The SEC today announced a settlement with Darrel T. Uselton and his uncle, Jack E. Uselton, defendants in a case that the SEC brought back in 2007 that alleged a massive e-mail spam campaign to drive up the demand for low value stocks the two men owned. The case was noteworthy for at least two reasons.

First, the SEC was initially tipped off to the e-mail spam campaign when an attorney in the SEC's Division of Enforcement actually received one of the emails on their computer in August 2005. The e-mail had the subject line: "Experts are jumping all over this stock …" and seemed to be a scam. Shortly thereafter, the attorney received several more e-mails. The SEC opened an investigation and was able to identify the Useltons as the driving force behind the e-mails, and further determined and alleged that from May 2005 through December 2006, the Useltons generated proceeds of more than $4 million through their scheme that they carried out in the markets for penny stocks.

Second, as discussed in detail in the SEC's 2007 Press Release about the case, the Useltons allegedly employed a particularly nasty-sounding technology that actually hijacked personal computers nationwide to disseminate millions of spam emails through so-called computer "botnets" or "proxy bot networks." These networks are comprised of personal computers that, unbeknownst to their owners, become infected with malicious viruses that forward spam or viruses to other computers on the Internet.

As former SEC Chairman Christopher Cox described it, the use of bots helped "spread investment spam at exponentially higher rates" and turned "victims' computers into zombies." Cox stated in 2007 that it is estimated that "up to one-quarter of all personal computers connected to the Internet are part of a botnet," and that there is a "thriving market in selling lists of compromised computers to hackers and spammers."