Microsoft, along with the Washington State Attorney General said last week they had filed a suit against James McCreary whom they say, in addition to being CEO of Alpha Red, is the director of Branch Software, a company that makes and distributes the so-called "scareware" Registry Cleaner XP, designed to trick users into paying for unnecessary "cleaning" software.

Well documented in a report last week by Ars Technica's Joel Hruska, the lawsuit alleges that McCreary was responsible for the software, which used pop-up windows to tell users it had found "errors" on their machine, and to offer a supposed solution designed to clean their systems for $39.95.

Aside from McCreary himself, the connection between Alpha Red and Branch Software was less clear. While it appeared the site was hosted (and presumably software distributed) by Alpha Red, it seemed to many that shutting down an otherwise above-board hosting provider for hosting an illegitimate service would be an overreaction.

Microsoft's full complaint (linked here in PDF format) says McCreary, Branch Software and Alpha Red were each "directly engaged in the marketing and sale of software products over the Internet," referring to the Registry Cleaner XP software.

In several online discussions last week, and over the weekend - including several threads on WebHosting Talk (www.webhostingtalk.com) and several others on the popular adult webmaster board with the unprintable name, known in abbreviated form as GFY - users voiced their concerns about Washington Attorney General Rob McKenna's apparent desire to shut down Alpha Red, along with the Registry Cleaner XP business. They reasonably feared the shutdown of the company could hurt their unrelated businesses hosted with the company.

Further discussion gave the impression that users were having trouble reaching Alpha Red, and several more alarmist posts seemed to suggest the company might be closing its doors without warning.

In a Thursday post on GFY, a user named "Milan" said "I have heard from multiple clients, some who have already been able to move out and others who are in a frenzy trying too get out that things are coming to a grim ending. Allegedly, the lawsuit has put Alphared into a position that it can't recover from and according to some rumors that we have heard the staff has been completely fired."

After what appears to have been a disquieting period of silence, Alpha Red posted to the WHT forums late Friday evening, saying "As of this afternoon, we have received a Letter of Intent and have entered into negotiations with CWIE Holding Company, Inc, parent company of CCBill on an agreement to further protect and secure your ongoing service."