A Baltimore federal court judge ordered six absent defendants yesterday - including one from Maryland - to shut down Internet businesses that the Federal Trade Commission claims are part of a vast $100 million "scareware" scheme that tricked more than a million people into purchasing useless security software by making them think their computers were under attack.
"The evidence in this case is quite overwhelming," said U.S. District Judge Richard D. Bennett.
He also extended a freeze on the defendants' assets and signed an order requiring them to show why they shouldn't be held in contempt of court for missing the hearing and ignoring an earlier restraining order.
Bennett promised he would issue arrest warrants within five days if this round of orders in the civil case is ignored.
"People are hiding out," he said. "The time for hiding out will be over as of 4 o'clock next Wednesday."
Internet fraud is top concern for the FTC, which fields thousands of complaints each year about activity such as online identity theft and spyware. Fraud leeches millions of dollars from consumers and makes them afraid to go online.
Scareware, a relatively new hazard, is particularly devious because its sole purpose is to intimidate computer users through fear. Microsoft Corp. took a stand against it this fall, joining with the Washington state attorney general to file lawsuits against scareware purveyors.
It's "a considerable threat," FTC attorney Ethan Arenson said in court yesterday. His agency filed the suit last week, though Arenson said the FBI is also looking into the case, which means criminal charges could follow.
Court papers filed by the FTC outline a sophisticated scheme involving executives, past and present, with Belize-based Innovative Marketing Inc., or IMI - which also operates through a "variety of aliases and shell companies," Bennett said - and an Ohio affiliate known as ByteHosting Internet Services.
Neither the companies nor the defendants could be reached for comment, and they weren't officially represented in court yesterday.
Phony problems
The companies allegedly represented themselves falsely as Internet marketers and used legitimate advertising outlets to place malicious advertisements that redirected consumers to the defendants' Web sites.
