EU passports for sale

On the www.guardian.co.uk I came across an advertisement by http://www.crownpassport.com/. Who claims to offer "second citizenship, naturalization programs for visa-free travel world wide." They do that by acquiring Latvian passports. As Latvia is an EU member state, and part of the Schengen area, Latvian citizenship will grant access to the rest of Europe. Is this an abuse under the Schengen agreement? Does the Latvian government know about this practice? Does Latvia even profit from this? Latvia is one of the worst hit EU countries in the economic crisis.