Domain name investing has been around almost as long as domain names were open for purchase by the general public, and the practice has picked up since the mid-90s, as companies stake out their spot on the digital frontier. Domain names can be so valuable, in fact, that people actually steal them to sell to unsuspecting companies or other domain name investors. The legal process to combat a domain name thief is complicated at best, but there is hope, as police have arrested a man accused of stealing the domain P2P.com.

An initial investigation by Florida police, where the victims reside, was dropped for lack of evidence. The rightful owners of P2P.com then filed a civil suit as they believed it was their only recourse. However, Detective Sergeant John Gorman of the New Jersey State Police Cyber-Crimes Unit later reviewed the case, and asked the victims if they wanted to pursue the case in New Jersey, where the alleged thief lived. Based on evidence gathered for the civil suit, the NJ District Attorney approved an indictment. On July 30, Daniel Goncalves, a 25-year-old computer technician for a NJ law firm, was arrested at his home and his computers were seized.

The first-ever criminal arrest for domain name theft has been made in the great state of New Jersey.

The story begins several years ago. In 2005, husband and wife Albert and Lesli Angel got together with investor and partner Marc Ostrofsky—known for his sale of the domain business.com for $7.5 million—and bought P2P.com for $160,000. Sometime before late 2006, Gonclaves hacked into the Angels' e-mail account, obtained login details for the couple's Godaddy.com account, and transferred the domain to an account he controlled using a fake name. He even falsfied Paypal transaction records to make it appear as though he had rightfully purchased P2P.com for $900. Gonclaves then put the domain up for sale on eBay, and sold it to LA Clippers player and part time domain name investor Mark Madsen for $110,000.

With the help of professional "cyber" investigators, the Angels gathered enough evidence to file a civil suit against Madsen and Goncalves to retrieve the domain name. That case is still pending, and has since been amended to include Gonclaves' brother as a co-conspirator and Godaddy.com for negligence and contributory trademark infringement under Anti-Cyber Piracy statute. The outcome of both the civil and criminal case are likely to set precedents for similar cases in the future.

The main problems affecting victims of domain name theft are lack of experience of law enforcement, lack of clear legal precedents, and the money necessary to launch an investigation. DomainNameNews, which first reported the arrest, relates the Angels' experience in reporting the crime. When the Angels called Florida police to report the theft, a uniformed officer in a squad car was sent to their home. "What's a domain?" the officer asked them, according to DomainNameNews.

Then, there is the fact that domain names aren't necessarily considered property. "The laws do not specifically identify domains as property," attorney Paul Keating told DomainNameNews. "That has been the subject of various court decisions—not all courts have issued consistent decisions."

Finally, because domain name theft is such a legal gray area, most people wouldn't have the money or the wherewithal to pursue an investigation. There is little legal precedent for criminal investigation and only one civil case has been successfully litigated in California.

Goncalves is currently out of jail on $60,000 bail. Meanwhile, prosecutors in New Jersey intend to pursue the criminal case and are pushing for a felony conviction. The Angels, along with Ostrofsky, are pressing on with their civil case against Goncalves as well. Goncalves may have thought he had gotten away scott free—he had an in-ground pool installed at his home, drove a Lotus and a Mercedes, and bragged about frequent travel—but his days of wine and roses may soon be at an end.