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Accused Spam King Alan Ralsky Pleads Guilty

Alan Ralsky, a 64-year-old Michigan man that federal investigators say was among the world's top spam kingpins, pleaded guilty on Monday to running a multi-million dollar international stock fraud scam powered by junk e-mail.

ralsky.JPG

Ralsky (pictured at right, courtesy of Spamhaus) and his son-in-law and chief financial officer Scott K. Bradley, 38, also of Michigan, pleaded guilty to conspiracy to commit wire fraud, money laundering and to violate the CAN-SPAM Act. Under the terms of his plea agreement, Ralsky faces as much as 87 months in prison and a $1 million fine, while Bradley could get as much as 78 months in prison and a $1 million fine under the federal sentencing guidelines.

The Ralsky plea caps a long effort by the government to nab one of the most prolific spammers. In September 2005, the FBI raided Ralsky's home, but it wasn't until early 2008 that the government indicted Ralsky and 10 others tied to a scheme to manipulate Chinese stock prices through the use of junk e-mail.

The defendants admitted to sending tens of millions of e-mails in a bid to pump up the prices of Chinese penny stocks, and then selling the stocks at inflated prices. According to court records, Ralsky and his accomplices blasted out their spam through botnets, using tens of thousands of hijacked PCs to relay their junk messages. The government says they earned as much as $3 million during the summer of 2005 through the scams.

Richard Cox, chief information officer at Spamhaus.org, a group that tracks spammers and spam activity, said his organization has followed Ralsky orchestrating spam campaigns as far back as 1997.

"This has been a long time coming," Cox said. "Ralsky has been identified as one of the key drivers of a lot of development in the spam world, and was among the first to commission mass-mailing Trojans to help develop spam botnets."

Cox said stock spam has taken a big hit since Ralsky's indictment, but that even 87 months -- if he actually receives that much -- would be far too lenient a sentence for someone who caused so much misery for computer and network owners and operators. "If you look at the fact he was paying money to people to develop botnets - and the cost to millions of innocent people around the world who had to pay lots of money every time they had to repair their computer to fix the damage caused by his spam Trojans -- even the maximum time he could get under this agreement is not nearly enough."

Prior to the government's case against him, Ralsky tangled with several Internet service providers. Verizon Communications Inc. sued him in 2001, charging that he clogged its network with millions of e-mail solicitations. Ralsky settled that lawsuit in 2002, pledging to no longer spam Verizon's customers.

Also pleading guilty in connection with the Ralsky case are:

-John S. Bown, 45, of Fresno, Calif., the chief technology officer for the spamming operation. He faces up to 63 months in prison and a $75,000 fine.

-William C. Neil, 46, of Fresno, who built and maintained a computer network used to transmit junk e-mails as part of the conspiracy. Neil is looking at as much as 37 months in prison and a $30,000 fine.

-James E. Fite, a 36-year-old from Culver City, Calif., a contract spammer, who hired others to send spam. Fite is facing up to two years in prison and a $30,000 fine.

All five defendants are scheduled to be sentenced on Oct 29, 2009.

By Brian Krebs  |  June 23, 2009; 10:15 AM ET
Categories:  Cyber Justice , Fraud , U.S. Government  | Tags: alan ralsky plea  
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Comments

Is it just me or are those sentences and fines really light? They're not even losing all they made from their crime, let alone feeling any real financial pain. How's that supposed to be a deterrent?

Posted by: csdiego | June 23, 2009 10:53 AM | Report abuse

If the length of sentence couldn't be increased, perhaps the severity could?

Let's put the lot of them in the stocks for a year or two. Public humiliation! More appropriate than tucking them away in private.

Posted by: jamshark70 | June 23, 2009 10:58 AM | Report abuse

This couldn't happen to a better bunch of people. Kudo's to AUSA Lanny A. Breuer and his team that is prosecuting this case and the investigation team that put it all together.

This case may have not been "sexy," but these folks have caused more IT problems and headaches than one can imagine.

But after looking at this from a cost-benefit perspective, if Ralsky took in $3 million, he is only paying a $1 million fine. He'll cruise along in a minimum security facility for 6 years, while earning interest and / or dividends on the remaining $2 Million.

Posted by: Computer_Forensics_Expert_Computer_Expert_Witness | June 23, 2009 11:00 AM | Report abuse

I'm against the death penalty, but I hope he hangs!

Ha ha, o well-- one can always dream.

Posted by: alarico | June 23, 2009 1:13 PM | Report abuse

I just hope they spend every month in prison writing apology notes to those who received their spam.

Posted by: dougw3 | June 23, 2009 1:51 PM | Report abuse

Hand them over to the Taliban. That's what they deserve.

Posted by: blakesouthwood | June 23, 2009 2:24 PM | Report abuse


Feed him only canned Spam the whole sentence, and make him eat it through a clogged straw.
.

Posted by: gitarre | June 23, 2009 3:09 PM | Report abuse

What a piece of garbage. I hope he is painfully raped every day in prison.

Posted by: hangjbat | June 23, 2009 4:01 PM | Report abuse

Now that these malefactors have admitted guilt, do they have any connection, direct or indirect, to the botherder profile from early 2006?

Posted by: featheredge99 | June 23, 2009 4:53 PM | Report abuse

@Featheredge -- It's possible. But not one that I'm aware of.

Posted by: BTKrebs | June 23, 2009 5:01 PM | Report abuse

@Computer_Forensics_Expert

If you want to talk about real money, check out the numbers from the Richard Martino crew of the Gambino Family. They stole between $500 million and $750 million. The fines and forfeitures are under $50 million. Even taking into account the money kicked up to the Gambino hierarchy and the money paid to their Israeli traffic brokers, many millions of dollars are unaccounted for.

http://www.msnbc.msn.com/id/6928696/

Posted by: featheredge99 | June 23, 2009 5:17 PM | Report abuse

WHAT -- NO HOUSE ARREST WITH 1000 HOURS OF PUBLIC SERVICE ???

Maybe this is a bit more serious than dog fighting in Virginia ????

When America STARTS to get serious about financial crimes, then they may lessen, but not until then !!!!!!!!!!!!

Posted by: brucerealtor@gmail.com | June 24, 2009 1:00 AM | Report abuse

There's no quantifying how many $Millions damage these financial crimes have caused over the years. The sentences are light by anyone's standards.

Hopefully they can devise some innovative ways to get these guys to give something back to the community - Proof reading emails for spelling mistakes or acting as 'human' spam filters for incoming mail for large corporates (some performance checks needed here)?

Posted by: datadefender | June 25, 2009 7:40 PM | Report abuse

The comments to this entry are closed.

 
 
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