Top spammer gets four years in jail for stock fraud scheme

Alan Ralsky, the self-proclaimed "Godfather of Spam," was jailed for his role in a stock fraud spam scheme.

The self-proclaimed "Godfather of Spam," indicted for flooding email clients with millions of spam messages touting stocks, was jailed this week, after a judge found him guilty for his role in a stock fraud spam scheme. 

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Notorious spammer Alan M. Ralsky of West Bloomfield, Mich., was sentenced to more than four years in prison. He was jailed with three others, Ralsky's son-in-law Scott Bradley, also from West Bloomfield, John S. Bown, from Fresno, Calif., and How Wai John Hui, a resident of Hong Kong and Canada.

Bradley and Hui received four year sentences. Bown received a three year sentence. All four men were indicted in 2007 and plead guilty to mail fraud, wire fraud, e-mail fraud, aggravated identity theft, money laundering, and CAN-SPAM Act violations.

Investigators from the FBI, the Postal Inspection Service and the IRS Criminal Investigative Division spent three-years building up a case against the men to halt the illegal spamming. Prosecutors said the men set up botnets by infecting computers with malicious code to create and control an army of zombie machines that sent out millions of junk emails since 2003. The spam messages promoted the sale of "pink sheet" stocks, artificially inflating the price so that prior holders of the stock could sell for a profit. 

Spam:

Top spammer indicted on email fraud, identity theft: The arrest may reduce the volume of spam in the short-term, say experts and analysts, but the real spam threat comes from criminal gangs based in Asia and Russia. 

Top spammer indicted on email fraud, identity theft: The arrest may reduce the volume of spam in the short-term, say experts and analysts, but the real spam threat comes from criminal gangs based in Asia and Russia. 

Technology making headway in spam battle: Few people in the world know more about identifying and stopping spam and other unwanted email than Paul Judge.

"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," said U.S. Attorney Terrence Berg for the Eastern District of Michigan in a statement.

Berg said the group sent messages pushing stocks of U.S. companies owned and controlled by individuals in Hong Kong and China. The men also engaged in money laundering involving millions of dollars generated by their manipulative stock trading, he said. Cases are still pending against two other men indicted for their alleged role in the stock spam scheme.

Microsoft has been aggressively tracking an investigating spammers. The software giant's Internet Safety Enforcement Team collected enough data to successfully win a $7.8 million civil judgment against  Robert Soloway in 2005, and helped federal prosecutors in Seattle obtain a guilty plea from Soloway on fraud charges related to his spam operations.

Security experts mostly praise law enforcement actions against spammers and malware pushers hoping it will help discourage others from taking part in cybercriminal activity. Although spam levels fluctuate, it shows a temporary dip any time a major spam or malware operation is shut down.

The de-accreditation of EstDomains, an ISP suspected by many to be hosting the command and control channels for botnets and the shut down of McColo Corp., which was known to be a hosting provider for spammers and malware pushers were among the most visible law enforcement actions against cybercriminal activity. 

The actions did little to slow global spam levels, although they caused a temporary dip in spam associated with the disrupting the Srizbi botnet, which was responsible for 50% of all spam. Srizbi has since returned to previous levels.

In the most recent security vendor activity reports, spam and Web-based attacks continue their upward trend, fueled by the use of botnets and automated attack tools designed to make running a botnet easy. McAfee Inc.'s report found  spam and malware levels at an all-time high. McAfee said spam in the third quarter reached its highest level in history, breaking the previous record set in the second quarter of 2009 by 10%. It now comprises 92% of all email.

Much of the spam can be attributed to the Cutwail botnet, which has rebounded since its command-and-control servers were disrupted by the Federal Trade Commission's shutdown of rogue ISP 3FN.net.

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