Eleven people, including a man described as one of the nation's most prolific senders of spam e-mail, were named in an indictment unsealed Thursday that accuses them of defrauding people by manipulating Chinese stock prices.
Alan Ralsky, 62, of Oakland County's West Bloomfield Township, made about $3 million through the scheme in the summer of 2005 alone, U.S. Attorney Stephen Murphy said.
Federal agents seized computers, computer disks and financial records in a raid on Ralsky's home in September 2005. But Ralsky, who said at the time that he had gathered at least 150 million e-mail addresses, was not arrested then.
In the 41-count indictment described Thursday by Murphy, Ralsky and the other defendants sent tens of millions of e-mail messages to computers worldwide trying to inflate prices for Chinese penny stocks. The defendants then sold the stocks at inflated prices, Murphy said.
The defendants used a variety of illegal methods "that evaded spam-blocking devices and tricked recipients into opening, and acting on, advertisements in the spam," Murphy said in a release.
The indictment also alleges that the defendants tried to send spam using botnets — networks of computers that have been infected with malicious software coding that in turn would instruct infected computers to relay spam, the release said.
Spam is the sending of unwanted bulk e-mails touting goods and services. Ralsky is considered to be one of the nation's most prolific spammers, sending tens of thousands of e-mails to Internet users every day, authorities said.
"A lot of people don't ignore or delete spam," Murphy told reporters. "Unsuspecting people can be duped ... that they were looking at legitimate stock tips."
Ralsky's son-in-law, Scott Bradley, 46, of West Bloomfield Township, and Judy Devenow, 55, of Lansing were arraigned Thursday on charges of conspiracy, fraud in connection with electronic mail, computer fraud, mail fraud and wire fraud.
A third defendant, Hon Wai John Hui, 49, of Vancouver, British Columbia and Hong Kong, was arrested at Kennedy Airport in New York and was expected to be brought to Michigan within days, Murphy said.
Murphy's office did not return telephone messages inquiring whether Bradley, Devenow or Hui had lawyers.
Seven other defendants remained at large, including Ralsky, who was believed to be in Europe. His attorney, Philip Kushner of Cleveland, told The Detroit News that Ralsky would surrender to federal authorities in a few days.
"We didn't know that an indictment was coming," Kushner told The News. "Mr. Ralsky intends to fight these charges, which are brought under a new federal statute that has not been interpreted by the courts."
A message seeking comment was left with Kushner by The Associated Press.
Conviction on the most serious charges, mail fraud and wire fraud, carries up to 20 years in prison and a $250,000 fine. Other charges include money laundering, fraud in connection with electronic mail and computer fraud.
The government also seeks forfeiture of real estate, brokerage accounts, bank accounts and life insurance policies worth a combined $2.7 million.
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 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.
When the FBI raided Ralsky's house in 2005, agents were seeking evidence that Ralsky and Bradley used at least 14 domain names to send commercial e-mail.
The other defendants are William C. Neil, 45, and Anki K. Neil, 36, both of Fresno, Calif.; John S. Bown, 47, of Poway, Calif.; James E. Fite, 34, of Whittier, Calif.; Francis A. Tribble of Los Angeles; James E. Bragg, 39, of Queen Creek, Ariz.; and Peter Severa of Russia.
Fite also was charged with making false statements to federal agents.
"What a great way to start the new year. It's a tremendous development," said Aaron Kornblum, a senior attorney with Microsoft Corp.'s Internet Safety Enforcement Team.
Microsoft has worked with government agencies and international authorities to build cases against spammers like Ralsky, Kornblum said.
"We do focus our attention on those cybercriminals who are creating the greatest impact," he said. "We do hope that these arrests send a strong message to senders of illegal e-mail that there are consequences for engaging in cybercrime."
Computer users might not necessarily notice less spam, but Kornblum said he hoped the Detroit indictments would act as a deterrent to other spammers.