I just found this piece at LAVoice.org -- the office of LA City Attorney, Rocky Delgadillo, has filed criminal charges against three officers of Enternet Media for distributing spyware to 18 million computers!
It is the first criminal spyware case filed in the state of California. The charges include conspiracy, 24 violations of unauthorized access to computers and four counts of false advertising. If found guilty, the penalties could include up to 25 years in prison and fines of up to $170,000.
The defendants, Lida Rohbani Hakimi, Nima Hakimi and Baback Hakimi, are charged with running companies that created spyware programs such as toolbars and fictitious “security programs,” that would insinuate themselves into a computer during the download of seemingly innocuous software, like music files. The toolbars would then track users’ Internet activity and transmit data back to Enternet.
The FTC shut down Enternet Media in November 2005 for spreading spyware by unfair and deceptive practices. I'm looking for more information on the LA City Attorney's case and will post again when I have details.