Jesse Willms, the Dark Lord of the Internet

How one of the most notorious alleged hustlers in the history of e-commerce made a fortune on the Web
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Willms, at his office near Edmonton, has been sued by the U.S. Federal Trade Commission, Microsoft, Oprah Winfrey, the company behind a product called dazzlesmile, and others. But he has never been charged with a crime. (Grant Harder)

If you want to get a sense of Jesse Willms at his absolute peak—the wealth, the lifestyle, the aura of swaggering invincibility—then the weekend of November 12, 2010, is where we want to begin. That Friday afternoon, resplendent in a lustrous violet button-down, Willms packed half a dozen friends into a private plane on a frosty Edmonton, Alberta, tarmac and jetted off to Las Vegas. En route, Willms uncorked a bottle of Dom Pérignon and passed it around so everyone could take a swig. Then came the shooters: for the men, Jack Daniel’s; for the women—three leggy brunettes and a statuesque blonde—Smirnoff with Red Bull. Soon enough, off came Willms’s shirt, as often happened on festive occasions. After landing in Las Vegas, the group piled into a titanic silver limo and made for the Encore, where they checked into an $8,000-a-night, 5,829-square-foot duplex suite—a favorite haunt of Prince Harry. For the next two days, Willms and his entourage danced atop nightclub tables, shopped at Tiffany, went for thrill rides, and caught an Usher concert, all before flying back to Alberta in time for work on Monday morning.

Of course, for an ascendant young tycoon like Willms, a flashy weekend in Vegas hardly registered as a noteworthy event. In those days, Willms spent quite a few of his off hours celebrating in grand style—carousing at the Playboy Mansion, racing Formula One cars—and with good reason. At only 22, without even a high-school diploma to his name, Willms had forged himself into a veritable e-commerce titan, with footholds in online auctions, health products, data services, and more. His company Just Think Media may have been the most successful Internet venture no one had ever heard of: in 2009, with just 20 employees, it earned more than $100 million in revenue. Few entrepreneurs, past or present, have ever built such a lucrative company so young. Not even Mark Zuckerberg could match the achievement; in 2006, the year he turned 22, Facebook reportedly grossed just $48 million. Basking in the neon radiance of Vegas, his eyes steely and sure, Willms looked like a triumphant mogul poised for greater triumphs yet.

But though this trip was routine by Willms’s standards, anyone familiar with his affairs likely would have been amazed that he had the nerve to take it at all. Even as he and his friends struck cocky poses and fanned stacks of cash at each other’s cameras, Willms knew that he was the subject of an exhaustive investigation by the Federal Trade Commission. And what this investigation would determine, essentially, was whether Willms, the white-hot e-commerce whiz, was actually one of the most egregious scammers in the history of the Internet.

In May 2011, after a year-and-a-half-long investigation that tracked his cash streams all the way to England and Cyprus, the FTC filed a sprawling lawsuit against Willms. The agency’s allegations were enough to drive an icy spike of fear into the heart of anyone who has ever typed in a credit-card number online: between 2007 and 2011, the lawsuit claimed, Willms defrauded consumers of some $467 million by enticing them to sign up for “risk free” product trials and then billing their cards recurring fees for a litany of automatically enrolled services they hadn’t noticed in the fine print. In just a few months, Willms’s companies could charge a consumer hundreds of dollars like this, and making the flurry of debits stop was such a convoluted process for those ensnared by one of his schemes that some customers just canceled their credit cards and opened new ones.

If you’ve used the Internet at all in the past six years, your cursor has probably lingered over ads for Willms’s Web sites more times than you’d suspect. His pitches generally fit in nicely with what have become the classics of the dubious-ad genre: tropes like photos of comely newscasters alongside fake headlines such as “Shocking Diet Secrets Exposed!”; too-good-to-be-true stories of a “local mom” who “earns $629/day working from home”; clusters of text links for miracle teeth whiteners and “loopholes” entitling you to government grants; and most notorious of all, eye-grabbing animations of disappearing “belly fat” coupled with a tagline promising the same results if you follow “1 weird old trick.” (A clue: the “trick” involves typing in 16 digits and an expiration date.)

On Web sites small and large, from backwater message boards to reputable news outlets, these sorts of ads have been appearing for years—long enough that most of us have learned to see them as the background static of the Internet. Because the work-at-home schemes and mango-based colon cleansers they peddle are so obviously fishy, the companies that promote them are seldom spectacularly profitable. Willms, on the other hand, used these same channels to capture 4 million paying customers and nearly half a billion dollars in sales, all at an age when many people are spending their work hours upselling the Never Ending Pasta Bowl at Olive Garden. “There are others doing similar things,” Ben Edelman, a Harvard Business School professor and an expert in online-advertising fraud, told me. “But Willms was doing it on a remarkable scale, by all indications as large as anyone—maybe the largest.”

Thus, simply accusing Willms of being a scammer does him a disservice; what he accomplished elicits something close to awe, even among his critics. “Jesse ran what was effectively a phantom empire scattered all over the world,” one of the many lawyers who have been involved in litigation against Willms told me. “His genius was that he was able to make it all function, and make it all look like a legitimate enterprise.”

Before his former classmates even graduated from high school, Willms had shaped eDirect into one of the largest Microsoft resellers.

Now 26 and already having made and lost multiple fortunes, Jesse Willms provides us with a perfect symbol of the savage landscape of online commerce. If the Internet is still in many ways a Wild West, seemingly ungovernable in its vastness, then people like Willms may well be its canny snake-oil salesmen, talking fast and hustling unsuspecting consumers in the digital equivalent of broad daylight. Of course, few among us open our Web browsers expecting to enter a wonderland of honesty and civility—but still, given its ever-growing prevalence in our lives, the Internet continues to be astoundingly underpoliced. Regulatory authorities like the FTC are undermanned; courts seem reluctant to punish offenders; and worse yet, even the sheriffs we believe are imposing order online—Google, Yahoo, Microsoft—often end up providing scammers with a platform for deception. To understand Willms’s success, then, is to understand a much larger expanse of the Internet’s seedy commercial underbelly, along with the hazards it poses to anyone who ventures online. So the question is, how did he do it?

When we use the term con artist, we typically place the emphasis on the first word while forgetting the implications of the second: that there is, after all, a real art to fleecing people. And no matter whether you believe Willms deserves a marble bust in the scamming pantheon, there is little question that he was something of a virtuoso—a Web wunderkind. By the time he’d built and lost his first fortune, Willms was still just a teenager, but the experience taught him something important: what it would take to really make a killing on the Internet.

Even as a small child, Willms had a knack for commerce. (This is probably a good time to mention that Willms, despite telling me in an early phone call that he would be “happy” to speak with me, later declined through his lawyer to be interviewed for this story—though he did e-mail answers to a few questions not relating to his business. He also let me speak with his mother, Linda.) Born in April 1987 to a rural Alberta family with an entrepreneurial streak—his father, Dave, runs a welding-equipment company, and his mother, a onetime cake decorator, manages revenue property and used to maintain a few “small entrepreneurial businesses” on the side—Willms quickly developed a fascination with trade. Whenever his mother brought him along to the grocery store as a boy of 3 or 4, he would beg her to narrate every step in the checkout transaction. Years later, once he was old enough for a paper route, he spent his wages on stacks of business books, hunting through them for the secrets of how moguls like Warren Buffett and Jack Welch achieved their success.

After his family relocated to the Edmonton suburb of Sherwood Park in the early ’90s, Willms spent entire days alone in his backyard, building complex forts and networks of waterways. “He sort of did his own thing,” Linda Willms recalled. “He wasn’t a moody kid or anything. He could just easily amuse himself.” In school, Willms was an honor student, but he seemed only mildly engaged with his studies. Former classmates described him as a kid with few friends who often cracked strange jokes. “Jesse was a misfit, like a nerdy class clown,” one told me. “He wasn’t a rule breaker, but he wasn’t a model student either.”

At 16, in 2003, Willms found his first serious business opportunity. He discovered that if he picked up a cheap enough copy of, say, Microsoft Office, he could resell it at a profit through a forum like eBay. He became so good so quickly at flipping software this way that he decided to develop a full-fledged online storefront, which he dubbed eDirect Software. Before long, Willms lost interest in school completely, as, in his mother’s words, “the entrepreneurial spirit took over.” His grades plummeted. By the beginning of 12th grade, Willms was often asking his mother to ferry him home at lunch so he could put in an extra hour of work on eDirect. Finally, they struck a bargain. “I knew that if I made him go to school, it would be a daily fight,” Linda Willms told me. “So we made a deal that if he could make money by a certain time frame, he could drop out of school. If he didn’t, he would take all of his core subjects the next semester.”

But there was never any real question about whether Willms could make money online. Soon, he assembled a staff of nearly a dozen people and opened an office. Before his former classmates even graduated from high school, Willms had shaped eDirect into one of the largest Microsoft resellers on the Web. He also began to acquire a reputation around Sherwood Park as a business prodigy; those who had scoffed at him in school suddenly saw him driving around town in his $280,000 black Lamborghini Murciélago. (Willms also kept a bright-yellow one garaged in Las Vegas for whenever he visited.)

Just as with his later work, Willms’s success with eDirect seemed, on the surface, to be the product of a staggering business talent. The problem was that even then, his greatest gift was for navigating the more shadowy areas of the marketplace—which is why Willms, at 18, became the target of a lawsuit by Microsoft that accused him of trafficking in massive quantities of “counterfeit, tampered and/or infringing” copies of its software.

How, you might wonder, does a teenager achieve something like that? When Willms first launched eDirect, he filled orders on a case-by-case basis: he would find an inexpensive piece of software, sell it online, and clear a $20 or $30 profit. But if he wanted to expand, he would need access to a steadier product supply. Somehow, around the time he first started hiring acquaintances from school to handle customer service and Web design, Willms began obtaining large quantities of Windows-related CD-ROMs—some of which had once been shipped with Dell computers, some of which were of murkier provenance. “It was a gray area,” a former employee told me. “Our job was basically to convince people that it was fine to install this software.”

As eDirect expanded, so did the number of customers complaining about dubious products. “It became a frustrating place to work, because I was the one trying to convince customers that it was fine, but after a while, you’d have to lie to them,” the same former employee told me. “The reason I quit in the end was that we got these copies of Office sent back to us, and the foil on the top saying it was authentic just peeled right off. I said it was clearly pirated, but Jesse was like, ‘No it’s not!’ ”

In March 2006, after receiving hundreds of complaints about eDirect-sold software and repeatedly warning Willms to stop selling copyright-infringing products, Microsoft finally sued. What the company found in pursuing the case surprised even its hardened anti-piracy lawyers. “Usually with people involved in counterfeiting and piracy, you see people acting very cautiously, very suspiciously,” says Scott Wilsdon, Microsoft’s lead counsel in the suit. “The opposite was true with Jesse. It looked like he went into this from the outset to grab as much cash as he could as quickly as he could. He seemed to have no concern for the customer and no appreciation of the consequences.”

Google, Yahoo, and Microsoft have huge stakes in maintaining user faith, so they surely wouldn’t endanger that by doing business with potentially shady affiliates. Right? Well, no.

What appeared to be a simple case involving an average teenager quickly turned into something far more complex. When Microsoft, through a court order, seized Willms’s PayPal account, the company’s lawyers thought they’d get a couple thousand dollars. The account contained more than $200,000. Likewise, Microsoft seized eDirect’s software inventory with only modest ideas of what it held. “In cases like this, you usually expect to find a few thousand units,” Wilsdon explained. Instead, according to court documents, authorities discovered some 66,000 questionable Microsoft products, in warehouses and customs facilities spread all across the country, from California to New York. More surprising still was the way Willms had obtained much of this software in the first place: through mysterious channels from the Jordanian government, which had originally acquired it for educational use.

The lawsuit cleaned Willms out. Against the wishes of his parents, who wanted him to “let it go,” he mounted an energetic defense, claiming he had done nothing illegal. Willms eventually agreed to an unspecified six-figure settlement, surrendering his two Lamborghinis and a Dodge Viper and agreeing never to sell Microsoft products again. (The companies behind FileMaker Pro and Norton AntiVirus—whose software eDirect had been marketing as well—also sued Willms, who agreed to similar prohibitions with them.)

That was fortune No. 1, lost and gone. Before the dust from the litigation had even begun to settle, however, much grander, more beguiling plans for fortune No. 2 were already well under way.

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