Friday, January 4, 2008
'Spam King,' 10 others indicted
West Bloomfield man is among those who sent e-mail that illegally drove up stock prices, feds say.
Paul Egan / The Detroit News
DETROIT -- Alan M. Ralsky of West Bloomfield, who is known as the "Spam King," has been indicted along with 10 other defendants in what U.S. Attorney Stephen Murphy described Thursday as the largest criminal spam and Internet fraud case in American history.
A federal grand jury alleges Ralsky, 62, headed an international ring that used sophisticated software to send out millions of spam e-mail messages a day. Many of those messages were used to illegally pump up the prices of penny stocks held by Ralsky and other defendants in the case, the indictment unsealed Thursday alleges.
"Today's charges strike at the heart of the abuses of some of the technology that criminal defendants have been engaged in over the years," Murphy said at a news conference.
Charges in the 41-count indictment include conspiracy, electronic mail fraud, mail fraud and wire fraud. The latter two counts are 20-year felonies.
Ralsky had not been arrested and was believed to be in Europe on Thursday. His Cleveland attorney, Philip S. Kushner, said Ralsky will voluntarily surrender to federal authorities in the next few days.
"We didn't know that an indictment was coming," Kushner said. "Mr. Ralsky intends to fight these charges, which are brought under a new federal statute that has not been interpreted by the courts."
Federal agents raided Ralsky's home and other locations in September 2005, seizing large amounts of computer equipment. At the time, Ralsky told The Detroit News, "I'm not a spammer," but "a commercial e-mailer." He also said he was out of business as a result of the raids.
The 39-page indictment alleges illegal conduct between 2004 and 2006.
According to the indictment, Ralsky sent messages touting penny stocks he owned, coaxing investors who received the spam messages into purchasing shares. When the prices would go up, the indictment alleges, he would sell the stocks at a profit.
The federal CAN-SPAM (Controlling the Assault of Non-Solicited Pornography and Marketing) Act took effect in 2004, making electronic mail fraud a crime.
Signs of illegal spam include disguising the sources and natures of the e-mails and using techniques to evade spam filtering programs.
The illegal stock manipulation allegations make the case more serious, Murphy said. It's alleged Ralsky netted about $3 million in the summer of 2005 alone as a result of illegal spamming.
Two other Michigan residents are named in the indictment and were expected to appear briefly Thursday in U.S. District Court in Detroit.
They are Ralsky's son-in-law, Scott K. Bradley, 46, of West Bloomfield, and Judy M. Devenow, 55, of Lansing.
Also charged are: John S. Brown, 47, of Poway, Calif.; William C. Neil, 45, of Fresno, Calif.; Anki K. Neil, 36, of Fresno, Calif.; James E. Bragg, 39, of Queen Creek, Ariz.; James E. Fite, 34, of Whittier, Calif.; Peter Severa, age unknown, of Russia; How Wai John Hui, 49, of Vancouver, British Columbia, and Hong Kong, China; and Francis A. Tribble, age unknown, of Los Angeles, Calif.
First Assistant U.S. Attorney Terrence Berg, who is in charge of the case, said the indictment was unsealed sooner than planned after Hui arrived on a flight at JFK Airport in New York Wednesday and was arrested.
Agents from the FBI, the Internal Revenue Service, and the U.S. Postal Inspection Service were part of the investigation.
John Mozena of Grosse Pointe Woods, a co-founder of the Coalition Against Unsolicited Commercial E-mail, said he is not active in the group but was pleased to hear about the indictment.
Mozena said the relatively new electronic mail fraud law appears ineffective. "We get as much or more spam as we ever did," Mozena said.
But more traditional laws such as wire fraud can be used effectively to fight illegal spammers, he said.