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.
More than 100 million users in 150 countries rely on Sophos as the best protection against complex threats and data loss. Sophos is committed to providing security and data protection solutions that are simple to manage, deploy and use and that deliver the industry's lowest total cost of ownership. Sophos offers award-winning encryption, endpoint security, web, email, and network access control solutions backed by SophosLabs - a global network of threat intelligence centers. With more than two decades of experience, Sophos is regarded as a leader in security and data protection by top analyst firms and has received many industry awards.
Sophos is headquartered in Boston, US and Oxford, UK. More information is available at www.sophos.com.