A US man dubbed the "godfather of spam" has been jailed for over four years for his role in an e-mail stock fraud scam that netted around $2.7 million.
Alan Ralsky and three co-conspirators have been jailed for their roles in the scheme, with five others set to be sentenced today.
Between January 2004 and September 2005 the gang used a botnet to send out spam e-mails, often promoting thinly traded "pink sheet" stocks for US companies owned and controlled by individuals in Hong Kong and China. They then profited by trading in the stocks once their prices increased on purchases by recipients of the e-mails.
The spam e-mails contained "materially false and misleading information or omissions" and were created and sent using software programs that made it difficult to trace them back to the conspirators.
The gang used wire communications, the US mail and common carriers to perpetrate their frauds and also engaged in money laundering involving millions of dollars generated by their manipulative stock trading, says the indictment.
The defendants used various illegal methods in order to maximise the amount of spam that evaded blocking devices and tricked recipients into opening, and acting on, the advertisements in the spam. These included using falsified "headers" in the e-mail messages, using proxy computers to relay the spam and using falsely registered domain names.
Ralsky, of West Bloomfield, Michigan, served as the chief executive officer and primary deal maker for the spam e-mail operation says the Department of Justice. He has been sentenced to 51 months in prison, for for committing wire fraud, engaging in money laundering and violating the CAN-SPAM Act as well as conspiracy.
Scott Bradley, his son-in-law, received 40 months in prison, How Wai John Hui, a resident of Hong Kong and Canada, was sentenced to 51 months and John Bown of Fresno, California, 32 months.
US Attorney Terrence Berg, Eastern District of Michigan, says: "With today's sentence of the self-proclaimed 'Godfather of Spam,' Alan Ralsky, and three others who played central roles in a complicated stock spam pump and dump scheme, the Court has made it clear that advancing fraud through abuse of the Internet will lead to several years in prison."
Andrew Arena, special agent in charge, FBI, adds: "Cyber crime investigations are a top priority of the FBI and we will continue to aggressively investigate those individuals who use and hide behind computers to commit various crimes."