Spammers Slammed With $1 Billion in Fines

Dec 20, 2004

Tim Gray

UPDATED: A federal judge has awarded a small Midwestern Internet service provider (ISP) more than $1 billion in what may amount to be the largest single decision ever handed down against spammers.

Robert Kramer, whose company, CIS International, handles 3,500 e-mail subscribers in eastern Iowa, was awarded the damages on Friday. A federal judge found three defendants guilty of violating federal racketeering laws and Iowa's state criminal codes.

"This is a victory for ISPs and Internet users who are sick of spam," Kelly Wallace, attorney for the plaintiff, told "This will send a signal to those living the good life because of these illegal activities."

U.S. District Judge Charles R. Wolle, who was forced to file default judgments against the three defendants because they did not provide proper representation during the proceedings, slammed AMP Dollar Savings, of Mesa, Ariz., with the largest penalty of $720 million.

Cash Link Systems of Miami, Fla., was ordered to pay $360 million and Florida-based TEI Marketing Group was fined $140,000 according to Wallace.

The defendants were found guilty of violating the Federal Racketeer Influenced and Corrupt Organizations Act (RICO) and the Iowa Ongoing Criminal Conduct Act, Wallace said. The fines were levied based on the Iowa law that allows plaintiffs to claim damages of $10 per spam message. The judgments were then tripled under RICO, according to Wallace.

The spammers were subject to both federal and state laws because the actions predated the 2003 federal CAN-SPAM Act, Wallace said.

Kramer filed the suit against the spammers in 2003, said Wallace, after the ISP was nearly ground to a halt by the constant bombardment of junk e-mail. At the height of the onslaught CSI International inbound mail servers were receiving nearly 10 million spam e-mails a day.

Wallace said the amount of the spam was an exceptional strain on the relatively small company.

"It was basically the equivalent of a DDoS [distributed denial of service] attack," he said. "The company lost customers every day, because people were tired of not being able to access their e-mail."

The Atlanta-based attorney said the odds of the ISP collecting at least some of the judgment appear pretty good and claimed at least one of the defendants, Cash Link Systems, already had $1 million in assets seized by the government.

John Levine, of the New York-based Anti Spam Research Group, said it was the largest judgment in a spam case that he had heard of, but he was skeptical if the astronomical figure would grab the attention of other spammers.

"It is highly unlikely that amount would ever be collected," he said of the judgment. Levine believes a settlement of $10,000 might be more effective in deterring spammers.

"At least then they [spammers] would realize somebody might actually come and get that kind of money," he said.

Levine said the most significant aspect of the case, like most spam cases, is that it provides an opportunity for law enforcement officials to learn more about the issue.

"Most judges aren't engineers, so when they get one of these cases it is usually brand new to them," he said. "It is an educational process for most people."

However, some ISPs welcomed the judgment and hope the big award signals a new round of enforcement on these rogue companies.

"Even if they collect a fraction of a fraction of that money, it will have a great effect," Dave Weis, owner of Iowa-based ISP Internet Solver. "These guys [spammers] make us incur so many costs we just shouldn't have to pay for."

Updates prior version to correct the spelling of the ISP company involved, CSI International


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