Federal prosecutors have accused three men of running an operation that used fraudulent ads to dupe internet users around the world into buying more than $100m worth of bogus anti-virus software.

The defendants operated companies including Innovative Marketing and Byte Hosting Internet Services, which perpetuated an elaborate scheme that tricked internet publishers into posting malware-laced ads on their websites, according to an indictment filed Wednesday. The banners allegedly presented messages falsely claiming visitors' computers contained dangerous malware and other defects that could be fixed by purchasing software that cost from $30 to $70.

The scheme often tricked users into purchasing multiple sham products, which were sold under names including Malware Alarm, Antivirus 2008 and VirusRemover 2008.

The charges, filed in US District Court in Chicago, largely echo allegations the Federal Trade Commission made in December 2008 against operators of of the same companies. The federal judge hearing that case has held Innovative Marketing in contempt of court and fined it $8,000 per day for failing to comply with a temporary restraining order to shut down the scareware operation.

The three defendants stand accused of setting up at least seven fictitious advertising agencies that placed ads on unnamed websites. The ads redirected viewers to websites that presented graphics that mimicked virus scans falsely claiming machines were riddled with a variety of dangerous infections.

To keep the scheme alive, the men allegedly established multiple merchant accounts to allow victims to purchase the rogue anti-virus products. That allowed the men to have a fresh account to use when an older one got shut down because of repeated requests for refunds. They also used multiple payment sites.

The 57-page indictment names Shaileshkumar P. Jain, 40, a US citizen who is believed to be living in Ukraine; James Reno, 26, of Amelia, Ohio; and Bjorn Daniel Sundin, 31, a Swedish citizen. Each was charged with one count each of computer fraud and conspiracy to commit computer fraud. Sundin and Jain were each charged with 24 counts of wire fraud, and Reno was charged with 12 counts of wire fraud.

Each count of wire fraud carries a maximum sentence of 20 years in prison and a $250,000 fine. Prosecutors are also seeking the forfeiture of $100m from a bank account located in Ukraine.

The indictment claimed Sundin, Jain and several unnamed individuals owned and operated Innovative Marketing, the Belize-based company that sold the software. Reno and others allegedly owned Byte Hosting, which prosecutors said operated call centers that provided technical and billing support to victims of the scam.

In all, the scheme is alleged to have tricked internet users in more than 60 countries into making purchases. ®