'Spam King' Faces 26 Years In Prison
The Seattle man pled guilty at Friday's hearing in the Seattle U.S. District Court, where he was charged with felony mail fraud, fraud in connection with electronic mail and failing to file a tax return in 2005 -- a year in which he made more than $300,000 through fraudulent spam activities.
In addition to a hefty prison sentence, Soloway could be required to pay a fine of up to $625,000 on all charges. Altogether, Soloway could serve up to 20 years in prison and a $250,000 fine for mail fraud, five years in prison and another $250,000 for fraud in connection with electronic mail fraud and up to one year in prison and a $25,000 fine for willful failure to file tax returns.
U.S. District Court officials say that the guilty plea was somewhat unexpected.
"This is a man who has resisted taking responsibility for his actions and eluded all kinds of people for a long, long time," Kathryn Warma, assistant U.S. attorney for the Western District of Washington. "It was gratifying and surprising to hear him confess his guilt."
U.S. District Court Judge Marsha Pechman will ultimately determine the amount of prison time, as well as the number of victims, the size of the fine and the amount of restitution Soloway may be ordered to pay during the June sentencing.
Soloway was first arrested and jailed in May 2007. His original 40-count indictment included 13 counts of money laundering and at least five counts aggravated identity theft -- a charge that comes with a minimum two-year prison sentence.
After entering a guilty plea, however, federal prosecutors dropped 37 of the total charges, including all but one of the spam-related charges. The most serious charge Soloway now faces is one that entails up to 20 years in prison for non-electronic mail fraud, in which he failed to live up to promises he made to customers regarding his e-mail marketing software.
U.S. District Court officials say that while it's unlikely that Soloway will receive the maximum sentence, prosecuting attorneys will use much of the same compelling evidence at his upcoming sentencing trial as in previous hearings. "(26 years is) the maximum under that statute," said Warma. "But the facts of the case that will lead to a sentencing outcome will be argued vigorously. We expect to have a mini trial at sentencing which will be a lengthy procedure."
Soloway spammed tens of millions of e-mail messages to advertise his fraudlent business Newport Internet Marketing coroporation (NIM) Web sites, while constantly moving the site which was hosted on at least 50 different domains. According to the indictment, Soloway operated "broadcast e-mail" software products and services through NIM, which produced spam for customers that contained false and forged headers and was relayed by using sophisticated proxy servers, or botnets.
Federal prosecutors accused Soloway of defrauding customers who paid him to send out high volumes spam or who bought his software to send spam themselves. Soloway charged customers $495 to either send e-mails to 20 million addresses over a period of 15 days or sell them 80,000 e-mail addresses.
Soloway made numerous false claims about the products and services on his Web site, one of them being that the e-mail addresses used were "opt-in" addresses, and a satisfaction guarantee that came with the promise of a full refund. Customers who later complained about the goods and services they had purchased or who asked for refunds, were threatened with additional financial charges and a referral to a collection agency.
Soloway, once considered the eighth-largest spammer in the world by Spamhaus, has faced similar charges in the past -- the most notable being a $7.8 million judgment in April 2005 after being sued by Microsoft in December 2003. During that time, Soloway unsuccessfully argued that his subcontractors were actually responsible for the spam that was used to forge reply e-mail addresses from hotmail.com. However, the judgment went in Microsoft's favor.
Soloway was also sued by an Oklahoma Internet Service Provider that same year for violation of the federal CAN-SPAM Act. After failing to appear in court, the judge handed down a $10 million default judgment to the ISP.
Soloway's attorney did not immediately return calls from ChannelWeb.com.
The case was investigated by the FBI, U.S. Postal Inspection Service and the Internal Revenue Service Criminal Investigations in conjunction with the Computer Hacking and Intellectual Property Task Force. Attorneys say that it's not unusual to see a few years pass before criminal prosecutions become common under new legislation, such as the 2003 CAN SPAM Act.
"The message is clear that there are federal law enforcement agents who will investigate these cases which are admittedly labor intensive. There are federal prosecutors who are interested in prosecuting them aggressively," said Warma. "We're on this stuff and there are going to be more cases."