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(WEB HOST INDUSTRY REVIEW) -- Four men including the "Godfather of Spam" were sentenced this week by US District Judge Marianne O. Battani in federal court in Detroit for their roles in a wide-ranging international stock fraud scheme involving the illegal use of spam emails.
According to the US Department of Justice's Monday announcement, Detroit's self-described "Godfather of Spam," Alan M. Ralsky, was sentenced to more than four years for committing wire fraud, engaging in money laundering and violating the CAN-SPAM Act, as well as conspiracy to commit such acts. Three co-conspirators were also sentenced for multi-million dollar email stock fraud scheme following a three year FBI-led investigation.
"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 Terrence Berg, US Attorney for the Eastern District of Michigan. "I commend the FBI, the Postal Inspection Service, and the IRS Criminal Investigative Division for their determined and careful investigation in this case which lead to today's result."
From January 2004 through September 2005, Ralsky, Scott Bradley, Judy Devenow, John S. Bown, William Neil, James Bragg, James Fite, How Wai John Hui, Francis Tribble and others allegedly used spam emails to manipulate thinly traded "pink sheet" stocks. They would buy the stocks, send spam promotional emails, and profit by trading in those stocks once their share prices rose.
Ralsky served as the chief executive officer and primary deal maker for the operation. Bradley, Ralsky's son-in-law, served as the chief financial officer and director of operations for the spam email operation. Bown, who was chief executive officer of an Internet services company, GDC Layer One, served as the chief technology officer for the spam operation. Hui, who was the CEO of China World Trade, served as the lead dealmaker representing the companies whose stocks were being promoted via spam email.
According to the indictment, the spam emails 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. They also used various illegal methods in order to evade spam-blocking devices, including falsifying email headers, using proxy computers to relay the spam, using falsely registered domain names to send the spam, and also making misrepresentations in the advertising content of some of the underlying email messages.
The defendants were indicted in the Eastern District of Michigan in December 2007. Ralsky, Bradley, Bown, William Neil, Bragg, and Fite pleaded guilty in June 2009 while Hui pleaded guilty in December 2008.
"Today's sentencing sends a powerful message to spammers whose goal is to manipulate financial transactions and the stock market through illegal email advertisements," said Assistant Attorney General Lanny A. Breuer. "People who use fraudulent emails to drive up stock prices and reap illicit profits will be prosecuted, and they will face significant prison time."
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Read Back Issues of WHIR Magazine
October 2009 - Web Hosting's All Star Team
This has been, for us, one of the most interesting, exciting and challenging build-ups to an issue of the magazine yet, Web Hosting's All Star Team. The balloting process was our first experiment with a kind of user participation we're planning to do a lot more with in the months to come. We had thousands of ballots submitted, with hundreds of write-in suggestions and a demonstration of user engagement that has us feeling super positive about the project.
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July 2009 - What am I Worth?
One of the interesting luxuries of working on a project like the printed WHIR magazine is that it allows us to play with things like our point of view from one issue to the next. In recent months we've been giving added attention to the kind of practical and applicable advice aimed at smaller hosts and resellers. This issue carries on with that point of view, asking, in our cover story, "what am I worth?" It's a complicated question without a clear-cut answer.
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May 2009 - The Blueprint for a Small Web Host
I was a little surprised by how difficult it became to see this idea through. We set out to assemble a blueprint for a small hosting business, but butted up pretty quickly against the general impossibility of covering all the territory that was out there to be covered. The basic constraints of a printed magazine, and the less-than-infinite amount of time we had available forced us to face the fact that we could never produce an exhaustive guide to starting a hosting company.
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Comment by Anonymous on Saturday, November 28, 2009
JMHO, but four years is NOT "significant" jail time! It's a white collar crime, he might do 14 months.
Comment by Anonymous on Monday, November 30, 2009
Whatever. In the meantime, 99.9% of spam continues unabated due to the worthless CAN-SPAM act.