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Scareware con artist fined $163 million by FTC
The woman behind a scareware con that tricked more than a million people into paying money to "fix" nonexistent problems with their computers has been fined $163 million by the Federal Trade Commission.
Kristy Ross was also permanently banned from selling security software or any other form of software that interferes with peoples PCs.
The case dates to 2008, when an elaborate scam used online ads to display a fake system-scan alert that claimed to find malware on users computers. The victims were then urged to buy software to fix the problem, costing between $40 and $60 each time, in order to clean up their PCs.
The FTC said that more than one million people were conned into buying the fake clean-up software with names such as WinFixer, WinAntivirus, DriveCleaner, ErrorSafe, and XP Antivirus.
The scareware con ran between 2000 and 2008, and the FTC estimated that Innovative Marketing, the company that promoted the fake software, took in more than $60 million in revenue over the years. The FTC investigation was prompted by some 3,000 complaints received over the scam.
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According to the FTC, Kristy Ross, together with defendants Sam Jain, Daniel Sundin, Marc D'Souza, and James Reno, served as officers and directors of two businesses: Belize-based Innovative Marketing, Inc. (IMI), and a subsidiary, Cincinnati-based ByteHosting Internet Services. The businesses were used "to conduct a massive 'scareware' scheme that marketed a variety of computer security software via deceptive advertising."
According to the FTC, the operation "used elaborate and technologically sophisticated Internet advertisements placed with advertising networks and many popular commercial websites," which purported to display the results of a "'system scan' that invariably detected a host of malicious or otherwise dangerous files and programs on consumers' computers." The scanner then urged consumers to buy software, priced between $40 and $60, to remediate the issue.
In the wake of the FTC's complaint, which accused eight defendants in total of having violated the FTC Act, the U.S. District Court for the District of Maryland immediately granted the FTC a temporary restraining order requiring IMI to cease marketing and selling its software, which was sold under such names as WinFixer, WinAntivirus, DriveCleaner, ErrorSafe, and XP Antivirus. The court also froze the assets of the businesses involved.
Last month, Ross argued in court that the judgment of $163 million proposed by the FTC against her "was grossly overinflated and that she should be held liable only for the ads and products she herself marketed at MyGeek," wrote Bennett in his judgment. But the judge said that he found the amount, which had been calculated by the FTC, was "a reasonable approximation of consumer redress." Bennett also ruled that Ross would be jointly liable for the "consumer redress" amount with defendants Sam Jain, Daniel Sundin, and IMI.
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Apparently, there was a whole cast of characters involved...Fake Antivirus Ringleader Must Pay $163 Million
According to the FTC, Kristy Ross, together with defendants Sam Jain, Daniel Sundin, Marc D'Souza, and James Reno, served as officers and directors of two businesses: Belize-based Innovative Marketing, Inc. (IMI), and a subsidiary, Cincinnati-based ByteHosting Internet Services
Of all of the people charged by the FTC in this case, Ross was the only remaining defendant. Four of the others already settled with the agency, including Marc D'Souza and his father, Maurice D'Souza, who in 2011 agreed to a settlement requiring that they return $8.2 million in what the FTC dubbed as "ill-gotten gains." The other three defendants in the case, meanwhile, had judgments entered against them by default because they failed to appear in court and participate in the litigation.
And at least one of the characters has taken a road trip...Lifestyles of the Rich and Infamous
12 January 2009 - Jain failed to appear in court to face criminal charges (Criminal Minute Order, USA v Shaileshkumar Jain, CR-08-00197-RMW). Bench Warrant issued, and stayed until 26 January 2009.
26 January 2009 - Sam Jain became a fugitive after the Bench Warrant stay was lifted. Jain forfeited a $250,000 cash bond.
And, it appears he (along with another participant) is still somewhere "out there" hiding under a rock. Which leaves Kristy holding the ugly end of the stick...Wanted by the FBI - Wire Fraud; Conspiracy to Commit Computer Fraud; Computer Fraud
...Jain is a United States citizen who has ties to Brazil, Canada, India and the Ukraine.
Shaileshkumar P. Jain, along with his co-conspirator, Bjorn Daniel Sundin, is wanted for his alleged involvement in an international cybercrime scheme that caused internet users in more than 60 countries to purchase more than one million bogus software products, resulting in consumer loss of more than $100 million.
The FBI is offering a reward of up to $20,000 for information leading to the arrest and conviction of Shaileshkumar P. Jain.
"Is life so dear, or peace so sweet, as to be purchased at the price of chains and slavery? Forbid it, Almighty God!" -- P.Henry, 1775