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Con Artist Takes Down Google

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Last week, Google (GOOG), Wikipedia and the rest of the Internet protested against SOPA and PIPA because the two acts threatened to turn them into criminals. Well, as it turns out, Google has been a lot closer to the criminal world than anyone would have thought.

A recent story in the Wall Street Journal describes an elaborate government takedown of Google’s ad sales department. At its center was David Whitaker, convicted con artist, who told the paper about a four-month sting operation he undertook with the government in 2009.

Whitaker’s most recent bouts of trouble involved taking money for Apple (AAPL) iPod orders he never filled and selling illegal pharmaceuticals online through Google ads. After being arrested and while in jail, Whitaker posed as an agent for wealthy foreign businessmen looking to buy ads.

Government agents then set up fake websites offering everything from steroids to anti-aging medications to the abortion drug RU-486. While Google initially rejected ads for some of these sites, executives there helped work around regulations. Eventually, several of these sites were advertising and even selling products, all with Google’s approval.

Prosecutors have made it clear that the advertisements for illegal goods on Google were not the result of a few bad apples, but were part of corporate policy. It has been alleged that people as high up as Larry Page knew this was going on.

The company paid $500 million dollars to resolve the allegations last summer. However, they still face some liability, including six shareholder lawsuits alleging the scandal has damaged the company. Media companies have also alleged that Google profits from websites that violate copyright laws.

All of this goes to show that the idea of an anarchic Internet is receding every day and major companies are being forced to take more responsibility for what happens online. In an interview, Whitaker said "There was part of me that felt bad… But I took ease in knowing they knew it was wrong."

If a convicted felon knows what you’re doing is wrong, then it probably is. It looks like Apple is no longer the only company with a PR nightmare on its hands.
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