CEO of firm that made $100 million selling 'scareware' was a fugitive

IDG News Service - The CEO of a company accused of making more than $100 million selling harmful "scareware" antivirus products was already a fugitive from U.S. authorities, following his arrest in 2008 on criminal counterfeiting charges.

Shaileshkumar "Sam" Jain is one of three men who were charged by the U.S. Department of Justice on Wednesday for allegedly operating a massive scareware distribution ring.

He's now thought to reside in Ukraine, but arrived there only after giving authorities the slip after being arrested by federal agents in 2008 on charges that his company sold counterfeit versions of Symantec antivirus products. Jain has been considered a fugitive by U.S. authorities since early 2009, when he skipped out on a $250,000 bond and failed to show up for a Jan. 12 California court appearance.

Jain ran a Ukrainian company called Innovative Marketing, which prosecutors say sold an astounding 1 million copies of fake antivirus products such as WinFixer, Antivirus 2008 and VirusRemover 2008.

According to court filings, Innovative Marketing was one of several companies that Jain operated, first selling counterfeit Symantec products and later moving into the scareware business with products such as WinFixer.

Symantec had already gone after Jain in the courts, winning a $3.1 million judgment against him in 2005.

Three years later, the U.S. Federal Trade Commission filed suit against Jain and the two other men charged Wednesday: Innovative Marketing Chief Technology Officer Bjorn Daniel Sundin and the man whose call center provided technical support for the products, James Reno of Amelia, Ohio.

The FTC won its court case, effectively putting Innovative Marketing and Reno's company, Byte Hosting Internet Services, out of business.

The scareware products that the three men are accused of selling are perhaps the most annoying problems on the Internet, and a constant source of complaints to security companies and federal regulators. They not only fail to protect computers, they often also bog down systems with spyware and malware.

Innovative Marketing allegedly pioneered the trade.

The company would set up fake advertising agencies with names such as BurnAds and NetMediaGroup, and then buy online advertising, pretending that it was for legitimate buyers, prosecutors say. These ads would be programmed to deliver scary-looking pop-up windows straight to users' desktops. The windows would typically look like Windows error messages or security alerts. To dismiss them, the victim would have to pull out a credit card and pay between $30 and $70 to buy Innovative Marketing's dubious products, prosecutors say.

Before the scareware came the fake Symantec software. Prosecutors allege that in 2003 and 2004, Jain operated a handful of Web sites -- Discountbob.com, shopenter.com, winantivirus.com and others -- that all sold fake Symantec products.