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An employee in Mahalo's IT department, John Schiefer, has been sentenced to 4 years in prison for launching a botnet attack. He was charged and agreed to plead guilty back in 2007. In the meantime, he got a job at Mahalo and has been working there up to his sentencing.

Mahalo CEO Jason Calacanis has posted a lengthy explanation about how Schiefer was hired, and why he has kept him on staff until his sentencing (he's also tweeted several times about the incident). What it pretty much comes down to is that Calacanis feels that he is a good judge of character and he thinks Schiefer was just a dumb kid when he launched the (failed) attack and has seen the error of his ways.

Calacanis also wants to assure users that their information is not in any danger. "John’s work is well-supervised. Mahalo follows strict security policies and we don’t store any sensitive data anyway (Even if one of our employees did go off the deep end, the most they would have access to would be your questions and answers on Mahalo Answers–not much damage can be done there since they’re all public anyway)," he says.

Even if nobody's data is in danger, this incident is likely going to leave a large bruise on the trust and credibility of Mahalo. The fact that he's keeping him on as an employee up until his incarceration won't help this. Calacanis defends the company’s decisions to the end though, and is well aware of the backlash the fiasco is likely to bring upon him and his company.

Calacanis notes that a simple Google search could've prevented him from being hired in the first place, and of course kept the whole ordeal from happening. Yet at the same time, he conveys little regret about the hiring at all. He says he's ready to give him a job again once he gets out of prison.

Even if Schiefer is a great guy and is truly reformed, I can't see this sitting well with customers. Calacanis has taken quite a chance with this approach.