I'm curious what laws this breaks. Has anyone been prosecuted for similar click fraud? It seems like a contract dispute and the advertiser has the ability to not pay and perhaps come after the scammer for past losses, but it's a TOS violation more than a legal one.

Google is pretty famous for shutting the door on AdSense publishers without much of an appeals process, but I haven't heard of them pursuing anyone criminally. Google even let go a case that involved extortion (someone set on releasing click fraud software unless Google paid up).

http://www.businessweek.com/stories/2006-12-04/the-vanishing...

It appears Google values its secrets more than their losses to click fraud.