Website Results' monthly cash flow -- roughly $1 million, according to Earnest's estimates -- caught the eye of 24/7 Real Media. Over the summer of 2000, executives from the New York-based online advertising firm negotiated to purchase Website Results as an independent operating unit run by Penna, Osborn and Smith.

At a celebration dinner at a local restaurant, said Earnest, Penna announced the 24/7 Real Media acquisition to employees, and said management would meet with each individually to discuss their piece of the take.

But after weeks went by and the one-on-ones never happened, disgruntled employees began to defect, according to Earnest.

Meanwhile, Penna and Osborn began outfitting one of the Hughes apartments with thousands of dollars of cameras, lighting and other professional moviemaking equipment, says Peter Wojciechowski, a technical expert who was with Website Results for nearly 18 months until October 2001.

The goal was to produce a Schwarzenegger-style action picture -- written by and starring Penna, and using employees on company time as cameramen, sound engineers and other production staff.

The film, tentatively titled "The Punisher," was never completed.

In May 2001, 24/7 Real Media fired Penna, Osborn and Smith -- whom it had kept on to manage the new unit -- and took back most of the stock it granted them.

As the three men were being summoned to New York and called on the carpet, 24/7 Real Media sent a pair of 18-wheelers to the Hughes Regency apartments to pack up Website Results' offices and move them to a corporate park in Santa Monica. A couple of dozen armed security guards stood watch, according to Hindman.

Mark Moran, 24/7 Real Media's general counsel, said the company is "very happy" with the Website Results acquisition. But he wouldn't comment on why 24/7 Real Media terminated the founders, whom it had previously credited with building Website Results into "the leading Internet marketing infrastructure company."

"The biggest thing 24/7 was mad about was the misuse of payroll funds for the movie project. Ron even had his mom on the 24/7 payroll full-time as a makeup artist," said Lazuka.

Website Results hit a rough stretch of road soon after the 24/7 Real Media deal closed, as many search engines began to deploy tactics to prevent SEO firms from gaming their ranking systems, according to Earnest.

The marketing company was delivering fewer hits for customers; as a result, revenues at the 24/7 Real Media unit, which was meant to act as a cash cow, began to dry up.

To address the changing search-engine environment, 24/7 elected to plow some funds into new technology for Website Results. In a December 2000 conference call with investors, 24/7's then president, Tom Detmer, reported that the early results of that upgrade were "promising."

But current 24/7 Website Results technical staffers say a good chunk of their time in late 2000 was not spent revamping the company's core SEO technology.

Instead, programmers were directed to develop a customizable browser toolbar that could steer traffic to BestoftheWeb.com and collect data on the surfing habits of users -- data that could be sold to Internet marketing strategists.

The technology also enabled Website Results to take credit whenever a toolbar user made a purchase at any of the hundreds of online merchants with which the company had established "affiliate" commission accounts.

Dozens of sites, most of them quite small, signed up to distribute co-branded versions of the browser toolbar. But the project was killed in May 2001 when 24/7 Real Media fired Penna, Osborn and Smith and took hands-on control of Website Results.

"The toolbar was never our technology. We never viewed it as being a company project," said 24/7 general counsel Moran.

But for Penna and associates, who retained the source code, the toolbar apparently provided a technological life raft after they were cut free from 24/7.

Under the auspices of their newly founded company, Intellitech Web Solutions, the three devised a plan to strip the visible front end off the toolbar, leaving only its snooping back end in place.

According to former Intellitech employees, the company also polished up some code designed to automatically and silently install the mutated toolbar when an Internet user viewed a specially designed Web page.

"At that point, it started to become a virus," said a former staffer who worked on the project.

Last March, Intellitech began to seed the Internet with copies of the backdoor program, using specially designed pop-up ads it purchased at sites, including the family entertainment portal Flowgo.com.

In violation of Flowgo's policy, the pop-ups automatically sent visitors to another site, where, according to virus researchers, special code exploited a vulnerability in Microsoft's Internet Explorer browser and forced the spyware onto users' computers.

According to Hindman, who said he wrote some of the software Intellitech used for its pop-up system, the company also "threw tens of thousands" of such booby-trapped ads every day at visitors to sites where Intellitech had affiliate programs. The ads also popped up on Web surfers who clicked on any of the links Intellitech had established for SEO customers at search engines such as Google.

Hindman finally decided he had seen enough. On April 5, a payday, he picked up his last check and, instead of heading in to work, began making arrangements to move his wife and children out of the Hughes Regency and back to Oklahoma.

"The whole time I worked there, I kept waiting for the FBI to kick in the door," said Hindman.

Instead, it was Michael Osborn who showed up at Hindman's apartment that afternoon and banged on the door, wondering why the programmer hadn't shown up at work.

"I told him I didn't want to be a part of what they were doing anymore, at which point he started screaming at me. When I shut the door and locked it, he just went crazy. He punched a hole in the door, and when he finally left, there was blood from his fist all over it," said Hindman.

Later, as fellow employees came by the apartment to say good-bye, they told Hindman it was a good thing that Osborn, and not Penna, had been first to hear the news.

"They said, if it had been Ron, he would have come right through the door," said Hindman.

Recent Stories