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Spam's 'poster boy' indicted

  • Story Highlights
  • One of U.S.'s most prolific senders of spam e-mail indicted
  • Alan Ralsky, 52, is among 11 named in the 41-count indictment
  • Federal grand jury alleges fraud scheme manipulated Chinese stock prices
  • The defendants are accused of making $3 million during the summer of 2005
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WASHINGTON (CNN) -- A man described as one of U.S.'s most prolific senders of spam e-mail was indicted by a federal grand jury over a fraud scheme that manipulated Chinese stock prices, the Justice Department said Thursday.

Alan Ralsky, 52, has been indicted in a spam scheme that netted $3 million in 2005.

Alan Ralsky, 52, was among 11 defendants named in the 41-count indictment, returned by a grand jury in Detroit. Authorities said he made millions of dollars by manipulating the stock prices through a massive global spamming operation.

Dubbed the "the poster boy for spam," Ralsky, of West Bloomfield, Michigan, is widely known for high-profile legal battles involving spamming operations that tout everything from mortgages to stocks to diet pills, .

Ralsky remained at large Thursday evening, but his son-in-law Scott Bradley was arrested Thursday along with another defendant, Judy Devenow, and both appeared in federal court for arraignment, the Justice Department said in a statement.

A third defendant, How Wai John Hui of Vancouver, Canada, and Hong Kong, was arrested in New York on Wednesday. The remaining defendants, from Arizona, California and Russia, were being sought, authorities said.

The defendants are accused of making $3 million during the summer of 2005 alone as a result of illegal spamming activities, authorities said.

The charges stemmed from a three-year investigation by federal authorities that revealed a "pump and dump" spamming scheme, the Justice Department said. The defendants allegedly sent spam touting Chinese penny stocks, driving up the stock prices and allowing the stocks to be sold at artificially inflated prices.

Those named in the indictment participated in various illegal techniques in order to maximize the amount of spam e-mail that evaded computer spam-blocking programs and "tricked recipients into opening, and acting on, the advertisements in the spam," the DOJ statement said.

The defendants are also accused of using a tool known as a "botnet," which authorities described as a network of "robot" computers infected with malicious software code that would in turn instruct infected computers to send spam.

The 11 people named in the indictment face charges including conspiracy, fraud in connection with electronic mail, computer fraud, wire fraud and money laundering, the DOJ said.

"Today's charges seek to knock out one of the largest illegal spamming and fraud operations in the country," U.S. Attorney Stephen Murphy of Detroit said in the statement.

Court documents unveiled last week showed FBI agents had seized computers and financial records from Ralsky's Michigan home last September.

Conviction on the most serious charges, mail fraud and wire fraud, carries as many as 20 years in prison and a $250,000 fine.

Other charges include money laundering, fraud in connection with electronic mail and computer fraud, the Associated Press reported.

The government also seeks forfeiture of real estate, brokerage accounts, bank accounts and life insurance policies worth a combined $2.7 million, the AP report said.

Ralsky has been a target of anti-spam efforts for years. Verizon Communications Inc. sued him in 2001, saying he shut down its networks with millions of e-mail solicitations.

He settled in 2002 and promised not to send spam on its networks to more than 1.6 million customers in 40 states.

A federal law that took effect in 2004 bans the use of misleading subject lines and the sending of commercial e-mail messages that appear to be from friends. It also bans use of multiple e-mail addresses or domain names to hide senders' identities.

The FBI raided Ralsky's house in 2005, with agents seeking evidence that Ralsky and Bradley used at least 14 domain names to send commercial e-mail. E-mail to a friend E-mail to a friend

CNN's Terry Frieden contributed to this report

Copyright 2008 CNN. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed. Associated Press contributed to this report.

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