Here's why a Chicago man is suing Leadnomics - Technical.ly Philly

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Apr. 28, 2015 12:33 pm

Here’s why a Chicago man is suing Leadnomics

The University City lead generation company says it was wrongfully named in the suit and expects the case to be dismissed.

The Cira Centre offices of RightAction and 50onRed. (Leadnomics used to be here, too, but moved in September 2014.)

(Photo by Christopher Wink)

Update: The lawsuit has been dismissed. (8/10/15, 10:59 a.m.)

A Chicago man named Dan Halperin is suing two Philly tech companies for engaging in a practice that is “incredibly devious,” said Halperin’s attorney, Joseph Siprut.

The matter at hand is a little convoluted, but what it comes down to is this, according to Siprut: Halperin alleges that these companies are selling ad space on websites without going through the actual owners of the website. That practice, detailed in this May 2014 Ad Age story, can lead to a Target ad being on Walmart’s website, for example. That’s deceptive, Siprut said, because it makes people see a website in a way that the website’s owners didn’t originally intend. The case is still pending.

Read the September 2014 court filing

Halperin is suing two companies:

University City lead generation company Leadnomics and another company called International Web Services that also goes by the name Amazing Apps.

Amazing Apps appears to be an alias of Leadnomics sister company 50onRed, but when asked about the connection between the companies, 50onRed cofounder Stephen Gill declined to answer, saying he could not comment on lawsuits involving the company or its clients. (Amazing Apps is registered at 2929 Arch Street, the Cira Centre, where Leadnomics sister company 5oonRed is located, and some malware sites have connected the two companies.) Gill is the cofounder of three companies — 50onRed, Leadnomics and RightAction — that formerly all shared office space.

When asked for comment, Leadnomics cofounder Zach Robbins wrote in a statement:

Leadnomics was wrongfully named in the lawsuit brought by an aggressive plaintiff’s class action firm. Our lead generation business is completely unrelated to the practices at issue in the lawsuit. The case has already been partially dismissed by the judge, and we expect it to be fully dismissed any day now.

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Here’s what Gill wrote in a statement:

I can’t comment on lawsuits involving the company or its clients. However, as an entrepreneur in the tech industry, I can speak to the problems we all face with aspects of the US legal system. It’s broken. Many entrepreneurs don’t realize that anyone can become the target of a bogus lawsuit based on manufactured stories and false information, which can drag on for years and distract a young company from what’s most important – growing the business.

Last year, Ad Age reported on what it called a “big ad ‘injection’ scheme” that sounds a lot like what Halperin is alleging. The report named Gill’s third company, RightAction, as one of the companies that “injects ads,” or sells ad space on a company’s website without their permission and pockets the revenue.

From the story:

One way these ads enter the ecosystem is through a Philadelphia-based ad server and exchange called RightAction. Contacted by Ad Age, co-founder Stephen Gill said he’s aware of the injected ads. “Like many other companies in our space, RightAction decided that not all toolbar and plugin inventory is bad,” he said, in an email.

The story also names a company called 215 Apps, also known as Engaging Apps, as another player in the ad injection industry. Both of those companies are registered at the Cira Centre and have also been linked to 5oonRed via malware sites.

Malware suits, like Halperin’s, aren’t as common as they used to be, said Odia Kagan, a Drexel law professor specializing in internet law and cybersecurity. They were popular in 2004 and 2005 but seemed to fall off, she said, because technology evolved and companies focused on targeted advertising, where companies collect data based on your internet surfing habits and serve ads that way.

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Juliana Reyes

Juliana Reyes became Technical.ly's editorial product lead after reporting on the Philadelphia tech scene for four years. She's co-president of the Asian American Journalists Association Philadelphia chapter and a two-time Philadelphia News Award winner for "Community Reporting of the Year." The Bryn Mawr College grad lives in West Philly, likes her food spicy and wears jumpsuits often.

  • Wow, Stephen Gill sure has some serious chutzpah (Yiddish word, defined as “killing your parents, then begging for forgiveness from the court because you’re an orphan”. He says “the legal system is broken” because he’s getting sued for installing ad-injecting malware on people’s computers (which he does not and cannot deny). In fact, the legal system is broken because he isn’t facing criminal charges. This sort of brazen computer / software hijacking should be explicitly illegal, and scumbags that engage in this nefarious activity should face both criminal and civil actions.

  • Amy Adams

    As a former employee, I can assure you this is just the tip of
    the iceberg.
    Zach, Steven, are some of the slimiest individuals I’ve met.
    Sounds Like they may shake this one off too. Keep digging there is so more
    here to uncover.

  • Robert

    This should be interesting to follow. Great settlement in the works for whoever goes after them:

    Here’s some math for fun: according to Adage there were 1.5B impressions sold a day on Zenovia. Since we are talking about premium sites like target.com where the remnant CPM could be well over $0.50 (probably double that) that would mean 50onRed was making at least: ($0.5/1000)*1,500,000,000 = $750K dollars a day or $22.5M a month. If they created and distributed the toolbar they probably kept all that revenue. If they partnered up, they split a portion out. In either case its a crap-load of money. If Katherine Forrest can give Ross Ulbricht life in prison (which I personally think is a crazy sentence) what would she do with these fools?

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  • rwall

    Another former employee here. I quit 50onRED because I didn’t want to be part of the mess when the company is sued to oblivion.

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