This is a great demonstration of what can happen with unnatural linking schemes and getting hosed by using link farms. This company did some black-hat SEO and it came back to bite them. Luckily the article shows that it is possible to recover from a Google update nightmare, but it will be expensive and very time consuming. What’s the best thing you can do to protect yourself? Build links naturally and with a strong focus on authority. Look to the site’s that are linking to you – does Google trust them? Do you?
http://searchenginewatch.com/article/2377198/Penguin-3.0-A-Proven-Roadmap-to-Recovery