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News

Texan pump and dump spammers charged with money laundering.

Sophos : 10 July, 2007  (Technical Article)
Spamming pair from Texas face money laundering conviction after inflating penny stock prices through spam campaign.
IT security and control firm Sophos has welcomed news that two men have been charged by the Texas Attorney General's Office (OAG) with organised criminal activity and money laundering. The case follows an investigation by the Securities and Exchange Commission (SEC) into the illegal use of pump-and-dump spam emails 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, US, with orchestrating a series of spam email 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 these emails and ultimately to defraud unsuspecting computer users out of an estimated USD 4.6 million. The investigation began after a SEC lawyer received one of the Uselton's fraudulent emails at work.

'Unfortunately for the SEC, pump-and-dump spam campaigns don't 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 these illegal spam messages 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 be their downfall.'

Sophos experts note this action by the SEC is part of a larger anti-spam initiative that aims to crack down on the use of stock spam campaigns. In March this year, the Commission suspended trading of 35 companies which had been the subject of pump-and-dump emails.

According to Sophos, the public must also learn to exercise caution when deciding which companies to invest in and must learn to never trust an anonymous internet tipoff. Sophos recommends that companies protect themselves with a consolidated solution which can defend against the threats of spam, spyware and viruses.


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