Two Firms Settle Claims of Spyware

The payment from Enternet Media Inc. and Conspy & Co. is the second-biggest spyware settlement collected by the agency. It represents money that the companies earned from advertising revenue generated by their planted software.

"This spyware operation was one of the most pervasive and widespread we have encountered," said Mona Spivack, lead attorney in the FTC bureau of consumer protection. "These guys were key players in the spyware arena."

The companies were run by brothers Nima Hakimi, 21, and Baback Hakimi, 24, both of Woodland Hills. They live with their mother, Lida Rohbani, who was also named in the settlement, which was announced Wednesday.

The brothers didn't admit guilt in the settlement. In November, a federal judge ordered the companies shut down and their assets frozen.

Late last month, the brothers pleaded guilty to three counts of computer crime, were each fined $15,000 and were sentenced to 200 hours of community service and 120 days in jail or 60 days of Caltrans work, a spokesman in the Los Angeles city attorney's office said.

Enternet's spyware worked by causing "installation boxes" to appear on consumers' computer screens, offering free ring tones, song lyrics, security software and the like, Spivack said. When users downloaded these free items, their computers were infected with spyware that tracked their Internet wanderings and inserted banner advertisements and pop-ups that were difficult to remove. Enternet received money from the advertisers whose products were featured, Spivack said.

Enternet also "hijacked" home pages, taking consumers to the websites of featured advertisers rather than where they wanted to go, the FTC said. The defendants deny that allegation.

Anthony Dain, an attorney for the defendants, said that consumers consented to downloading these advertisements by clicking on an agreement that popped up on their screens. He compared his clients' products to services such as those offered by Google Inc. that display ads related to a person's Internet searches.

"When you're on the Internet, it is like driving on a highway -- it's not something that you can do blindly," he said. "If you do receive a toolbar and don't want it, you have to figure out how to uninstall it."