

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In his judgment, Justice Hargrave also said Mr Bolton delayed handing over credit card information to the Federal Police. ''This is an early example of Mr Bolton seeking to downplay any risk that credit card information had been or may be fraudulently used.''

In giving evidence, Mr Bolton told the court that he sent the wrong letter to customers as a result of a ''cut-and-paste error'', as he had two different versions of the letter open on his computer screen.

Justice Hargrave called that explanation ''improbable'', and said it was ''a deliberate decision'' by Mr Bolton to send the amended email, and in doing so he had ''failed to act in good faith''.

Justice Hargrave said Mr Bolton had demonstrated ''an extraordinary indifference to the effect of credit card fraud upon its victims'', and said that if Mr Bolton had notified auDA of the initial security breach in 2007, the later theft of credit card details may have been avoided.

The judgment followed yesterday's order by the Takeovers Panel for Australian Style to withdraw its takeover offer for Multiplex Prime immediately, effectively ending Mr Bolton's bid to buy the property trust and liquidate its $567 million portfolio of assets.

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