Contempt Charges Levied Against Notorious Spyware Marketers

Rhett Pardon
WASHINGTON — Two spyware marketers and a company were ordered by a federal judge Thursday to forfeit $550,000 for disobeying a previous court order that barred them from their business practices.

“Spamford” Sanford Wallace, Walter Rines and Rines’ business, Online Turbo Merchant, Inc., were ordered to pay after U.S. attorneys representing the Federal Trade Commission told a U.S. district judge that Rines violated a provision in a 2006 settlement order that required him to post a $500,000 performance bond before downloading or installing computer code or other content that causes the display of ads or collects personal information.

The court granted the FTC’s request to hold Rines’ business partner Wallace in contempt because he had notice of the order and helped Rines collect personal information online without users’ prior consent, in violation of the order.

In its original 2005 complaint, the FTC charged Odysseus Marketing and owner Rines with luring consumers to their MySpace websites by offering free software, including a program that supposedly allowed them to engage in anonymous peer-to-peer file sharing.

The bogus software was bundled with spyware that intercepted and replaced search results and barraged consumers’ computers with popup ads, according to the FTC. The agency charged that the defendants subjected MySpace users to phishing, pagejacking and mousetrapping scams.

In May 2008, MySpace won a $234 million judgment against Wallace and Rines.

And Wallace, earlier this year, was hit with another FTC complaint. Regulators said that he and others were responsible for phishing attacks and CAN-SPAM violations by posting spam messages on Facebook members' walls.

Just last month, Wallace, who has promoted himself as the “original Spam King,” filed Chapter 7 bankruptcy.