US court throws book at zombie bot-masters

The SEC is cracking down on the use of stock spam campaigns

Two men who ran a network of zombie PCs have been charged with organised criminal activity and money laundering.

The case, filed by the Texas Attorney General's Office, followed an investigation by the US Securities and Exchange Commission (SEC) into the illegal use of pump-and-dump spam.

The emails were used to artificially inflate the share prices of at least 13 penny stocks between May 2005 and December 2006.

According to reports, the SEC's complaint charged Darrel Uselton, 40, and his uncle, Jack Usleton, 69, both from Texas, with orchestrating a series of spam campaigns designed to con unwary investors and to manipulate the stock market.

The men are believed to have used a zombie network of hijacked computers across the country to distribute the emails and ultimately to defraud unsuspecting computer users out of an estimated $4.6m.

The investigation began after an SEC lawyer received one of the Uselton's fraudulent emails at work.

"Unfortunately for the SEC, pump-and-dump spam campaigns do not seem likely to go away any time soon," said Graham Cluley, senior technology consultant at Sophos.

"The use of compromised networks of computers to spread illegal spam can result in quick fortunes for the scammers, and can have serious detrimental effects on the stock involved.

"But it seems that these criminals were in such a rush to make their millions that they forget to pay any attention to which email addresses were being spammed and, in the end, this looks likely to have been their downfall."

Cluley explained that the SEC action is part of a larger anti-spam initiative to crack down on the use of stock spam campaigns.

In March this year, the SEC suspended trading of 35 companies which had been the subject of pump-and-dump emails.