The U.S. Securities and Exchange Commission has filed securities fraud charges against two Texans alleging that they carried out a high-tech scam that hijacked personal computers to disseminate millions of spam emails and cheat investors out of more than US$4.6 million.

The SEC says that the scheme involved the use of so-called computer “botnets” or “proxy bot networks,” which are networks comprised of personal computers that, unbeknownst to their owners, are infected with malicious viruses that forward spam or viruses to other computers on the Internet. “The scheme began to unravel, however, when a commission enforcement attorney received one of the spam emails at work,” it said.

The commission alleges that the pair illegally profited during a 20-month “scalping” scam by obtaining shares from at least 13 penny stock companies and selling those shares into an artificially active market they created through manipulative trading, spam email campaigns, direct mailers, and Internet-based promotional activities.

In related enforcement actions, the Attorney General’s Office for Texas and the Harris County District Attorney’s Office indicted the men for engaging in organized criminal activity and money laundering. The Texas authorities also have seized more than US$4.2 million from bank accounts associated with them.

None of these allegations have been proven.

“This latest step in the commission’s anti-spam initiative is intended to protect investors from fraud artists who would treat the investing public as their personal ATM machines,” said SEC chairman Christopher Cox. “The use of bots to spread investment spam at exponentially higher rates is making this type of fraud an even more virulent threat to ordinary investors. Not only are victims getting hit with get-rich-quick spam, but by turning the victims’ computers into zombies, these fraudsters are sending out still more spam to others.”

“Given estimates that up to one-quarter of all personal computers connected to the Internet are part of a botnet, and the thriving market in selling lists of compromised computers to hackers and spammers, the SEC is taking this very seriously. We remain aggressively committed to tracking down anyone attempting to use bots to prey on investors with false or misleading spam about securities,” he added.