June 29, 2007 11:27 AM PDT

Police Blotter: Dark side of 'reputation defending' service

Police Blotter is a weekly News.com report on the intersection of technology and the law.

What: A company claiming to remove defamatory comments about clients from the Internet is found liable for defamation and making death threats.

When: Arizona federal judge rules on June 21.

Outcome: Preliminary injunction granted against DefamationAction.com and ComplaintRemover.com.

What happened, according to court documents:
Companies like DefendMyName.com have recently been treated to a flurry of positive news articles describing how they help paying clients remove embarrassing information from the Internet. The Wall Street Journal refers to "success stories of customers who have buried snippy blog comments" and an ensuing Slashdot thread was titled "companies that clean up bad online reputations."

A court ruling last week, however, revealed the dark side of how some of these companies work.

Arizona resident Ed Magedson is the manager of Xcentric Ventures, which operates RipOffReport.com, a clearinghouse where disgruntled customers can post freely about how much they hate a company, its products, or the people who work for it.

As you might imagine, RipOffReport has become something of a magnet not only for frustrated consumers, but also the reputation-defending services that can charge up to a few hundred dollars a year to try to clean up someone's name (or business name) online.

Magedson said, and a judge eventually agreed, that William Stanley (behind DefamationAction.com and ComplaintRemover.com) sent him a series of threats demanding that uncomplimentary information be deleted from RipOffReport. An example: "This letter is being sent to you in the name of more than 500 businesses. No matter where you go, we will cause you a problem. Your life is in danger until you comply with our demands. This is your last warning."

Stanley also made statements that, unless true, would be libelous including calling RipOffReport's Magedson: "one of the most notorious and prolific extortionists on the Internet today," a "scumbag," a "fugitive," a "wanted criminal...with a track record of fraudulent activity," a "con man," a "career criminal," and an individual who engages in "blackmail schemes." Stanley appears on the Register of Known Spam Operations.

Also, Stanley is alleged to have targeted Xcentric's business partners, including Prolexic, which provides Internet security services, saying it would be sued and harassed unless it ceased doing business with Xcentric. The marketing firm Professional Media Group, used by Xcentric, was also drawn in, and the site PGMIsucks.com created. Some business partners terminated their relationships with Xcentric as a result.

RipOffReport's Magedson replied by saying he had hired the law firm of Jaburg & Wilk and was going to file a lawsuit. In response, Stanley created the Web site JaburgWilkSucks.com that calls the firm "Internet extortionists."

On May 11, U.S. District Judge Neil Wake in Arizona granted a restraining order against Stanley, prohibiting him from sending threats and harassing Xcentric's business partners. The restraining order also applied to the other defendants, Robert Russo (behind DefendMyName.com), the Defamation Action League, and the Internet Defamation League.

It didn't seem to make much of a difference. In a ruling on June 21, Wake said that "Stanley violated the temporary restraining order by knowingly sending spam e-mails that falsely disparaged...Jaburg & Wilk." Wake also noted that the site JaburgWilkSucks.com was created after the initial restraining order was granted.

In an ironic twist for Stanley's company, which purports to remove libelous statements from the Internet, Wake ruled: "Stanley committed the tort of libel by publishing online false statements that the attorneys at Jaburg & Wilk are 'partners in slime' and that Speth is an 'unethical attorney,' an 'Internet extortionist,' and a "partner in the ripoff report extortion scam.' The statements were published in at least reckless disregard of their falsity."

For good measure, Wake also ruled that Stanley sent unlawful threats to Magedson, unlawfully interfered with Xcentric's business relationships, invaded Magedson's privacy rights by placing him in a false light, and committed copyright infringement as well.

Excerpts from what Wake ruled was an illegally threatening e-mail message from Stanley in February 2007:
This letter is being sent to you in the name of more than 500 businesses. No matter where you go, we will cause you a problem. Your life is in danger until you comply with our demands. This is your last warning.

Your neighbors already know about your criminal dealings and how you are making many people loose (sic) their business. You will soon be beaten to a pulp and pounced into the ground six feet under with a baseball bat and sleg (sic) hammer. You will soon be sorry not just from what I am capable of doing to you, but what other members will do as soon as they know exactly where you are. Its (sic) just a matter of time until I get to you.

Here is what you can do to save your life. But you must act imidiatly (sic). Make what ever deal it takes, you must comply.

You have the previous list of companies that you need to remove from Rip-off Report. We know you hold the power. We know you have that list.

You were provided an additional list several hours ago. It's too late for anything that we discussed today. No more deal. No more playing Mr. Nice Guy. Now you must delete any of our members from your data base who have reports listed on any search engine.

If not, BVA will drop you with in 24 hours. We will make thier (sic) life misrable (sic) like we have with Prolexic and gigenet. They don't like you either. We now know who your host is and the IP address to your servers.

Those you do business with will be in danger and will be continusily (sic) be harassed till they stop doing business with you. We are contacting your advertisers.

We will continue to spam you making it impossible for you to read your mail.

Excerpts from a second threatening message sent the same day:
We warned you ed magedson. Did you hear the gun shots last night? Because of you innocent people will die. Your tenants, family members and those that work with you. Think we're joking? I told you that your site will be down and it is. That is all we want and we will not hurt anyone.

If ripoff report moves again to new hosting facilities you will not like what we will do next. Your home will burn. Those around you will burn. Do not expect any help from the police.

Once you have completed with our first list we demand you remove we will give you another list on Saturday and every Saturday from this day forward and you will have 6 hours to do the same from the time we give you that list on each and every Saturday. If the Links work after the 6 there will be a man hunt for you.

We know where you shop. We know where you bank. Greenfield and Broadway, Greenfield and Main. Are we getting closer ED? What about Basha's at Higley and Brown?

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Police Blotter, business partner, Arizona, reputation

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