Man charged with hiring pump-and-dump spam botnet

IDG News Service - A Texas man was charged Monday by the U.S. Department of Justice with helping to inflate the prices of penny stock companies by promoting them with a spam-spewing botnet of hacked computers.

Christopher Rad, of Cedar Park, Texas, faces a maximum sentence of five years in prison and a $250,000 fine on charges that he acted as a middleman between unscrupulous stock promoters and Russian hackers, who operated the botnet.

Rad allegedly worked with another man, James Bragg, to make the companies' stock-prices move in a scheme that ran between November 2007 and February 2009. In October 2010, Bragg pleaded guilty to his role in the scheme. No date has been set for his sentencing.

Prosecutors say that the two men promoted penny stocks for now-defunct companies such as RSUV (Remote Surveillance Technologies) and VSHE ( VShield Software). They did this not only by using the botnet to spam would-be investors, but also by having their Russian hackers take over brokerage accounts and purchase the stocks they were pumping, so it would look like the companies had market momentum.

A Russian hacker identified only as "B.T." and another alleged botnet-provider called "D.S." are also named in court filings. Neither has been arrested.

Robert McMillan covers computer security and general technology breaking news for The IDG News Service. Follow Robert on Twitter at @bobmcmillan. Robert's e-mail address is robert_mcmillan@idg.com