64 year-old Michigan resident Ralsky got 51 months in jail for wire and mail spam and fraud, and violating the CAN-SPAM act. Also sent down were his son in-law Scott Bradley, who got 40 months, How Wai John Hui (51 months), and John S Bown (32 months). Bown, the CEO of ISP GDC Layer One, was specifically targeted for committing a computer fraud by creating a botnet.
Ralsky, the self-proclaimed 'Godfather of spam', was captured following an investigation by the FBI, the Postal Inspection Service, and the IRS Criminal Investigation Division.
From January 2004 through to September 2005, the spammer worked with a set of accomplices to manipulate the prices of select stocks using spam messages.
In a 'pump-and-dump' scam, the perpetrators invest money in a thinly-traded stock, and then bombard the internet with spam messages offering fake insider information about an impending rise in that stock's price. Naive individual investors take the bait, purchase the stock, and send the price skyrocketing, enabling the perpetrators to sell their stock for a healthy profit.
Ralsky was the CEO of the outfit, while Bradley was the CFO and director of operations, said an FBI statement. Hui was the CEO of China World Trade, which represented the companies whose stocks were being promoted in the spam messages.
Pink quote stocks (formerly known as pink sheets) are a common target for pump-and-dump scams, because they are traded without having to meet the minimum listing requirements for conventional stock exchanges, making it easy to trade in a company for which there is little reliable information. Chinese companies have in the past been featured heavily in pump-and-dump scams.
Other players, sentenced on Tuesday, were Frank Tribble, who directed the stock trading, Judy Devenow, who managed the sending of spam, and William Neil, COO for GDC Layer One. James Bragg and James Fite were contract mailers for the spam operation, while David Patton, who created specialised spamming software for Ralsky, was sentenced to a single day in prison, with fines and a year of supervised release.
Ralsky and his team falsified email headers, used proxy spam relays, falsely registered domain names, and misled users with the content of their mails, court documents said.
Ralsky and Bradley both forfeited $250 000 that the US seized from them in 2007, and were given an additional five years' supervised release following their prison time.