TELECOM Digest OnLine - Sorted: Texas-Size Lawsuit For 4th-Largest Spammer

Texas-Size Lawsuit For 4th-Largest Spammer

(no name) ((no email))
14 Jan 2005 08:44:46 -0800

By Howard Witt, Tribune senior correspondent

Seeking to shut down a University of Texas student listed as the
fourth-worst e-mail spammer in the world, the Texas attorney general
on Thursday filed a lawsuit against the man potentially seeking nearly
$500 million in damages.

The action, the first effort by the state of Texas targeting a
purveyor of unsolicited commercial e-mails, comes as state and federal
officials are suddenly stepping up enforcement of a year-old federal
anti-spam law.

FBI officials say they are conducting criminal investigations of up to
100 of the biggest spammers nationwide and have raided suspected
spammers in four states in recent weeks, seizing computers and other
materials. The Federal Trade Commission targeted senders of
pornographic spam in a lawsuit earlier this month.

Thursday's lawsuit against Ryan Pitylak, a 22-year-old University of
Texas junior majoring in philosophy, follows a Chicago Tribune
investigation of Pitylak published in July that Texas Atty. Gen. Greg
Abbott said influenced him to pursue the case.

Pitylak is "reaching out harassing hundreds of thousands of people
across the United States and across the entire world, issuing a
barrage of illegal spam," Abbott said in announcing the lawsuit.

"It would be erroneous to characterize this as a struggling college
student," he said. "This is someone who has illegally used the system
and abused the system to make countless dollars."

The Tribune reported last year that Pitylak, whose spam e-mails tout
low-interest mortgages, home warranties and insurance plans, owns a
$450,000 home in an exclusive Austin neighborhood and several luxury
automobiles. Abbott said Pitylak earns up to $28 each time a recipient
clicks on one of his e-mails and fills out a form seeking personal
information -- a bounty paid by mortgage and insurance brokers for
each legitimate lead.

Pitylak is listed as the fourth-worst spammer in the world, behind
three other Americans, by Spamhaus Project, a London-based
international clearinghouse that tracks spammers and works closely
with law-enforcement officials around the world. The rankings, which
are not scientifically derived, are based on frequency of spam reports
and the number of Internet domains used by the spammers, among other

Abbott sued Pitylak, his California business partner, Mark Trotter,
and three of the corporations under which they do business --
PayPerAction, LeadPlex and Eastmark Technology Ltd. -- alleging that
the spam e-mails, sent to untold numbers of recipients from more than
250 front companies, contained misleading and deceptive information in
their subject lines.

The suit alleges violations of the federal Controlling the Assault of
Non-Solicited Pornography and Marketing, or CAN-SPAM, Act, as well as
the Texas Electronic Mail Solicitation Act and the Texas Deceptive
Trade Practices Act. Total damages, based on more than 24,000 e-mails
collected as evidence and potential penalties of more than $20,000
for each violation, could reach almost $500 million.

His lawyer claims the business is legitimate.

Pitylak declined to comment on the lawsuit when contacted by the
Tribune on Thursday. But his attorney said Pitylak and his partner are
legitimate businessmen who have done nothing wrong.

Pitylak and Trotter "are Internet marketers and are no different from
the bulk mailers" who flood postal mailboxes with unsolicited offers,
said the attorney, Lin Hughes, an antitrust expert at McGinnis,
Lochridge, Kilgore in Austin.

The CAN-SPAM Act, passed by Congress to slow the torrent of unwanted
e-mails that by some estimates account for 85 percent of all e-mail
traffic, does not ban unsolicited commercial solicitations.

Instead, it requires among other provisions that senders of spam
provide ways for recipients to remove themselves from mailing lists
and bars the senders from using fictitious identities. Violations can
result in civil and criminal penalties, and state and federal
officials, as well as Internet service providers, are entitled to
bring lawsuits for violations of its provisions.

Hughes said that all of Pitylak's e-mail activities were carefully
constructed to stay in compliance with the law. For example, the
CAN-SPAM Act requires that spammers include actual physical business
addresses to which complaints can be mailed. Last year, on Jan. 1 --
the day the anti-spam law took effect -- Pitylak signed a lease for an
office in north Austin that he does not occupy but uses to receive
postal mail, Hughes said.

The Tribune investigation last year uncovered other examples, however,
that appeared to show Pitylak in violation of the anti-spam law, such
as return e-mail addresses that went nowhere and non-functioning links
to opt out of mailing lists.

Hughes also said Pitylak and Trotter have no liability because they
sold their interest in PayPerAction and LeadPlex to Eastmark
Technology last March and now are acting merely as consultants to the
purchaser, a Hong Kong-based company.

'Pattern of deceit' alleged.

But Abbott said Pitylak had set up an elaborate network of front
companies and aliases to hide his identity.

"We believe these more than 250 assumed names have been set up to help
Mr. Pitylak avoid detection and also to mislead consumers about the
identity of the company or entity who is issuing these illegal spams,"
Abbott said. "We contend that these defendants have engaged in a
pattern of deceit."

Enforcement of the CAN-SPAM Act began slowly, and only a handful of
states have made use of its provisions to go after spammers. But the
nation's largest Internet service providers, including Microsoft,
America Online and EarthLink, have begun making extensive use of the
law. Microsoft alone has filed 51 lawsuits against spammers in the
last year, seeking damages and injunctions.

The Federal Trade Commission, citing the complexity of the cases, so
far has filed only six lawsuits against bulk e-mailers under the
anti-spam law. In the most recent action, the commission won
injunctions on Tuesday to shut down six companies in the U.S., England
and Latvia that allegedly were sending unsolicited pornographic
e-mails without the required labels warning recipients that the
e-mails contained adult content.

Criminal investigations:

The FBI, meanwhile, is pursuing criminal spam investigations.

"Spam is the front end of a lot of things," said Dan Larkin, the unit
chief of the FBI's Internet Crime Complaint Center. "It can lead to
identity theft or getting spyware downloaded to your computer."

Larkin said the FBI was targeting "the top 100 people or organizations
of interest" and that he expected a number of criminal cases to be
brought in the next six weeks.

"These guys are not just nuisances," he said. "They are making a lot
of money, they are disrupting e-commerce and they are involved in
malicious code that leads to high-impact attacks on the Internet
infrastructure. We are going after them."

On the Internet you can read the Chicago Tribune's original
investigation about Ryan Pitylak at

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