Wednesday, Dec 10, 2008    Text size: 

The company, which hosts many adult sites on its servers, made the filing last week in the southern district of Texas with about $10 million in debt to pay off, including $826,000 to the IRS. Other creditors awaiting payment include Cogent Communications ($1.6 million); and Level (3) Communications ($799,798).

Texas law firm Okin & Kilmer will represent Alpha Red during its bankruptcy proceedings.

According to the tech blog Work Bench, Alpha Red has been in legal trouble for some time.

"On Sept. 23, Alpha Red CEO James Reed McCreary IV and the company were sued by Washington state Attorney General Robert McKenna, who accused McCreary of selling 'scareware,' software that made Windows XP users falsely believe that their registry had become 'damaged and corrupted,'" wrote tech analyst Rogers Cadenhead.

The Washington state suit against Alpha Red went on to accuse the company of scaring customers into buying unnecessary cleaning software for $39.95 a pop.

"We won't tolerate the use of alarmist warnings or deceptive 'free scans' to trick consumers into buying software to fix a problem that doesn't even exist," McKenna said.

Alpha Red's problems haven't gone unnoticed by the adult industry. Several threads have appeared on prominent message boards like GFY.com and JustBlowMe.com. Online discussion has included many complaints about Alpha Red's "shady" behavior and tolerance for video-sharing adult sites. Online records indicate that Alpha Red hosts video-sharing sites like Tube8.com.

So far, Alpha Red customers haven't been able to get any help. Customers who went straight to the company's headquarters in Houston had no luck.

"The place is locked down and no one answering the phone [or] mails," one anonymous customer wrote online. "Got 10 servers stuck inside and can't do anything."