14 DAY TRIAL // After ignoring the requirements of the restraining order served to them, the defendants in the scareware lawsuit brought up by the Federal Trade Commission were threatened by the judge with arrest warrants. Only Sam Jain, Kristy Ross, Marc D'Souza, and James Reno, on their behalf, and the Bytehosting Internet Services have responded to the Order to Show Cause served by the judge.
As we previously reported, the FTC has filed a lawsuit against several individuals and companies responsible for running what could easily be called the world's biggest scareware distribution operation. Defendants Inovative Marketing, Inc., of Belize, along with its current and past directors/officers, Daniel Sundin, Sam Jain, Kristy Ross, and Marc D'Souza, and Bytehosting Internet Services, LLC of Ohio, US, along with its owner James Reno, have been served with a temporary restraining order on December 2, and were asked to appear in court by December 12 so as to justify why a preliminary injunction should not be issued. Maurice D'Souza, the father of Marc D'Souza, has also been named a defendant in this case for receiving ill-gotten funds as a result of the operation.
According to the Baltimore Sun, U.S. District Judge Richard D. Bennett commented that "The evidence in this case is quite overwhelming," and since none of the defendants were represented at the hearing, he promised to issue arrest warrants in order to bring them in. "People are hiding out. The time for hiding out will be over as of 4 o'clock next Wednesday," he warned.
Both Reno and Jain motivated that their assets were frozen and that they could not afford the trip to Baltimore. In fact, a local attorney was present at the hearing and tried to explain this issue to the judge, but his presence there was only out of courtesy to another attorney who represented Reno in a different case. The judged replied with "I understand. The defendants are too culpable to come here to the courtroom."
The official issued an order that required all defendants to "Submit to this Court all evidence, if any, demonstrating why they should not be held in contempt of court for failure to comply with the Temporary Restraining Order entered by this Court on December 2, 2008."
At the same time, a preliminary injunction was entered, prohibiting them to use their illegal advertising techniques and domains registered under incomplete or fake informations, or to claim that they advertised on behalf of other parties without a written authorization from them. In addition, all parties providing hosting, domain registration, or payment services for the defendants were obliged to suspend those services without destroying any data or records regarding the operations of the suspects.
Furthermore, all of their assets were frozen and they were obliged to submit complete financial statements. They were also prohibited to destroy any business records or put an end to their being generated, the FTC being entitled to access all of the documents.
Long-time Microsoft MVP, Sandi Hardmeier, who researches malvertizements (malicious advertisements) and other web threats, has been keeping track of the developments in this case. She informed though her blog, after obtaining access to court records, that all defendants except Daniel Sundin and Innovative Marketing responded to the Order to Show Cause and submitted entries of appearance. They also vowed to fully comply with the requirements of the preliminary injunction by December 23, a term that the FTC did not challenge.
Both Sundin and Innovative Marketing are listed as having addresses outside the U.S., in London and Belize, respectively. "It is not surprising that Innovative and Sundin have been silent so far - perhaps they feel immune because of their stated geographical location," Sandi Hardmeier writes.