The so-called "Godfather of Spam" was among four people sentenced today in federal court in Detroit for involvement in a stock fraud scheme that leveraged on a virulent spam campaign.
Alan M. Ralsky, 64, of West Bloomfield, Mich., was sentenced to 51 months in prison for conspiring to commit wire fraud, mail fraud and violate the CAN-SPAM Act, as well as engaging in money laundering, wire fraud and violating CAN-SPAM. Also convicted was Scott Bradley, 48, of West Bloomfield; How Wai John Hui, 51, of Hong Kong and Canada; and John S. Bown, 45, of Fresno, Calif.Those three were sentenced to 40 months, 51 months and 32 months, respectively.
"With today's (Nov. 23) 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. "I commend the FBI, the Postal Inspection Service, and the IRSCriminal Investigative Division for their determined and careful investigation in this case which lead to today's result."
The charges arose from a three-year investigation involving the FBI, IRS, U.S.Postal Service and the U.S. Securities and Exchange Commission. According to authorities, from January 2004 through September 2005, Ralsky, Bradley, Bow, Hui and others engaged in a related set of conspiracies designed to use spam e-mails to manipulate thinly traded stocks and profit by trading in those stocks once their share prices increased after recipients of the spam e-mails traded in the stocks being promoted.
Ralsky was accused of heading the spam e-mail operation, while Bradley, Ralsky's son-in-law, served as the spam ring's chief financial officer and director of operations. Bown, who was chief executive officer of Internet services company GDC Layer One, served as the ring's chief technology officer, and Hui, CEOof China World Trade, was the lead dealmaker representing the companies whose stocks were being promoted via spam e-mail, authorities said.
Many of the spam e-mails promoted thinly traded "pink sheet" stocks for U.S.companies owned and controlled by individuals in Hong Kongand China, according to the feds. The e-mails contained 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. According to the indictment, the group falsified "headers" in the e-mail messages, used bots to relay the spam, and also made misrepresentations in the advertising content of some of the underlying e-mail messages. They also used falsely registered domain names to send the spam.
"Through this conspiracy Ralsky and the others were able to manipulate the stock market and maximize their profit," said FBI Special Agent in Charge Andrew G. Arena, in a statement. "They flooded our e-mail boxes with unwanted spam e-mail and attempted to use a botnet to hijack our computers assist them in the scheme. Cyber crime investigations are a top priority of the FBI and we will continue to aggressively investigate those individuals who use and hide behind computers to commit various crimes."