Feeds

Pro tip: Don't include SEC lawyer in your $4.6m botnet scam

Texas men settle lawsuit over spam scam

High performance access to file storage

When running a botnet to spam millions with emails touting your illegal stock-scalping scheme, it's rarely a good idea to include a US Securities and Exchange Commission lawyer's work address on the mailing list.

Alas, these kinds of oversights sometimes need to be learned the hard way, as allegedly is the case of two Texas men who recently settled a civil lawsuit with the SEC.

Darrel Uselton and his uncle Jack Uselton were charged with fraud by US regulators in 2007 based on claims they orchestrated a series of spam email campaigns using an array of botnets. The Useltons allegedly flooded inboxes across the country with spam emails pitching near-worthless penny stock using baseless price projections and other unfounded claims.

According to the Commission's complaint, the Useltons bilked investors out of more than $4.6m between May 2005 and December 2006 with their fraudulent activities. The SEC said the Useltons typically received unrestricted shares from penny-stock companies for little or no money in return for purported promotional activities.

The SEC pins the swindle as scalping - which it defines as purchasing a security for oneself, recommending that same stock to another (typically posing as a "market specialist"), then immediately selling the stock when the market price goes up following the recommendation. Running a botnet is also a big no-no.

The Useltons' scheme, as the SEC puts it, allegedly began to "unravel" when a Commission enforcement attorney received one of the email messages at work with the subject line "Experts are jumping all over this stock..." Shortly after, the attorney's inbox was filled with them.

Without admitting or denying the SEC's allegations, the Useltons agreed to be permanently banned from selling penny stock in the future. Out of $4.2m seized by authorities, Darrell Uselton will pay more than $2.8m in disgorgement and prejudgement interest. The SEC will also collect a $1m penalty.

Darrel Uselton still faces charges for engaging in organized criminal activity. ®

High performance access to file storage

More from The Register

next story
Parent gabfest Mumsnet hit by SSL bug: My heart bleeds, grins hacker
Natter-board tells middle-class Britain to purée its passwords
Obama allows NSA to exploit 0-days: report
If the spooks say they need it, they get it
Web data BLEEDOUT: Users to feel the pain as Heartbleed bug revealed
Vendors and ISPs have work to do updating firmware - if it's possible to fix this
Samsung Galaxy S5 fingerprint scanner hacked in just 4 DAYS
Sammy's newbie cooked slower than iPhone, also costs more to build
Snowden-inspired crypto-email service Lavaboom launches
German service pays tribute to Lavabit
One year on: diplomatic fail as Chinese APT gangs get back to work
Mandiant says past 12 months shows Beijing won't call off its hackers
Call of Duty 'fragged using OpenSSL's Heartbleed exploit'
So it begins ... or maybe not, says one analyst
NSA denies it knew about and USED Heartbleed encryption flaw for TWO YEARS
Agency forgets it exists to protect communications, not just spy on them
prev story

Whitepapers

Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
HP ArcSight ESM solution helps Finansbank
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.