Spyware Sucks
“There is no magic fairy dust protecting Macs" – Dai Zovi, author of “The Mac Hacker’s Handbook"

Developments in the FTC v Innovative Marketing et al lawsuit…

February 16th 2009 in Uncategorized

image Filed – Consent motion to withdraw motion to dismiss for lack of personal jurisdiction of defendants James Reno and ByteHosting Internet Services, LLC – 12 February 2009

By agreement of the Plaintiff the Federal Trade Commission and Defendants James Reno and ByteHosting Internet Services, LLC, and in anticipation of resolution of the claims against said Defendants in the near future, which is under discussion, the parties hereby move to withdraw the Motion to Dismiss for Lack of Personal Jurisdiction of Defendants James Reno and ByteHosting Internet Services, LLC (Doc. 50), without waiving any defences.

Filed – Plaintiff’s consolidated opposition to the motions for a temporary stay filed by defendants Sam Jain and Kristy Ross – 12 February 2009

Defendants Sam Jain and Kristy Ross are making a mockery of this proceeding.  After evading service of the complaint, ignoring this Court’s order to appear at the preliminary injunction hearing, and wilfully disobeying the mandates of both the Temporary Restraining Order and Preliminary Injunction issued by this Court, defendants Jain and Ross now ask this Court for extraordinary relief: an indefinite stay of proceedings.  In making this request, defendants neglect to mention that Jain is the subject of a recently-issued bench warrant, which was executed after Jain absconded from an unrelated criminal proceeding currently pending in California.

The FTC is informed by the Assistant United States Attorney prosecuting the case that as of the date of this Opposition, Jain remains on the lam.

In a brief footnote to each of their briefs, Jain and Ross ask this Court to modify the asset freeze currently in place and allow them to pay their criminal defense counsel with the proceeds of their unlawful enterprise(2).  Despite the defendants’ assertions to the contrary, they have no right to spend ill-gotten gains on attorneys’ fees, much less retain counsel of their choice with unlawfully-acquired assets.  Furthermore, the defendants’ request to release frozen funds cannot be justified in this case, where the defendants have provided no evidence to demonstrate a need for these funds, and the funds available for consumer redress are dwarfed by the consumer injury caused by the defendants.

The Defendants have no right to use the proceeds of their fraud to fund the best defense money can buy.  Moreover, the defendants’ refusal to account for their assets, or offer any proof that they lack access to non-frozen funds, is fatal to their applications to modify the asset freeze imposed by this Court.  As a result, this Court should deny the defendants’ request to modify the asset freeze.

(2) It is unclear whether Ross’s motion requests frozen funds for her civil defense counsel as well.  The footnote request merely says that she ‘joins in Mr Jain’s request to modify the asset freeze to permit her to pay for defense counsel.’”

It is worth noting that Maurice D’Souza, Innovative Marketing itself and Daniel Sundin are still unrepresented in these proceedings (Marc D’Souza, Sam Jain, Kristy Ross and Daniel Sundin are all officers of Innovative Marketing, but it does not mean that Innovative is represented simply because some of its officers have responded to the suit).  I was hoping that the latest documents would reveal whether or not Innovative Marketing have paid to the Court part or all of the penalty applied to it ($8,000 per day) but, alas, there is no mention.


It will be very interesting to see what resolution will be agreed between the FTC and James Reno.  Let’s not forget that Reno had got into trouble before because of his association with Innovative Marketing and Sam Jain:

Reno claimed in his now-deleted missive, which is riddled with spelling mistakes, that “11 years of {his} hard work and 11 years of {his} life, as well as, {ByteHosting’s} history have been ruined in 30-seconds by a single court action”.  No James – everything that has happened and will happen is your own fault.  You chose to do business with Jain and Innovative et al and you chose to continue the business relationship even after the Symantec lawsuit.

The fact that Reno continued to do business with Jain and Innovative et al despite the successful Symantec lawsuit leads me to the conclusion that the FTC should throw the book at Reno, and not let him get off lightly.    And, I certainly hope that any settlement will not be “confidential”.  It seems that no lessons were learned by Reno in 2004 when he was embroiled in the Symantec lawsuit, and I do not feel at all confident that Reno will learn the necessary lessons this time, especially when I consider the statement that he posted on ByteHosting’s home page.  If Reno believes that it is/was ok to supply even part of the infrastructure supporting such a massive fraud even after becoming embroiled in the Symantec lawsuit (infrastructure being technical support and a call center for the victims of fraudware call), and if the Symantec lawsuit was not enough to make him stop supplying such infrastructure – then I fear that he will simply do it again if asked.

The FTC lawsuit is a big fall from grace for Reno.  Not many people know that back in 2007, Bytehosting was named “small business employer of the year” by the Clermont County’s Business Advisory Council (perhaps the Council know about the Symantec lawsuit from a few years before.  If they did check into ByteHosting’s background did they ask hard questions like “is Jain/Innovative still a customer of Bytehosting?”).  I also found it interesting to read that Bytehosting was originally started as a school project.


image By the way, I suspect the “AR” that Reno refers to in his web site missive is Alpha Red – a hosting provider with two datacenters in Houston.  The CEO of Alpha Red, James Reed McCreary IV, and the company itself, were sued by Washington state Attorney General Robert McKenna in September 2008.  The lawsuit claimed that McCreary/Alpha Red were selling scareware that tricked Windows XP users into believing that their registry had become "damaged and corrupted".  Alpha Red filed for Chapter 11 Bankruptcy late last year.

3 comments to...
“Developments in the FTC v Innovative Marketing et al lawsuit…”


Cheers for the heads up Sandi 🙂

J Davis

Hopefully there will be some prison time involved. I am tired of thieves like this being let off with probation. If he is convicted I plan to file a lawsuit as one of his victims. Winantivirus did a ‘drive by’ install on my computer. At no time did I click on any dialog box. The rogue program installed itself against my wishes. Off with their heads!!

j davis

This scam goes way beyond ‘scareware.’ I was infected with winantivirus via a drive by download. It ruined my computer and I had to spend a considerable amount of money to have my hard drive cleaned. I lost several essential work files and was without a computer for a week. Considering I make my living on the internet it was a severe inconvenience. My pc slowed to a crawl within 24 hours and the rogue program blocked access to legitimate anti virus sites not to mention the endless scans and warnings. The tech who fixed my pc said he had never seen such a malicious program! All involved in this deserve serious jail time in a maximum security facility. Possibly ‘Bubba’ and ‘Tyrone’ could introduce Sam and James to the nuances of prison life!

The latest “Rollup for ActiveX Killbits for Windows” (KB960715) is causing problems for some third party applications that are dependent on the disabled controls. One application that has problems, “Office Tools Professional”, is advising its users to not only uninstall the Killbit patch (thereby restoring the broken functionality), but also to “turn off automatic […]

Previous Entry

Hat tip to Malekal Deja vu – guess what domains are involved in the jeuxvideo.com incident – adclickmate.net and smartadserver.net. IMPORTANT NOTE: PLEASE DO NOT CONFUSE THE MALICIOUS DOMAIN SMARTADSERVER.NET WITH THE LEGITIMATE SMARTADSERVER.COM. Adopstools results – positive: http://www.adopstools.com/index.asp?page=quicklink&id=GOS8G5jCpshG1DtK   Malicious code is hidden within […]

Next Entry