Alan Ralsky, a spam kingpin who was convicted of felony bank fraud in 1995, could face more than seven years in prison after pleading guilty in a stock fraud case involving spam messages that pumped up Chinese "penny" stocks.
Ralsky and four other individuals pleaded guilty on Monday, joining three others who had pleaded guilty earlier, the U.S. Department of Justice announced Monday. Cases are still pending against three other people, they said. The defendants were indicted in the Eastern District of Michigan in 2007.
In 2004 and 2005, the group engaged in a set of related conspiracies to manipulate stocks using false and misleading spam messages. After the spam boosted the trading volume and prices of the thinly traded stocks, the conspirators profited by trading in their shares. Many of the shares were low-priced "pink sheet" stocks for U.S. companies owned by individuals in Hong Kong and China, the DOJ said.
Ralsky, 64, of Bloomfield Hills, Michigan, pleaded guilty to conspiracy to commit wire fraud and mail fraud and to violate the CAN-SPAM Act. As part of his guilty plea, Ralsky acknowledged he faces as much as 87 months in prison and a US$1 million fine. Ralsky's son-in-law, Scott Bradley, 38, also of Bloomfield Hills, pleaded guilty to the same charges and acknowledged he faces as long as 78 months in prison and a $1 million fine.
John Bown, 45, of Fresno, California, admitted creating a botnet to send the spam. Bown pleaded guilty to conspiracy to commit wire fraud and mail fraud and to violate the CAN-SPAM Act, as well as conspiracy to commit computer fraud. He faces as much as 63 months in prison and a $75,000 fine. William Neil, 46, of Fresno, and James Fite, 36, of Culver City, California, also pleaded guilty in the case. All five defendants are scheduled to be sentenced on Oct. 29.
In addition to using false and misleading information in the spam messages, the conspirators created and sent the e-mail using software that made it hard to track the messages back to them, the DOJ said. They also used illegal methods to get around spam blockers and trick recipients into opening and acting on the messages. They falsified the headers, used proxy computers to relay the spam and falsely registered domain names, the DOJ said.
Antispam advocates have long considered Ralsky one of the world's most prolific junk e-mailers, though he has claimed he is a legitimate business operator. He reportedly once admitted sending more than 70 million messages a day.