(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.”
