23 June 2009

Attention Men: A Gui1ty P1ea From The Sp@m K1ng

Story from the Detroit News

Detroit -- A West Bloomfield man identified by a federal prosecutor as "the world's most notorious illegal spammer," pleaded guilty Monday to federal fraud and money laundering charges.

Alan M. Ralsky, 64, known as the "Spam King" for his years as a prolific and sophisticated e-mailer for hire, entered pleas before U.S. District Judge Marianne O. Battani to crimes that could cost him $1 million and put him behind bars for more than seven years.

Ralsky also agreed to help the government in future investigations in return for a possible reduction in his sentence.

For years, Ralsky has flooded the Internet with unsolicited promotions for everything from mortgages to male enhancement pills.

He pleaded guilty to being the mastermind of a scheme that boosted the value of "pink sheet" Chinese penny stocks by spamming tens of millions of Internet e-mail addresses with promotional messages.

When the prices rose, Ralsky and his co-defendants unloaded their stocks at a profit, according to government investigators.

It was alleged that Ralsky made about $3 million from illegal spamming in the summer of 2005 alone.

Also pleading guilty Monday were Ralsky's son-in-law, Scott K. Bradley, 48, of West Bloomfield; and co-conspirators James E. Fite, 36, of Culver City, Calif.; John S. Bown, 45, of Fresno, Calif.; and William C. Neil, 46, also of Fresno.

When indictments were handed up by a grand jury in January, the case was described by federal authorities as the largest criminal spam and Internet fraud action in American history.

"Using the Internet to manipulate the stock market through spam e-mail campaigns is a serious crime," U.S. Attorney Terrence Berg, the prosecutor in the case, said in a statement released Monday.

"This case serves notice that federal law enforcement has both the capacity and the will to successfully investigate, prosecute and punish cybercrimes."

The defendants from China, Canada, Russia and throughout the United States were accused of using elaborate software to send millions of spam e-mail messages daily between 2004 and 2006. Federal agents raided Ralsky's $750,000 home and other locations in September 2005, seizing computer equipment.

At that time, Ralsky told The Detroit News he wasn't a spammer, but described his work as "a commercial e-mailer."

...the case was described by federal authorities as the largest criminal spam and Internet fraud action in American history

But, John Mozena, a Grosse Pointe Woods resident and co-founder of the Coalition Against Unsolicited Commercial E-Mail, said it's the illegal actions of Internet buccaneers like Ralsky that clog e-mail boxes with junk mail and cause untold expenses for legitimate businesses.

"We are all paying the 'Spam Tax' because of spammers like Ralsky," said Mozena who helped law enforcement when it launched a three-year investigation of Ralsky.

"A huge percentage of e-mail is spam, which loads mailboxes and causes money to be spent on teams of experts bent on stopping it.

"Your computer can be hijacked and used in a 'botnet,' like a zombie, to send more e-mail without you even knowing about it until your service provider suddenly cancels your service.

"There is a large added cost to being on the Internet and we are all having to pay this cost for unscrupulous unethical people who are trying to hijack it to make money."

Ralsky is a former insurance agent who lost his license in Illinois and declared bankruptcy. He served three years probation for a felony conviction of falsifying bank records.

In the late 1990s, he sold his car to buy computers and launch a business sending bulk e-mail messages.

In 2002, Ralsky agreed to an undisclosed cash settlement to end a lawsuit against him by Verizon Internet Services, which alleged he twice paralyzed the network in 2000 with massive e-mailed pitches for items like diet pills and vacations.

He boasted of getting offers from colleges to lecture on his Internet practices.

Federal laws enacted in 2004 making electronic mail fraud a crime describe signs of illegal spam as including efforts to disguise the source and nature of e-mails, and using techniques to evade spam filtering programs.

"He was one of the bigger guys out there, but it's so hard to figure out who is actually doing this because of hidden identities, shell companies and offshore servers," Mozena said.

"In the end, I believe it was old-fashioned police work that caught up to Mr. Ralsky. The feds followed the money. They tracked his profits and that's a lot easier than trying to convince a judge and jury of the details of network topography in China."

Prior guilty pleas were taken from Judy Devenow, 56, of East Lansing, Francis Tribble, 41, of Los Angeles, Calif., and How Wai John Hui, 50, of Vancouver, Canada, and Hong Kong, China. No date has been set for sentencing. Ralsky and the others will remain free until then.

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