Q: What do geeks get when they go out at night? A: A moonburn.

The Final Analysis of the Tux500 Scam

Date/Time Permalink: 04/19/07 02:16:31 pm
Category: General
Update 5/10/07: Hey, Diggers! You like how that story got there by way of a planned "Digg storm"? And it worked, didn't it? How does it feel to be had? Did you check the profiles of everybody who whooped that story up, to see if they're "instant accounts" like the two I found here? Still think it's all groundless "disgusting slander"?

Yayyy! Today is the Very Last Day that Penguin Pete has to talk about the tux500 scam! The story is almost completely told, and then I can forget it.

Are you as thrilled as I? Hey, I could have been blogging about fun stuff all this week, like how to make a Flash animation using only Free Software - that's what I had planned. I have clients on hold waiting for the rest of their work, I have turned other clients away because I am too busy this week. Yes, it's costing me business and I've pretty much had to flush my whole website down the toilet - I will likely never again be able to allow unmoderated comments on my site, because I will not tolerate a single tux500 extortionist to post one statement to mislead one person into contributing to it. I would sooner close the site down than be a party to this crime. As it is, I will have to hack moderation into my PHP setup before I turn comments back on. I don't like it any more than you do, but you know who to thank!

If none of this has been fun for you to read, then believe me on my ancestor's grave that it hasn't been a Swedish massage for me. This has been the LEAST FUN, MOST DISGUSTING thing I have EVER had to do since joining the FOSS movement.

Let's get it over with...


Before we start, think of a name. No fair peeking in Wikipedia or Google. The name is Effen. Ring a bell? Think what it is. It is a brand name. You should know what product it is, if there's any value to advertising on Stephan Gregoire's car through Acceleration Marketing.


To summarize the points so far:

  • As a lot of other commenters on this scandal have pointed out in some of the sites I've been linking to, this scheme does not show good return on investment. There are hundreds of other, less expensive, more guaranteed ways to promote Linux, which carry no risk.
  • The way this scheme is being promoted in itself is morally bankrupt. Rigging Digg, spamming forums, abusing everybody who doesn't contribute, and God knows what they're doing to wring money out of foreign countries. I'll let somebody else find that out. I gather that it involves a pink contract.
  • All we have so far is two bloggers and a marketing firm. Every single lead for this story I've dug up, without exception, points back to one of these three. They all point to each other as a sign of legitimacy. For instance, the indy500.com website. Remember that devnet first posted here, claiming that... wait, let's break up this list to quote exactly:

"I can totally see how people might think it's fishy...but then again, if it's hitting the front page to the indy500 website it should carry some clout. After all, would they risk their almost 100 year reputation on a scam? Not likely."

Well, as promised, I wrote the admin of www.indy500.com, asking what the source of the news story about tux500 was. And here is what the reply was:

Thanks for your e-mail. The story about Chastain Motorsports' sponsorship for the Indianapolis 500 from the Linux community came from an Indianapolis-based marketing group, Accleration Marketing, hired by the team to source sponsorship. The head of that group, Ted Woerner, knows Bob Moore, and that's how their idea spawned.

The Indianapolis Motor Speedway is not providing official support for this project and is not involved in the sourcing and collection of funds. We simply ran the press release as we would for any Indianapolis 500 team seeking sponsors, especially a unique program like this one.

Best regards.

Paul Kelly
Communications Manager
Indianapolis Motor Speedway

Oh, yeah, mere detail devnet left out!

  • ...so, in other words, we have two bloggers and a marketing firm. Chase and chase though I will, that's all I come back to. Note, in Mr. Kelly's response, the courteous response of a true business person. Note that he washes his hands of the whole deal. Note that he calls it 'unique'. Good choice of words!
  • Did the bloggers hire the marketing firm? Or did the marketing firm approach the bloggers? This I do not know. We'll address the distinction between these two scenarios momentarily.
  • $350,000 dollars has to be raised in a month, for THIS driver, THIS year, THIS race, THIS sport, THIS method of promoting Linux and no other. Question any of these variables? Like why the mad rush, when the Indy 500 happens every year? You get flamed and slandered and threatened far and wide across every website they can submit to.
  • I've had the word 'libel' thrown at me a lot, here. Wolf! Wolf! Wolf! I link to a page backing up every claim I make, and I've saved copies and screenshots, and I'm ready to go to court. Not that I'll have to, of course; if you believe you actually have a libel case, then you pick up a phone and call a lawyer. You do not post threats in web forums to the person in question; that actually only strengthens your intended defendant's case. I can now also go to court and claim that I was threatened with groundless legal action intended to stifle me. That's how Microsoft and SCO loses cases, too.
  • Further more on the libel threat, I am acting in a well-founded public interest. The shysters want to turn it around on me and question my credibility. But I'm not the one asking for a third of a million dollars! Hence, I don't need a stick of credibility. All I have to do is link and point. To get a third of a million dollars donated to you, you have to expect that a few people are asking "What the hell for?", and the burden of proof to produce a product of good value is on you. You're not just holding a PTA bake sale, here.
  • I'd just like to point out one last time: one of the bloggers immediately posted a rebuttal, claiming that they had NO INVOLVEMENT with the deal. NOT claiming, "We did nothing wrong." Well, then, why rush to deny involvement with it? At the same time, this same blogger under the same name continued to post in other websites forums haranguing other forum members to donate to the tux500 fund, while denying involvement on his own page.


A scam does not always require criminal intent on the part of all of the parties involved... at least not at first. For instance, take how multi-level marketing schemes work. To quote Wiki:

Some less legitimate companies produce revenues primarily by attracting new participants with the hope of reward and selling them products or services of dubious value at inflated prices, as opposed to selling products or services consumers would purchase at the given price without regard to the opportunity attached.

Pyramid schemes, Ponzi schemes, and muti-level marketing schemes all have this in common: they make criminals out of ordinary, innocent citizens. If I sell you a bogus investment, you were a victim of my trickery. I could then point out that you could make up for your loss by passing it on. You are now angry at being scammed, but you lost money, and to get it back, you have to bring me more victims. Eventually, if you become as good a scam artist as the one who scammed you, you can cling to a false hope that your loss will turn into a gain.

That's what schemes like these are: a factory for turning out schemers!

In a pump-and-dump scheme, a worthless stock is purchased. Next, the purchaser hypes the value of the stock through publicity. When enough suckers have bought the stock and inflated the price, the original purchaser can now sell the stock at increased value. Note that there was a real stock in a real company the whole time. The scheme part comes from marketing.

I began this series of investigative articles not knowing if there, indeed, even was a real car, driver, and race entry involved. I now believe there is a car, driver, and possibly a race entry. I definitely believe there's a marketing firm. Can't miss that! But the distinction between whether the bloggers or the marketing firm started this plan is almost irrelevant as time goes by.

UPDATE 4/20/07: For the record, if it turned out that Accelerated Marketing were deceptive in selling this idea to devnet and helios, and they, too, weren't fully aware of the return on investment and the risks involved, I'd be ready to listen. But each day they continue to race around hyping the scheme is one more day that possibility becomes less and less likely.


At the bottom line: It is too late for them to stop! They have already dug themselves a gigantic hole. If they call it off now, funnel the funds into a more sensible project (and even painting the Tux logo on 500 rocks in the most uninhabited part of the Mojave desert would be more sensible than this boondoggle), they risk a big backlash. Instead, they have too much money and hype invested to do anything but press forward and call all of the detractors liars.

And what about the next scam? Where will it come from, and who will hype it? Perhaps sponsor a horse on a racetrack? Hold a Linux sweepstakes? A pyramid scheme to sell Cds? It raises a lump in your throat just to think of it.

What a shame, to see the 15 years of Linux progress turn overnight into a big Amway plot. There goes the ball game! Fortunately, GNU, BSD, Minix, Open Solaris, ReactOS, and other Free and Open Source entities will be relatively unscathed. Possibly, the commercial distributions and commercial companies such as IBM and Google will keep the reputation of Linux afloat.

In the early days of this blog, I tried out and reviewed some of the FOSS systems that aren't Linux, and stated that I was doing so to check out my options in case Linux went off track. This tux500 scam is one of those scenarios I was hoping I wouldn't have to face. But here it is. I'll be checking out and reviewing some more of those non-Linux FOSS distros later.


Have you remembered what Effen is, yet? It's the name of a brand of vodka. That's a fun name, too. If my local bar stocked it, it would be fun to swagger in and call out "Pour me a shot of that F'in' vodka!", just to see the heads turn. Specifically, Effen vodka was sponsored on Stephan Gregoire's race entry in last year's Indy 500, also brought to you by Acceleration Marketing.

Wow! That really made Effen vodka a household name, didn't it? Yep, right up there with these well-known brands. Come on, folks, tell me about all the Effen vodka you've drank, because it was painted on the side of a car which had to be pulled out of the race last year after 49 laps because the driver couldn't handle the car.

What Acceleration Marketing did for Effen, it can do for Linux.


Folks, I have sputtered and fumed around a lot. It takes a lot of digging to scrape up the facts when so much has been done to obfuscate them. I've run on at great length, and I don't expect everybody has the patience to read it all.

Here is the whole story in an elevator pitch:

Coming back to the post on LXer on April 16th,
If you read no other link in this story, read this one. It refers to the predictably negative reaction on the Fedora Community Portal when helios posted a link to tux500 there. In part, two quotes from this link show everything that is wrong with this stinking, rotten scam:

"Some of you are talking about "ROI" (return of investment). What Bob, Ted and Ken are doing here has nothing to do with traditional rules and outcomes the financial world would normally be interested in."

...and...

"So you disagree. Fine, but don't do what many of you are doing and actively attempt to damage this effort. That can come back to cause you grief later. Your thoughts and quotes are a record for all to see. As a successful business man in Austin Texas, I have learned a valuable lesson. You shouldn't get in the way of a man who is trying to do the right thing. They remember who supported them and who didn't. Given the things Ken has done for the Linux Community, I wouldn't want to be known as someone who "got in his way.""

Ladies and gentlemen, I, you, and everybody else in the Linux community have been threatened by the post which I link to above. The threat has been made for questioning the Return on Investment of tux500.com. The false claim is also made that this has nothing to do with traditional rules and outcomes the financial world would normally be interested in.

BULLSHIT!

It's still green paper money, it belongs to you, and you have every right to demand the opportunity to fairly consider what's going to be done with it. Every single rule of economics and investment applies to it 100%. Most especially for a third of a million dollars. Yet this is what all of you are being threatened for asking about. Because that's where they don't want you to look, that is exactly where you should be looking!

Make it your mantra: Return on Investment. Return on Investment. Return on Investment. Return on Investment. Return on Investment. Return on Investment. Return on Investment....

The full series on the tux500 scam:
Is the Tux500 racecar advertizing project a scam? Just asking the question...
Tux500 scam - news and links history Showing the circular links and promotion.
the tux500 scam of the Linux community A blogger cracks, more false promotion, an example of a racecar advertising scam perpetrated recently in NASCAR.
WHY the tux500 promotion is a pump-and-dump scam An in-depth analysis of driver stats, and some very serious cases of extortion, threats, slander, and intimidation on the part of the scammers.
The Final Analysis of the Tux500 Scam The source of the news story on indy500.com. A final summary.
Further Developments since I broke this story:
Dear Newsforge: I am not devnet. Newsforge links to devnet and says that's me. Best thing to happen to devnet and worst thing to happen to me. Other developments.
DC Parris of LXer to Linux community member: shut up! I wouldn't have half the problem with these thugs, if they didn't abuse EVERYBODY who crossed their path.
tux500 crew caught rigging Digg - with screenshots! Somehow, even documented proof of their own admission of blatant spamming fails to get them shut down. Wake up, Internet!
Are the tux500 people really all THAT bad? Or, why being on tux500's case 24/7 is one of the most important and necessary things I've ever done.

Give some consideration to chronological order. At the beginning, I was groping around, and chased a lot of dead ends before I honed in on the important facts.

Follow me on Twitter for an update every time this blog gets a post.
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