Target Spam: NY AG, Microsoft File $38M Suits

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In partnership with Microsoft , New York Attorney General Eliot Spitzer on Thursday announced a massive legal offensive against a spam network allegedly responsible for sending more than 250 million junk e-mails daily.

Spitzer filed a $20 million lawsuit against a New York-based spam ring allegedly led by Scott Richter, president of e-mail marketing firm OptInRealBig.com, accusing the company of being part of a network that hijacked computers and used them as drone machines to send billions of illegal and deceptive spam messages.

In addition to Richter and OptInRealBig.com, lawsuits were filed against New York-based Synergy6 Inc. and five others who allegedly assisted in the distribution of the spam messages. The lawsuits were filed under existing anti-fraud statutes and had nothing to do with the Can Spam Bill signed into law earlier this week.

Microsoft also announced it had filed a separate suit against the same defendants seeking damages of $18.8 million. Additionally, the software giant filed five other lawsuits against alleged spammers which Microsoft says used the same transmission route that Richter employed. Defendants in those suits include Delta7 Communications; Boxplay5.com; Webmed-RX.com; Safemed-RX.com; Teslianet; Nutriworx; and Jonathan Huang and Ann Le Dangtran doing business as AJ Imports, Enhance Institute and Epar.

All of the spam campaigns the company details in its suits involve the falsification of Microsoft domains as origination addresses. Hotmail.com and msn.com were allegedly “spoofed,” as were the domains of other major ISPs, such as aol.com, netscape.net earthlink.com, yahoo.com, juno.com, and bellsouth.net.

Combined, the lawsuits seek penalties in excess of $38 million and Spitzer made it clear in a press conference Thursday that the mission is to put spammers out of business for good.

“We want to prove to others who are spammers that the penalties will make it financially unviable. When we catch you, we’ll drive you into bankruptcy. We have to shut them down and make it evident that there is no viable business model to sending fraudulent spam messages,” Spitzer declared.

According to Spitzer, the lawsuits were a culmination of a six-month investigation that included spam traps set by Microsoft to pinpoint spammers. Microsoft chief counsel Brad Smith explained that investigators discovered a high volume of spam originating from a compromised IP address in New York and traced the mail back to Synergy6.

The lawsuit alleged that the New York AG’s office was able to track the e-mails to identify separate marketing campaigns that passed through 514 IP addresses around the world. “The investigation identified Richter in Colorado and his partners in Washington, Texas and New York as responsible for the campaigns,” Spitzer declared.

The investigators also determined that the e-mail messages were developed and sent from hijacked computers belonging to a foreign government’s defense ministry, others from a hospital, and still more from elementary and high schools. According to the lawsuits, the spam messages used other people’s sender names, false subject lines, fake server names, inaccurate and misrepresented sender addresses, or obscured transmission paths, all in violation of New York and Washington state law.

Spitzer is seeking $500 for each fraudulent statement contained in 8,000 e-mail messages trapped between May 13 and June 13 this year. “We examined the 8,000 e-mails and found 40,000 fraudulent statements,” Spitzer declared.

On its home page, OptInRealBig.com “vigorously” denied any violations of New York law. The company said it would not be making any further comments until it reviewed the complaint.

But Spitzer was pulling no punches. He described the spam scourge as “junk mail and telemarketing on steroids” and described the Nevada-based Richter as the “third largest spammer in the world.”

He said Richter was hired by Synergy6 to blast out billions of e-mails to hawk items ranging from diamond earrings to teeth whiteners. “The reason they send 250 million e-mails a day is to find a way past mail filters. They have fraudulently loaded deceptive information and misinformation to fool ISPs and consumers into receiving those mails,” the Attorney General alleged.

“We believe Scott Richter is clearing several million dollars a month in profits from his illegal activities. That’s why we are seeking heavy damages. The penalties we are seeking are sufficient to wipe out whatever profits he made,” Spitzer declared.

Spitzer declined to release details that will be used a trial evidence but made it clear the parallel investigations with Microsoft had produced a roadmap for future use in the ongoing anti-spam battle.

“They tried to cover tracks during every stage of the network. They used new technologies and tools but we were able to penetrated every layer of the deception,” he added. He accused Synergy6 and OptInRealBig.com of setting up “operational layers” by subcontracting the activities to third-party individuals who were also included in the lawsuit.

Microsoft has been in the midst of a legal blitz against spammers throughout the past year. Last June, working with attorneys general in the United States as well as authorities in London, Microsoft announced that it had filed 15 lawsuits in the U.S. and United Kingdom targeting entities the company accuses of sending more than 2 billion spam messages to MSN and Hotmail users.

Of the 15 suits filed in June, 12 were filed in Microsoft’s home state, Washington, another in California, and the other two in London. Those cases are accusing spammers of using deception and fraud in their unsolicited commercial bulk e-mail.

Spitzer, for his part, has worked to shut down spammers. In January, for example, he hailed a decision by a Manhattan Supreme Court to enjoin accused spammer MonsterHut from falsely representing its e-mail marketing messages.

In that case, a judge ruled that Niagara Falls, N.Y.-based MonsterHut and its two top executives must stop from “further engaging in any of the fraudulent, deceptive and illegal acts and practices” relating to the company’s claim that its marketing service is opt-in or opt-out.

Microsoft is not the only ISP to target spammers. EarthLink successfully pursued Howard Carmack, also known as the “Buffalo Spammer.” The Atlanta ISP won a $16 million judgment against Carmack in May, and a week later he was arrested by New York state authorities. Last July, EarthLink won a $25 million judgment in another spam case.

With the help of AOL to build their case, Virginia authorities arrested and charged a North Carolina man last week with four felony counts of using deceptive routing information in sending bulk commercial e-mail. The indictments are the first felonies in the country to be levied against a spammer under Virginia’s tough new anti-spam law.