There are a lot of blackhatters doing this, or used to do this, some Google updates can ruin your income. Check out autoblogging. No need for Pay-Per-Download of malicious addons, you can do just fine with other acceptable PPC or CPA

Unfortunately this happens quite often. There is a specific type of tactics used to bring down these sites or knock them off the top of SERPs, it is called "Reputation Management". Depending on the competition and other factors it can be a little pricey, so you will have to outweigh the benefits against the cost. Feel free to contact me for a reference.