Oct 072006

Your insightful emails warrant another entry on this issue. Featuring additional Spyware “conspirators” named John Robert Martinson and Spy Wiper, Spy Deleter, Odysseus Marketing and its principal, Walter Rines, plus a litany of additional characters. All of which reads like a “Mafia Conspiracy” because in many respects, that’s exactly what it is. Finally, my thoughts on serious JAIL sentences for these Spyware players.

Reader “Susie” asks: How did the FTC arrive at the 4 Millon dollar plus default Judgment against Sanford Wallace?
The FTC obtained numerous internal documents to trace the exchange of money between Sanford Wallace/Smartbot.Net and his partners. Consider some of the “partnerships” which Wallace formed with like minded Criminals. In all cases he was paid lots of money. The net net is over 4 million dollars changed hands which the FTC traced. The FTC says:

“Defendants’ course of conduct in marketing Spy Wiper and Spy Deleter has no benefits to consumers or competition .
39. Therefore, Defendants’ practices in marketing Spy Wiper and Spy Deleter described above are unfair and violate Section 5 of the FTC Act, 15 U .S.C. § 45(a) .
40. Defendants generated revenues through exploiting vulnerabilities in the IE web browser to download and install software programs and distribute advertising on behalf of others, including, but not limited to, CDT, Inc. ; Friendfinder Network/Friendfinder, Inc. ; Internet Traffic Pros. Inc . ; Mindset Interactive, Inc . (Broadspring) ; Odysseus Marketing, Inc.; PKW Interactive, LLC; Quadrogram LLC; RK NetMedia, Inc., SI National, LLC, Web Entertainment Group, Inc .,
Wild Media, LLC (Overpro), and numerous other companies managed by Co-Defendants OptinTrade and Lansky. See S . Schools Dec . Default ¶¶ 16-18 ; J. Lansky Dec. ¶¶ 5-7 ; and Declaration of Kenneth Kelly, attached as Exhibit 2 to the Federal Trade Commission’s
Memorandum In Support of the Motion for Judgment By Default, Entry of Permanent Injunction
and Order for Disgorgement Against Defendants Sanford Wallace and SmartBot.Net, Inc . (K. Kelly Dec. ) Defendants also generated revenues through exploiting vulnerabilities in the IE web browser to market products on behalf of others, including, but not limited to, Co-Defendants John Robert Martinson (“Martinson”), Spy Wiper, Inc . (“Spy Wiper”), and Spy Deleter, Inc .”

Source: http://www.ftc.gov/os/caselist/0423125/WallaceFinalJudgment.pdf
Reader “broken arrow” asks: Can you provide more details on exactly how they earn money from Spyware?
It’s a complex issue but lets start with how these like minded folks form partnerships. Some of the major players were formerly involved in Spam. Some have prison records like John Robert Martinson. Both Martinson and Wallace have multimillon dollar Judgments against them for their previous Spam activities. Here are a couple of methods which I have simplified:
1. Wallace strikes a “deal” with Martinson to sell Spy Wiper and or Spy Deleter. Wallace earns around 30% of each sale. To insure his sales, Wallace first infects the surfers machine with Spyware, then blasts pops at the surfer which indicate their machines are infected and they need to purchase Spy Wiper and or Spy Deleter ASAP. Wallace creates the problem and then participates in the revenue generated from the sales.
2. Wallace needs traffic to his sites and or Wallace needs methods to deliver his Spyware to surfers computers. He “partners” with OptinTrade and Lansky who acts as a “front man” and this “ad broker” buys banner impressions with major Netowrks and all of the Companies I listed above. Both Lansky and Wallace participate in the revenue stream as these companies (listed above) pay money to other parties for delivering their Spyware/Advertisement. The FTC obtained internal documents to trace the flow of money in this relationship and slams Lansky with a default Judgement for 227K.
Source: http://atlanta.creativeloafing.com/2004-08-12/cover.html
Unfinished Business
This action was amended by the FTC to include an additional Spyware player named John Robert Martinson who sold Spy Wiper and Spy Deleter. I hope the FTC purses him.

“Dated 4/8/05
Through this action, the FTC is seeking to name as additional defendants Optintrade, Inc.; Jared Lansky; Mailwiper, Inc.; Spy Deleter, Inc.; and John Robert Martinson. The amended complaint alleges that, on behalf of the Seismic defendants, OptinTrade, Inc., and its principal Jared Lansky disseminated Internet pop-up ads causing consumers’ computers to be sent to the Seismic defendants’ Web sites, to have their Web browser home pages changed, and to have spyware and other software installed without authorization. The amended complaint also alleges that Mailwiper, Inc.; Spy Deleter, Inc.; and John Robert Martinson retained the Seismic defendants to unfairly market the purported anti-spyware products, Spy Wiper and Spy Deleter.”

Source: http://www.ftc.gov/opa/2005/04/fyi0526.htm
The FTC currently has a seperate action against another Spyware Criminal:

“In a second case, the FTC charged that Odysseus Marketing and its principal, Walter Rines, lured consumers to their Web site by advertising bogus software they claimed would allow consumers to engage in anonymous peer-to-peer file sharing. According to the FTC, the spyware and other software bundled with it hijacked search engines and reformatted search engine results, placing Rines’ clients first.”

Source: http://www.ftc.gov/opa/2006/05/seismic.htm
What really needs to happen. Send them ALL to JAIL!
Many of these Spyware players belong in Federal Prison for 10 to 20 years. Unfortunately, none of the legal procedures and cast of characters which I have documented involve criminal/jail time charges. They are all civil actions. We need laws and or aggressive legal actions to accomplish this. To support my thoughts please consider this:
1. A criminal brakes into your house and steals millions of dollars or even lesser amounts then this criminal would go to jail after “due process”. This happens all the time. If this same criminal stole millions from a Bank via either a break in and or a white collar crime, they would certainly find themselves in jail after due process. This happens all the time.
2. Exactly who are we kidding. Some of the players I have documented above already have multi-millon dollar money Judgments against them. They simply view this as the cost of doing business since they don’t pay and then they continue to abuse and exploit Internet users with new techniques.
3. This case documents over 4 million dollars. A HUGE amount of moeny changed hands and millions of computers were damaged/infected. I can’t imagine any other type of criminal activity with these dollar amounts and inflicted damage which would NOT involve jail time.