Adbot forced out of business

Customers are lining up to complain after Internet advertising middleman and auctioneer Adbot closed its doors Friday.

Complaints range from failure to receive payments to poor record-keeping.

Adbot--a service that matched advertisers with online publishers that also grouped sites with similar content before auctioning off their excess ad space to the highest bidders--counted among its former advertising clients Microsoft, Amazon.com, Hotmail, and Hickory Farms, according to Margaret Raye, Adbot's writing, research, and production manager. The company had more than 60 advertisers and worked with some 200 sites.

But the service's move to close its doors came days after its owner was forced to liquidate his investment fund Chicago Partnership Board, from which he allegedly diverted funds to Adbot.

"They misclassified my site, gave me wrong stats on traffic, and funnelled me through four ad reps in less than six months," said Hunter Elliott, which operates The Daily .WAV site.

Elliott had signed up for a block of 400,000 ads. "They said I could terminate my contract early since it was their fault on the stats. I got it all cancelled in July and they were supposed to send me money by the end of August," he added. "I kept getting the 'check is in the mail' line from them...I've never received any other monies."

Adbot, though it is not in bankruptcy, will most likely be forced to file one soon, Raye said.

The ad network company was formed in January, funded by businessman James R. Frith Jr. Its revenues were slower than projected but picked up some after the Fall Internet World earlier this month, Raye noted.

It was about that time when regulators from the Securities and Exchange Commission and the FBI began descending upon the offices of Frith's Chicago Partnership Board, she said. Investigators accused Frith's organization, which buys and sells limited partnerships, of diverting millions of dollars in investors' money to Adbot, as well as to Frith's personal account.

A federal judge last Monday ordered that the partnership be liquidated, appointing a trustee to seize control of its remaining assets. The judge's action, however, did not apply to Adbot, according to Raye and a representative for the trustee.

Adbot employed 70 people at its peak, but after its December 1 paychecks bounced as regulators froze the assets of Chicago Partnership, an exodus began until a core group of only eight employees remained. The last paychecks the employees were able to cash were issued on November 1.

"Jim [Frith] was looking for investors for the past two weeks but didn't find anyone who wanted to commit as quickly as we wanted them to," Raye said. "The staff said it was time to give it up. It's hard to work for free when you come to work still not knowing what will happen."