FTC slams spam gang boss with $15 million fine

Spammer sent billions of junk e-mails

Whether or not anyone actually ever gets this money remains to be seen but at the behest of the Federal Trade Commission, a federal judge has ordered the mastermind of what was a vast international spam network to pay $15.15 million in a default judgment for his role in running the operation which sent out billions of junk e-mails. 

The anti-spam organization Spamhaus Project called Atikinson's crew the largest spam gang in the world which at one point may have accounted for as much as one-third of the world's spam.  The group's specialty was pushing male-enhancement pills, prescription drugs, and weight-loss pills, the FTC stated. 

According to the FTC, ringleader Lance Atkinson, a New Zealand citizen and Australian resident, last December admitted his involvement in the spam network to New Zealand authorities and has already paid more than $80,000. Atkinson's accomplice, US resident Jody Smith, agreed to an order requiring him to turn over nearly all of his assets to the FTC, to settle FTC charges. 

According to the FTC Atkinson and Smith recruited spammers from around the world to send billions of e-mail messages directing consumers to Web sites operated by an affiliate program called "Affking," according to the complaint. By using false header information to hide the origin of the messages, and by failing to provide an opt-out link or list a physical postal address, the defendants are alleged to have violated the CAN-SPAM Act of 2003. 

Using the moniker "Canadian Healthcare" and other names, the defendants' spam messages deceptively marketed a male-enhancement pill, prescription drugs, and a weight-loss pill in violation of federal law, the FTC stated. The group falsely claimed that the medications came from a US-licensed pharmacy that dispenses FDA-approved generic versions of drugs such as Levitra, Cialis, Viagra, Lipitor and Zoloft. However the drugs they sold were shipped from India, had not been approved by the FDA, and were potentially unsafe, the FTC stated. 

Today the court issued a default judgment against Atkinson, his company, and three companies affiliated with Smith. In addition to the $15.15 million that Atkinson and his company have been ordered to pay, the three companies affiliated with Smith are liable for $3.77 million. 

Smith pled guilty in August 2009 to the criminal charge of conspiracy to traffic counterfeit goods, and faces up to five years in prison. He is scheduled to be sentenced in December in US District Court for the Eastern District of Missouri, the FTC stated. 

While the fine is impressive, it's not clear that the government or any one else wronged by this group will ever see the money.  In 2005 Atkinson and his company were ordered to pay over $2 million but the group continued to operate and the Commission has yet to collect a penny. In an IDG News Service story from 2008, the FTC said that the group has been grossing more than $500,000 per month in Visa credit card sales alone. 

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