TELECOM Digest OnLine - Sorted: -- Spam Suit Nets $1 Billion -- Spam Suit Nets $1 Billion

Marcus Didius Falco (
Sun, 19 Dec 2004 19:01:32 -0500

Trying yet another way of stripping the HTML. Hope this works better

Copyright 2004 The Quad-City Times |

By Todd Ruger
and Kay Luna

CLINTON, Iowa A federal judge awarded a Clinton Internet service=
provider more than $1 billion in judgments Friday in a lawsuit
against companies who used his equipment to send so-called spam

It is believed to be by far the largest judgment ever against
companies accused of sending unsolicited commercial e-mail via the
Internet, said those who track such practices.

It's definitely a victory for all of us that open up our e-mail and
find lewd and malicious and fraudulent e-mail in our boxes every day,
said Robert Kramer, the owner of CIS Internet Services in Clinton.

Kramer is unlikely to ever collect the large judgment, which was made
possible through an Iowa law that allows plaintiffs to claim damages
of $10 per spam message, said his attorney, Kelly O. Wallace of

"We hope to recover at least his costs," Wallace said of the lawsuit,
originally filed in October 2003 against 300 defendants then known only as
John Does. "He decided it was worthwhile to take some of these guys down."

Kramer;s relatively small service provided e-mail for about 5,000
subscribers in the Clinton vicinity when, at one point, his Internet
server received 10 million or more spam e-mails per day, according to
Kramer and the judgment documents.

He was called away almost daily to repair downed e-mail servers that
should run months without interruption, Kramer added.

U.S. District Judge Charles R. Wolle of the Southern District of Iowa
filed the default judgments Friday against three companies under the
Federal Racketeer Influenced and Corrupt Organizations Act and the
Iowa Ongoing Criminal Conduct Act:

n $360 million against Cash Link Systems Inc., a Florida corporation
shut down by the Securities and Exchange Commission in July for a
fraudulent investment scheme involving automatic teller machines.

n $720 million against AMP Dollar Savings Inc., an Arizona corporation
that Wallace said is mainly a organization designed for spammers to
hide their identities.

n $140,000 against TEI Marketing Group Inc., a Florida
corporation. Wallace described TEI as one guy selling spy software.

Wallace said he has only heard of judgments up to $25 million in
spam-related cases.

The president of the SpamCon Foundation, an organization based in Palo
Alto, Calif., said it was the biggest judgment in a spam lawsuit she
has ever heard about.

"This is just incredible," Laura Atkins said. "I'm not aware of
anything that's been over $100 million.

Steve Linford, the chief executive officer of a London-based spam
tracker called The Spamhaus Project, also said he had not heard of a
judgment reaching $1 billion, adding that such lawsuits and criminal
investigations into spamming are starting to have an effect.

"But the effect is still rather small," he said. "What we are seeing
is slightly more spammers from overseas."

While it used to be that 100 percent of spammers operated in the
United States, about 10 percent of them now operate in other
countries, including Russia and some Asian nations, with 70 percent of
spam messages directing users to Web sites hosted in China, he said.

Kramer said the lawsuit made a difference for his business almost
immediately after it was filed, but not before 4 years of taking a
toll on him at both the business and personal levels.

"I was forced to set up an infrastructure that would support e-mail
for millions of users," he said. "It has consumed me."

Friday's judgment covers only three companies who did not respond to
court papers and were found in default. The lawsuit continues against
other named defendants.

"It's a slow process and it's not cheap," Wallace said. "Our goal is
the economic death penalty."

He and Kramer said they began identifying the companies by doing what
the spammers wanted purchasing spy software and other products
typically hawked via the e-mails, including penis enlargement pills.

"I've got a bottle of them sitting here," Kramer said. "I never opened

Wallace said he presented about 1,400 pieces of evidence at a hearing
to determine the amount of damages, including selections from
thousands of CD-ROMs full of computer usage log files showing that
large numbers of spam e-mail were not atypical.

Kramer's problems are linked to a CD-ROM sold to spammers that is
called 'Bulk Mailing 4 Dummies,' which includes a guide for sending
spam and a large number of mainly fictitious e-mail addresses for some
of the largest Internet providers in the nation, the judgment states.

While most of the addresses were for large providers such as America
Online, Microsoft Network, Hotmail and Earthlink, CIS somehow had 2.8
million addresses entered on the CD-ROM, Wallace said.

Receiving e-mail at those bogus addresses uses as much computer
resources as legitimate e-mail, the judgment states.

"My dad put it well when he said I was being terrorized, and I was,
Kramer said. "It's been a hassle to catch these people because of the
method they use.

Nothing will stop spam altogether, he said.

"I think all of us as Internet service providers are always going to
face spam problems," he said. "We are still pursuing others. We're
going to catch more."

The company, operating since 1996, has four full-time employees. Two
are network administrators.

In response to the spam congestion, CIS beefed up its core
infrastructure, spending thousands of dollars to upgrade the system so
it could handle the traffic flow.

Kramer now calls himself a 'spam professional.'

"We know how to handle this better than any other ISP (Internet service
provider) in Clinton," he said. "We can virtually eliminate spam coming
to your mailbox."

Todd Ruger can be contacted at (563) 383-2493 or


For the two larger parts of the anti-spam judgment he entered Friday,
U.S. District Judge Charles R. Wolle used a formula based on trial
testimony and Iowa and federal laws. This is how the judgment was
calculated for Clinton Internet Services against AMP Dollar Services

AMP Dollar messages,
per server per day 40,000
CIS mail servers X 3
Messages per day 120,000
Number of days X 150
Total e-mails sent 18 million

Statutory damages
per message X $10

Total statutory
damages $180 million
Federal, state laws
triple statutory damages X 3
New damage total $540 million
Punitive damages + $180 million

Total liability

of AMP Dollar $720 million

Copyright 2002 The Quad-City Times

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