Google was busted by the US Department of Justice last year for facilitating the sale of illegal Canadian prescription drugs through its AdWords program, agreeing in August 2011 to pay $500 million. One of the biggest cash settlements of its kind in history, the sum nevertheless represented a small fraction of Google's reported $45 billion in ready cash.
Now, new information has emerged in a Wall Street Journal report that a convicted con-man aided federal authorities in a sting operation to take Google down, spending $200,000 of government funds.
Federal prisoner David Whitaker was facing 65 years in prison previous to his cooperation with the feds, for running an illegal prescription drug scheme out of Mexico through Google ads, selling steroids and human growth hormones. Upon his 2008 arrest, he informed the feds that Google was compliant with his misdeeds, which prompted them to enlist his help on the collection of evidence against them.
Because of his role in helping feds bust Google, Whitaker's sentence has been reduced to a six-year stint.
Whitaker apparently acted in the federal sting in a similar capacity to that which had landed him in prison, as the head of a business selling illegal prescription drugs. This time, however, the companies were fake, and Whitaker used the name "James Coriente." Through aliases and fake companies, he purchased ads for Canadian drugs through Google's AdSense for sale in the US.
"Google's employees were instrumental in bypassing policy regarding pharmacy verification. The websites were blatantly illegal. It was very obvious to Google that my website was not a licensed pharmacy," said Whitaker in the WSJ report. "Understanding this, Google provided me with a very generous credit line and allowed me to set my target advertising directly to American consumers."
The details of the lawsuit reportedly show that Google knew that Canadian companies using its AdSense advertising platform were illegally selling drugs in the US, and even offered considerable technical support and assistance in optimizing their ads.
"The forfeiture [of $500 million], one of the largest ever in the United States, represents the gross revenue received by Google as a result of Canadian pharmacies advertising through Google’s AdWords program, plus gross revenue made by Canadian pharmacies from their sales to U.S. consumers," said the DOJ in its August 2011 statement.
“We ban not just ads but also advertisers who abuse our platform, and we work closely with law enforcement and other government authorities to take action against bad actors," said Google's general council Kent Walker, to the WSJ.
Of course, the federal indictment of Google and the $500 million forefiture occured last year. But these details about Whitaker's involvement in the bust emerge in the midst of a continuing PR fail for Google. In recent weeks, a public uproar has sounded in response to Google's new privacy policies, and the US Federal Trade Commission and Senate antitrust subcommittee zeroed in on their potentially unfair practices.
In other words, Google is sure digging itself a hole these days.