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FTC Busts Domain Name Scammers 125

Posted by Soulskill
from the wrists-have-been-slapped dept.
coondoggie writes "The Federal Trade Commission said today it had permanently killed the operations of a group that it said posed as domain name registrars and convinced thousands of US consumers, small businesses and non-profit organizations to pay bogus bills by leading them to believe they would lose their Web site addresses if they didn't. As with so many of these cases however, the defendants get off paying back very little compared to what they took. With today's settlement order, entered against defendants Isaac Benlolo, Kirk Mulveney, Pearl Keslassy, and 1646153 Ontario Inc., includes a suspended judgment of $4,261,876, the total amount of consumer injury caused by the illegal activities. Based on what the FTC called the inability of the settling defendants to pay, they will turn over $10,000 to satisfy the judgment."
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FTC Busts Domain Name Scammers

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  • I used to get mail from these jerks all the time.
    It must have profitable as they spent a fortune in postage.

    • Re: (Score:2, Interesting)

      by oldspewey (1303305)

      I also used to receive postal mail from these guys, but haven't seen anything recently

      On a somewhat related note, I have noticed that the fake lottery scammers and 419'ers seem to have migrated from email to actual physical postal mail. It's not a lot (over the last year I've received maybe 4-5 of them) but it makes me wonder whether these scams are actually lucrative enough to cover the cost of postage (often from overseas). The other possibility is that these scammers have figured out a way to hack the po

      • by tlhIngan (30335)

        On a somewhat related note, I have noticed that the fake lottery scammers and 419'ers seem to have migrated from email to actual physical postal mail. It's not a lot (over the last year I've received maybe 4-5 of them) but it makes me wonder whether these scams are actually lucrative enough to cover the cost of postage (often from overseas). The other possibility is that these scammers have figured out a way to hack the postage metering system so they're sending their mail for free (minus the cost of paper)

    • DROA (Score:5, Informative)

      by vlm (69642) on Monday August 09, 2010 @05:18PM (#33196030)

      That would be DROA

      http://en.wikipedia.org/wiki/Domain_Registry_of_America [wikipedia.org]

      I got their invoices all the time. Good for a laugh at least. I'm sure they scammed thousands.

    • I received a couple of letters from these people for www.tabaxipixiebob.com [tabaxipixiebob.com] last year. I dismissed them out of hand simply because I am sufficiently happy with the current host-and-registrar. However, if I had been interested in making I change, I would have considered these people. Fortunately, I would have done research about the company first, which is what would have saved me from a very expensive mistake.
      Granted, 1and1 isn't a great host (and I've got my eye on a new host/registrar), but there hav
    • by PopeRatzo (965947) *

      It must have profitable as they spent a fortune in postage.

      They caused over $4million in damages and had to pay a fine of $10k.

      It might be profitable, yes.

  • by ZipK (1051658) on Monday August 09, 2010 @05:12PM (#33195910)
    If they can't pay the full judgment, why not have them work off the bill in debtor's prison?
    • Refresh my memory. How is debtor's prison different from pound-me-in-the-ass prison?
      • In the latter one, the taxpayers fund your stay. In the former, you have to fund your stay WHILE paying back what you owe. They were outlawed because people would never be able to get out of debtor's prison.

        • by ZipK (1051658)
          You can tell your family where you hid the money and they can take a really nice vacation instead of paying to free you.
        • by Renraku (518261)

          What do you mean 'taxpayers fund your stay'?

          You still have to pay the prison that kept you back for the time you spent in it.

          • meaning, your tax dollars are spent on feeding, clothing, and giving immediate medical care to incarcerated felons.

      • by lennier1 (264730)

        They have a nicer letterhead?

    • Re: (Score:3, Informative)

      by jonadab (583620)
      Debtor's prison does not exist in the US, for historical reasons. (Basically, at the time our constitution was written debtor's prison was being, or had recently been, significantly abused in Europe as a political tool to squelch opposition. Our founding fathers did Not Want That Happening Here, so they proscribed debtor's prison entirely.)

      The provision that prevents our congressmen from being stopped and prosecuted if they are on their way to a session of congress exists for similar reasons. Also the th
      • by Raenex (947668)

        Debtor's prison does not exist in the US

        Did you know that if you bounce a check at the casinos in Vegas they'll throw you in prison if you can't pay your debts?

        • by T-Bone-T (1048702)

          Bouncing a check isn't the same thing. That is more like lying about how much money you have.

        • by jonadab (583620)
          A lot of rules are different in Vegas. Gambling, for instance, is legal there even if the games are run by private enterprise (whereas, gambling is almost universally illegal in the United States except when run by a government or non-profit organization). Basically, the local law enforcement is effectively at least half way under the thumb of the casinos.

          However, "they'll throw you in prison IF you can't pay your debts" does not really describe debtor's prison. Debtor's prison is when they'll throw you
    • by pavon (30274)

      The problem with debtor's prison is that people can fall into debt for all sorts of reasons ranging from maliciousness to recklessness to just plain bad luck. Do you really think that someone who can't pay their bills because a hurricane destroyed their house and their place of employment should be put in prison?

      What you are looking for is thieves' prison and last time I checked we already have those. However, AFAIK [ftc.gov], the FTC doesn't have the authority to prosecute criminal cases, just levy civil fines. Inst

  • 1646153 Ontario Inc.

    I wonder if they trademarked that number? Epic spammer business name is epic.

    • Re:Blame Canada (Score:5, Informative)

      by greed (112493) on Monday August 09, 2010 @05:50PM (#33196656)

      Not to detract from the humour.... If you incorporate without a name, you get to be known by the serial number associated with your incorporation.

      There was a similar scam in Canada, with some registrar sending out renewal notices to other registrar's customers. I forwarded one to the RCMP fraud division, and they said it wasn't technically illegal so they wouldn't do anything.

      • by cosm (1072588)
        +1 Informative
      • Re:Blame Canada (Score:5, Interesting)

        by Monkeedude1212 (1560403) on Monday August 09, 2010 @06:53PM (#33197570) Journal

        I forwarded one to the RCMP fraud division, and they said it wasn't technically illegal so they wouldn't do anything.

        You know, that's the RCMP's answer to everything. I have sent them so many tips on how to catch these guys - from the phone numbers they call from, the email servers they use, the post box they send from, and even how I as a regular citizen was capable of tracking all that info to at least a common city - if not an address that they could raid.

        However, there is nothing I can do, and the police all claim that this kind of cyber crime isn't in their jurisdiction, so no one does a damn thing about it. I had someone sending me emails saying that they were going to sell me medical records for a low cheap rate - which already sounded sketchy enough as is but I decided to follow it through on the premise that if this was someone illegally selling that kind of stuff I could aid in his capture.

        However, the RCMP basically told me that until they actually sell it - it wasn't enough for them to go on, and that following through would make me a criminal for purchasing it, and that they weren't capable of following the lead. That was the day I lost my faith in the legal system.

  • FTC outlines new business model.

    Hey guys, I'm the cyber police and you've all been backtraced. Hand me your sloshdat credentials or your consequences will be permanently altered.

    • Re: (Score:2, Funny)

      by Anonymous Coward
      > Hand me your sloshdat credentials or your consequences will be permanently altered.

      In order to prevent anyone *else* from seeing my sloshdat credentials except for you, I have transferred them directly to your computer and hidden them in a special file called /dev/random. They are preceded by the phrase "sloshdat credentials", so you can grep for them easily. HTH.HAND.
  • Not debtor's prison (Score:4, Interesting)

    by NEDHead (1651195) on Monday August 09, 2010 @05:19PM (#33196064)
    They should be pounding rocks with a sledge hammer for 20 years instead. If the penalties for screwing with people's lives through these kinds of scams, identity theft, and all the botnet thievery were serious and enforced, maybe there would be less of it. In a time when our lives are increasingly open - and privacy a joke - then righteous behavior becomes a (inter) national necessity. Otherwise we have anarchy.
    • It wasn't that long ago that stealing a man's horse was a hanging offense, and in most circumstances you were given wide latitude to use deadly force to defend yourself against theft, precisely because loss of resources like a horse could imperil a person's life.

      Our era of bounty and consequence-free living is nearly over, though, so you can rest easy, it won't be long before we will be living in an era where these guys will get what they have coming to them.

      • Re: (Score:3, Insightful)

        by Red Flayer (890720)
        Interesting. I was just thinking that the reason we're living in such an impolite society is because the penalty for cold-cocking someone for being rude is so huge.

        You're saying that since we have such comfy lives, we don't punish people for taking some of our stuff, since it's easy to replace.

        I get the feeling that you're referring to some kind of resource scarce apocalyptic scenario where Thog hits Grog over the head with a relic broken-off parking meter[1] because Grog tried to take Thog's supper?

        I
        • Re: (Score:3, Interesting)

          by swb (14022)

          The rules regarding theft of property and the use of lethal force (which in today's language is nearly any force, not just the use of firearms or dangerous weapons) have really changed radically since the mid-1960s.

          Prior to the mid-1960s, the law appeared fairly soundly on the side of theft victims. I trolled the back issue database of the NRA's "Armed Citizen" column and was surprised to see a ton of stories from about 1965 and earlier where theft victims shot thieves *in the back* as they ran or even *dr

          • Prior to the mid-1960s, the law appeared fairly soundly on the side of theft victims. I trolled the back issue database of the NRA's "Armed Citizen" column and was surprised to see a ton of stories from about 1965 and earlier where theft victims shot thieves *in the back* as they ran or even *drove* away, often killing them and getting absolutely no resistance from the police.

            I think it's a little far-fetched to say the law was soundly on the side of theft victims. I think the reality is that the law, as w

            • by sjames (1099)

              More like a thorough drubbing for discretion and judgment. Zero tolerance is another symptom.

        • I don't know if the rule of law will disintegrate so quickly... but your ideas intrigue me and I would like to subscribe to your newsletter.

          Depends on the level of 'resource scarce apocalyptic scenario' you're talking about. Read the book One Second After (EMP takes out all electronics in North America and elsewhere).
          Small towns - a week, followed by an uneasy local truce. Urban areas - 1-2 days.
          • I'll check my library to see if they have it/can get it through interlibrary loan.

            Sounds fascinating.
          • Re: (Score:2, Interesting)

            by Jedi Alec (258881)

            I was in Enschede when the fireworks storage exploded in 2000.

            Aside from the really bad devastation to the surrounding area, the blast also broke pretty much every window in the inner city. Within less than 5 minutes people were looting from the stores that had thus been exposed.

            The layer of veneer between our civilization and the return to good old "my club is bigger than yours so hand over everything you have" barbarism is very, very thin indeed.

        • I was just thinking that the reason we're living in such an impolite society is because the penalty for cold-cocking someone for being rude is so huge.

          It's that way in Hawaii. and many Polynesian islands: if you're rude to someone they might knock you out and no one will think anything of it. People are a lot more polite to each other, too, and a lot more obviously friendly. A lot of times when people talk about the 'aloha spirit' I think what they're really seeing is the, "don't hit me brah" spirit.

          On the other hand it is nice to walk to the street and not have to worry if someone's going to hit you in the face or not. You take your trade-offs: eithe

      • by ultranova (717540)

        Our era of bounty and consequence-free living is nearly over, though, so you can rest easy, it won't be long before we will be living in an era where these guys will get what they have coming to them.

        If history is any guide, when going gets tough, robber barons live like nobility and the rest of us live like serfs. So no, these guys won't get what they have coming to them, because the less wealth Joe Average has, the more guards, lawyers, judges, policemen and political influence Joe Robbers ill-gotten loo

    • Re: (Score:3, Informative)

      by phantomfive (622387)
      IANAL but it looks to me like the summary is misleading: they only settled with three of the defendants, and the other one had to pay the full $4,261,876. The article doesn't say why they settled with three of the people, maybe they were just secretaries and didn't know the full extent of what was going on. Here is the relevant quote:

      The settlement order, entered against defendants Isaac Benlolo, Kirk Mulveney, Pearl Keslassy, and 1646153 Ontario Inc., includes a suspended judgment of $4,261,876, the total amount of consumer injury caused by the illegal activities. Based on the inability of the settling defendants to pay, they will turn over $10,000 to satisfy the judgment. The default judgment order was entered against defendant Steven E. Dale and includes a judgment in the amount of $4,261,876.

  • by sirwired (27582) on Monday August 09, 2010 @05:21PM (#33196120)

    Honestly, I don't know why the FTC even bothers. If these clowns aren't criminally prosecuted, what exactly is the point? $10k, and an order to Go Forth and Sin No More is just a waste of time.

    And the "Go Forth" orders are routinely ignored... I think Kevin Trudeau has been slapped by the FTC for infomercial scams no less than three times, and he still doesn't give a $hit.

    SirWired

    • by Anonymous Coward on Monday August 09, 2010 @05:33PM (#33196340)

      Riddle me this: Why is it that these guys get their judgement whittled to $10,000 for doing an active crime with victims, while some guy who left a directory full of songs on LimeWire gets stuck with a multi-million dollar amount that the only way it can be discharged is an immediate bankruptcy... and most likely a judge would turn that down?

      Yes, IP violations are crimes, but scamming people out of money is a far greater crime than downloading the latest remix of "Oops I Did It Again."

      I wish the FTC would have gone whole hog on these people, wage garnishment, tax return attached, property seized, etc. so the fine is paid.

      • by Pharmboy (216950) on Monday August 09, 2010 @05:49PM (#33196636) Journal

        The obvious lesson here is that if you *MUST* either download a song, or scam thousands of businesses out of hundreds of dollars each, the federal government wants you to NOT download the song. Why else would the punishment/fines be higher?

        • by gbjbaanb (229885)

          the obvious lesson here is: if you must download a song, scam thousands of business out of hundreds of dollar each, buy all the songs there are, and save just enough for the fine the courts will slap on you.

          obviously the government wants this - must be something to do with keeping money sloshing around boosting the economy or something, so go knock yourselves out. I believe the Domain Registrars Association of America business is still available.

      • Re: (Score:3, Informative)

        by h00manist (800926)

        Why is it that these guys get their judgement whittled to $10,000 for doing an active crime with victims, while some guy who left a directory full of songs on LimeWire gets stuck with a multi-million dollar

        Money buys good lawyers. Good lawyers can make a person innocent or incriminated on demand. Legal battles are like real battles in one respect though -- the result isn't predictable and guaranteed just by using overwhelming force. A low-power, underfinanced, disadvantaged opponent can sometimes be very resourceful. Vietnam won, in the end. The music industry isn't winning, in spite of lawsuits. Microsoft is still winning, though, nobody's managed to circle the wagons quite efficiently yet.

      • The greater crime than both is seeking out "Oops I did it again". Playing it in public should be a capital offense.
      • Yes, IP violations are crimes

        Really? I thought they were just a civil matter, not a criminal one.

    • by 3seas (184403)

      the 10k is to pay for the legal process. its call payola

    • Note that the operation was shut down and the people involved are likely going to have problems starting up a new scam now that they've got this record. And now that one group of people has been successfully stopped, it should at least push other thieves to think of a slightly different way to screw people over. I wrote a complaint to the FTC about these dicks a year ago when I got my first letter from ILS. I got angry every time I saw a letter from them. They didn't get what they deserved, but this FTC
      • Note that the operation was shut down and the people involved are likely going to have problems starting up a new scam now that they've got this record.

        Bullshit.

        These clowns *ALREADY* have a record of scamming, and it hasn't stopped them yet. There is no realistic reason to assume that a 10k fine means anything at all to them.

      • by Raenex (947668)

        You call this progress? I call it a big fat advertisement for would-be fraudsters. "Make millions! Pay $10k and do no jail time years later!"

      • WHAT record? WHAT problems? The only record there was ever a problem is this FTC press release, and attached orders. All the scammers have to do is pay their 10k, and then set up shop again using different names.

        And do you know what happens when they get caught again? (The FTC has a lot of repeat offenders.) They'll get another, virtually identical court order. The second one will not only "enjoin" them from violating the law, but will also order them out of the business entirely. If the FTC is feeli

    • by alanshot (541117)

      sounds more like a shakedown than a punishment.

      a TRUE punishment would be "According to our investigation you made exactly 4 million dollars pulling off this scam of billing people fraudulently. As punishment you owe us $4,010,000 in penalties, PLUS JAIL TIME."

      "Attention consumers: Anyone who can produce proof they paid these yahoos please come forth with your cancelled checks, etc for a full refund."

      now THAT would be a punishment.

      Just for the record, that $10k/4M ratio isnt even a slap on the hand

  • How much of the $4,261,876 they scammed people out of was used to cover the cost of postage for these bogus bills? It's trivially easy to get addresses out of the whois database, but couldn't you potentially actually lose money on this scam?
  • Wrong business (Score:4, Insightful)

    by uffe_nordholm (1187961) on Monday August 09, 2010 @05:43PM (#33196516)
    Let's see if I get this right: the guys make a little over 4M dollars, get fined 10K dollars and can "keep" the rest because they have already spent it? If this is true, I'm in the wrong business!
    • Re: (Score:3, Funny)

      by Obfuscant (592200)
      If this is true, I'm in the wrong business!

      It's TRUE! You're in the wrong business!

      Send $1000 to the address at the end of this posting and I'll teach you what business you SHOULD be in if you want to MAKE MILLIONS!

  • Lately the talking heads have made a lot of news about growing discontent with the U.S. federal government. To some extent I've written that off as muck-raking by Fox, CNN, Republicans, etc.

    But I've got to say, it really does seem like the government is failing at very basic issues regarding law enforcement, especially with letting white-collar criminals get away with pretty much anything.

    Are things actually getting worse in that regard, or has the problem existed to this same degree for many decades now?

    • Amusingly, most white-collar criminals are actually republicans.
      • Amusingly, most white-collar criminals are actually republicans.

        Amusingly, most white-collar criminals are actually democrats but spread the myth that such crooks are mostly republicans. B-)

        • Re: (Score:3, Insightful)

          by Xaedalus (1192463)

          Amusingly, most white-collar criminals are actually republicans.

          Amusingly, most white-collar criminals are actually democrats but spread the myth that such crooks are mostly republicans. B-)

          Amusingly, most white-collar criminals are actually indifferent to political party and will claim whatever political affiliation they think will get them the maximum amount of leverage/sympathy/etc. possible. :-P

    • by h00manist (800926)

      problem existed to this same degree for many decades now?

      Some things have become worse, some things have become better, usually over a long period, quick changes are rather rare. I believe the mistake of the current government is that people were led to expect some kind of a massive change, although it was never promised or said in any way. But now they are wanting it. In any case, people don't really know what they want, and the politicians don't either, at least not in terms of a political and social proposal. Everyone wants money, and cares little about any

    • by T Murphy (1054674)
      The FBI is mostly in charge of putting white collar criminals behind bars, but since 9/11 upper management wants more focus on national security and terrorism, so FBI agents have less and less time for going after real criminals. Every once in a while there is a news article about the FBI foiling some terrorist plot, so their efforts may be successful, but I still think the FBI may have gone overboard pulling people off of white collar and corruption cases.
  • I initially read that as "The Federal Trade Commission said today it had permanently killed the operators of a group ..."
  • in the U.S. that you must first incorporate and go after the peoples money. Never commit a crime against the government or against a corporation unless you want the full weight of the law brought down on your head.

    • by h00manist (800926)

      in the U.S. that you must first incorporate and go after the peoples money. Never commit a crime against the government or against a corporation unless you want the full weight of the law brought down on your head.

      Yeah, that's usually the case. These guys did most likely send domain invoices to rich people too though.

  • It should be mandatory that the names and addresses of all guilty-found parties be published publicly. A little vigilante justice goes a long way.
  • by AsmordeanX (615669) on Monday August 09, 2010 @07:09PM (#33197734)

    Our domain was up for renewal in September. In July we get a letter from Domain Registry of Canada (Domain Registry of America is their US version). Looking like a normal and official bill, the boss paid it by VISA despite it being nearly 10x what a domain registrar should be charging. The next day I'm going through the paperwork and find the DROC invoice. I'm baffled because they are not our domain registrar. First thing I do is call our real company and confirm that the domain is still locked. I also renewed at the time just to make sure. I then called DROC and after a few minutes on hold I was assured that the charge was cancelled. I contacted VISA the next day and was informed that the charge had been cancelled. They seemed to be pretty routine and mechanical about cancelling people though I imagine a few people never realized they had been suckered.

    • by JKConsult (598845)
      Yeah, if they're not out to run blatant fraud and ensure that they will end up very sought-after criminals, they're going to calmly and professionally refund money when a complaint reaches them.
  • by b4upoo (166390) on Monday August 09, 2010 @07:51PM (#33198202)

    Apparently the courts and the FTC actually seek to encourage crime. How is it with the overwhelming number of useless laws on the books that we do not have a single law that states that the wrong doer must always pay back more than was taken?

  • I got an "Official Notice" from them once for my domain. They wanted me to renew my registration for something insane, like $100-200, or as the summary states, "I'd lose my domain". I called BS, especially since they were far from my regular registrar, and shredded it.

    Good to hear they got what was coming.
  • "As with so many of these cases however, the defendants get off paying back very little compared to what they took." Not happy? Then why not have the RIAA prosecute them?

If you're not careful, you're going to catch something.

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