Kristy Marie Ross grew up in the Treasure Valley, hailed as a star student and athlete when she was a student at Centennial and Eagle high schools.

She looked to be another Idaho success story when she began earning big money through a start-up Internet company on the East Coast. But that success unraveled into a series of legal disputes that culminated in a $163 million civil judgment in a Maryland federal courtroom in September.

Now federal authorities say Ross, who has family in the Meridian area, is nowhere to be found. Federal authorities suspect she’s hiding on the Caribbean island of Nevis, where an online voter registry from April 2011 lists her as a resident. Her ex-boyfriend and former business partner, Sam Jain, is an international fugitive whose photo appears on the FBI’s Cyber Crimes website.

How Ross, now 32, went from star Idaho student to accused Internet scammer represented by a prominent white-collar criminal lawyer is a story of entrepreneurship and financial ruin. Federal officials say Ross participated in an Internet software scam designed to scare people into buying a product they don’t need to rid their computers of viruses and illegal pornography that didn’t exist.

“They scared millions of people,” said Paul Spelman, a Washington, D.C., attorney with the Federal Trade Commission.

And they got rich doing it. Two of Ross’ business partners settled their cases by paying $8 million each. Ross is the only one to fight the civil case in court.

Now Ross owes the government $163 million, which a judge said was the proceeds of the far-reaching scam.

Authorities haven’t seen a cent so far.

“Do we expect to get the $163 million from her? No,” Spelman said. “What we try to do is get whatever we can from her.”

‘SHE WAS A BABY’

Ross’ lawyer, Carolyn Gurland, has appealed the verdict and says federal authorities have the story all wrong.

The Chicago lawyer, who represented former Illinois Gov. Rod Blagojevich and ex-media mogul Lord Conrad Black, told the Idaho Statesman that Ross is “one of the most amazing people I’ve ever been privileged enough to meet,” hardly the high-tech con artist the FTC alleges. Rather, Gurland says, Ross was a young woman who worked hard to follow her boyfriend’s orders and ended up becoming a victim herself.

“She was a baby — she had no idea what the hell these boys were doing,” Gurland said. “She was just diligent and smart and hard-working.

“She tried to rein it in, but she couldn’t do it all.”

BUILDING AN INTERNET EMPIRE

Ross was living in Maryland in the early 2000s when she met Jain, who operated an Internet business called Innovative Marketing. The company marketed Internet security software that the FTC says was nothing more than scareware — fraudulent software that aims to scare users into purchasing it.

Innovative Marketing pushed advertisements that claimed users had hundreds of viruses or illegal files that needed cleansing and offered software for $39.95 or more. But installing the product didn’t help; it gave the user more scareware ads, according to the FTC.

“It was basically to get you to think ‘Oh my God, this stuff’s on my computer, and I need to get it off. I could get in trouble for this, or I could get in trouble with my wife for this,’ ” Spelman said. “So people would end up paying for their security software.”

Soon, complaints were pouring into the FTC. Spelman called the thousands of complaints “the tip of the iceberg.”

“Most people this happens to don’t file complaints,” he said.

A civil complaint filed by the FTC against Ross, Jain and business partners Daniel Sundin, Marc D’Souza and James Reno in December 2008 led a federal judge in Maryland to order Innovative Marketing and a similar partner company, Byte Hosting, to shut down.

In May 2010, a grand jury indicted Jain, Sundin and Reno on felony charges including wire fraud and conspiracy to defraud the government. Jain and Sundin are fugitives, Spelman said, who have left the United States to avoid prosecution.

Ross, Marc D’Souza and his father, Maurice D’Souza, have not been charged criminally. The two D’Souzas each paid $8 million to settle their cases out of court last year.

The money went to repay consumers who were ripped off by the scareware scam, Spelman said.

But Gurland said federal authorities have badly mischaracterized the software, which she described as a legitimate security product that left many purchasers completely satisfied.

Federal authorities reached the $163 million figure by counting “every single dollar that every single person who had ever bought software from IM ever spent,” Gurland said. “But most of those people never complained or ever had any problem.”

The problem with the company’s marketing tactics began when the company grew so large it hired people in Ukraine to handle advertising and who used scare tactics that drew the ire of the FTC, Gurland said.

“They didn’t know honest from dishonest,” Gurland said. “They were just like ‘Holy mother of God, money!’ ”

DIDN’T SHOW IN COURT

The legal turmoil extends to Canada, where Jain and Sundin have sued the D’Souzas, alleging they embezzled millions from Innovative Marketing. The partnership turned into a fight about money after Ross ended her relationship with Jain and began seeing Marc D’Souza, Spelman said. Marc D’Souza has since countersued Jain and Sundin.

Documents and testimony from that lawsuit helped show U.S. District Judge Richard Bennett that Ross had much more control over the company than Gurland portrayed, Spelman said. Spelman said Ross could still face criminal charges.

In his 29-page ruling issued Sept. 24, Bennett wrote that Gurland portrayed Ross as “a betrayed young woman who made poor choices in both work and life partners.” But, Bennett said, “her expertise in marketing was touted by her partners and used to deceive and defraud a large number of consumers.”

Ross never showed up for the civil trial. Gurland said she advised her to stay away.

“The judge was angry that she didn’t show up, but she couldn’t show up because we had no assurances that she wouldn’t be indicted criminally and taken away right then,” Gurland said. “She would have loved to have told her story.”

Gurland has appealed Bennett’s judgment. She said the judge, a former U.S. attorney for Maryland, did not allow her to present crucial evidence that supported Ross’ innocence, such as testimony from a NASA software expert who found no problems with the products Innovative Marketing sold.

“The judge didn’t want to hear that all her products worked just fine,” Gurland said.

Spelman said federal authorities hope to get anything they can from Ross, but acknowledge that may be close to impossible if she’s not in the United States.

“We can make efforts to get that money,” he said, “but overseas governments and banks are not always amenable to our requests.”

IN TOUCH WITH IDAHO FAMILY

Ross was a freshman at Centennial High School in 1995, when the yearbook described her as a honors student who excelled at soccer and participated in speech, piano, basketball and volleyball. She transferred to Eagle High School the next year, but it’s not clear if she graduated.

Gurland said Ross left Idaho while in high school and was estranged from her family. She’s since rekindled that relationship, Gurland said, but declined to say whether she’s seen them in person recently.

Gurland declined comment on Spelman’s assertion that Ross is hiding in Caribbean, but said Ross has had long conversations with her friend Dan Webb, a high-profile business lawyer who’s representing former U.S. Rep. Jesse Jackson Jr. amidst a criminal investigation into campaign contributions.

“She gave (Webb) a history book about Nevis as a gift. The two are like, fast, life-long friends,” Gurland said. “That’s who she is. She’s that brilliant.”

Meghann M. Cuniff: 377-6418