Security news
Security news10 July 2007
Texan two accused of zombie computer stock scam SEC lawyer said to have received one of the pump-and-dump emails
Darrel Uselton and his uncle are alleged to have orchestrated a pump-and-dump stock campaign.
IT security and control firm Sophos has welcomed news that two men have been charged by the Texas Attorney General's Office 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, with orchestrating a series of spam email campaigns designed to con unwary investors and to manipulate the stock market. The men are alleged 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 $4.6 million. The investigation began after an SEC lawyer is said to have received one of the 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."
Media reports claim that both men have been in trouble with the authorities before in connection with pump-and-dump stock frauds.
Pump and dump stock campaigns work by spammers purchasing stock at a cheap price and then artificially inflating its price by encouraging others to purchase more (often by spamming "good news" about the company to others). The spammers then sell off their stock at a profit. Sophos experts report that pump-and-dump stock campaigns account for approximately 25% of all spam.
Sophos experts note the action against Darrel and Jack Uselton 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, hackers and viruses.
About Sophos
Sophos enables enterprises all over the world to secure and control their IT infrastructure. Sophos's network access control, endpoint, web and email solutions simplify security to provide integrated defenses against malware, spyware, intrusions, unwanted applications, spam, policy abuse, data leakage and compliance drift. With over 20 years of experience, Sophos protects over 100 million users in nearly 150 countries with its reliably engineered security solutions and services. Recognized for its high level of customer satisfaction and powerful yet easy-to-use solutions, Sophos has received many industry awards, as well as positive reviews and certifications.
Sophos is headquartered in Boston, US and Oxford, UK. More information is available at www.sophos.com
