Updated Friday Jan. 4, 2008 at 5:36 p.m. EST
A federal grand jury Thursday returned a 41-count indictment against Alan Ralsky, the so-called "Spam King" of Michigan whom authorities accused of running one of the nation's most prolific pump-and-dump
stock junk mail outfits.
Alan Ralsky, 62, of West Bloomfield, Mich., and 10 others were charged following a three-year federal investigation that uncovered “a sophisticated and extensive spamming
operation” attempting to dupe recipients into purchasing thinly traded Chinese penny stocks, according to a U.S. attorney's statement.
The spammers' goal was to purchase the stock, drive up its price through the mass spam campaign and sell the shares at the artificially inflated price, authorities said. The ring collected more than $3 million in estimated profits in the summer of 2005 alone.
“Today's charges seek to knock out one of the largest illegal spamming and fraud operations in the country,” U.S. Attorney Stephen Murphy said.
International anti-spam nonprofit Spamhaus
applauded the announcement Thursday, saying Ralsky was a member of the group's Top 10 Worst Spammers' list.
“We at Spamhaus are, of course, very pleased at the news,” Spamhaus' Quentin Jenkins wrote on the organization's blog. “[Ralsky's] gang frequently sent millions of spam messages per day.”
Ralsky and his 10 accomplices used fake headers and bogus domain names to mask where the messages were coming from and to trick recipients into reading the spam, authorities said. The group used compromised computers, known as botnets, to automatically deliver the spam, often in droves.
The defendants were arrested under the federal CAN-SPAM Act
Ralsky's Cleveland-based attorney, Philip Kushner, said his client is currently out of the country, attending a funeral, but intends to plead innocent when he returns. Kushner said he will challenge the wording of the federal anti-spam law, enacted in 2003.
"It's true (Ralsky) has been involved in electronic marketing, but he disputes what he's done is a crime," Kushner told SCMagazineUS.com today. "Not all spam is illegal. There is a new statute that tries to distinguish what is permitted and what isn't and it's relatively untested and it has not been interpreted."
Another key member of the ring was How Wai John Hui, 49, of Vancouver, British Columbia and Hong Kong, who was responsible for working with Chinese companies that wanted their stocks used in the scam.
Also charged were Scott Bradley, 46, of West Bloomfield, Mich.; Judy Devenow, 55, of Lansing, Mich.; John Bown, 47, of Poway, Calif.; William Neil, 45, and Anki Neil, 36, of Fresno, Calif.; James Bragg, 39, of Queen Creek, Ariz.; James Fite, 34, of Whittier, Calif.; Peter Severa, age unknown, of Russia; and Francis Tribble, age unknown, of Los Angeles.
Authorities lodged a number of charges against them, including conspiracy, fraud in connection with electronic mail, computer fraud, mail fraud, wire fraud and money laundering.
This is not the first spam allegation against Ralsky. Verizon sued him in 2001, contending he sent spam to millions of its internet customers. He settled the suit in 2002 by paying an unspecified amount in damages to the company and agreeing to not spam its customers anymore.