I tried to get rich on stock spam

According to Joe Stewart, a senior security researcher with SecureWorks, spammers have become so sophisticated that they're able to target those e-mail recipients most likely to respond. Stewart reverse-engineered some of the bugs that exploit security flaws in computers and allow spammers to create "zombie" computers. By doing that, Stewart was able to see the commands sent by the spammers to the zombies. He also found some databases the spammers had left behind -- databases, he says, of subscriber information for things like investor information lists from legitimate brokerages. "These were pretty likely stolen," explained Stewart, "and you could clearly see their customer information."

And there's no question that the people sending the e-mails are getting better at it. Anti-spam companies and programmers keep trying to beat back the onslaught, but the spammers evolve to defeat each new anti-spam technique. Anti-spam forces had, for instance, mastered the art of seeking out, and blocking, e-mails with certain giveaway lines of text, so spammers simply switched to sending spam as part of image files. That's why most of the stock spam in your in box these days consists of graphics files with embedded text.

Most observers believe that the companies targeted in penny stock spam are innocent bystanders, blindsided by spammers who choose a stock at random and then run their pump-and-dump scams. The companies affected certainly want investors to think so.

Of the eight companies in which I invested, four put out press releases disavowing the spam campaigns. Another, Quantex Capital Corp. (QCPC.PK), put out no press release, but I spoke with its president, L. Evan Baergen, who denied that his company had any involvement in the spam. (None of the other companies, except two that had no working phone numbers and so were not contacted, responded to requests for comment.)

Baergen, who said he first heard about the spam campaign affecting his company's stock from a friend who forwarded him one of the e-mails, professed to be disheartened by it. "To be honest, there's not much I can do and not much I can say about it," Baergen lamented. "Unfortunately, it makes us look bad, as we're legitimately putting out news releases and that kind of thing. But there's nothing I can really do about it, as I don't know who's putting it out there."

Cromwell Coulson, the CEO of Pink Sheets, isn't sure that all the targeted companies are as innocent as they claim to be. "Every company we've ever met has denied being involved," Coulson said, "but somehow they seem to know how to make [the spam] go away."

As Coulson put it, without singling out any firm, "most of the companies that spam involves are companies with speculative or at best developing operations, and that's at best. They're lucky to have a fax machine or a phone."

In fact, when I, as a virtual stockholder, attempted to learn more about the companies in which I'd invested, I found hard information elusive. Without casting aspersions on or making accusations about any of these firms -- which, for all I know are legitimate companies selling real products -- what I could glean didn't make me think any of them was likely to be the next Google.

I found a string of phone numbers that never had a message machine or a live person on the other end. I found Web sites that had ceased to exist in their advertised form, Web sites with front pages where every single offered link was unclickable, and Web sites with press releases announcing news that had nothing to do with the company.

I was able to dig up history on a few of the companies. Physician's Adult Daycare (PHYA.PK), a company that specializes in providing outpatient day care for the elderly, has previously been two other companies. Until 1999, it was Unique Fashions Inc. After that, it was -- until July 2006 -- a company called Rhino Enterprises, an incubator for start-up companies that had an interest in the franchisor of a sub shop called Great Outdoors and a sports memorabilia company. Another of my stocks, Medical Institutional Services Corp. (MISJ.PK), which claims to have developed a distribution system to allow physicians to dispense medicine without making their patient go through a pharmacist, was until this past October Go Call Inc., an e-commerce company that processed online gaming transactions.

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