'Godfather Of Spam' Hit With Four-Year Prison Sentence
Ralsky, 64, of West Bloomfield, Mich., along with his son-in-law, Scott Bradley, 48, were sentenced for heading an illegal spamming scheme designed to artificially inflate stock prices and profit by trading in those stocks once their share prices increased.
In addition to his sentence, Ralsky faces five years of supervised probation and a $250,000 fine for conspiracy to commit wire fraud, mail fraud and violation of the CAN-SPAM Act.
Bradley was sentenced to more than 3 years in prison, as well five years of supervised probation, for committing wire fraud, engaging in money laundering and violating the CAN-SPAM Act, according to court documents.
"Today's sentencing sends a powerful message to spammers whose goal is to manipulate financial transactions and the stock market through illegal e-mail advertisements," said Assistant Attorney General Lanny Breuer, in a statement. "People who use fraudulent e-mails to drive up stock prices and reap illicit profits will be prosecuted, and they will face significant prison time."
According to the indictment, Ralsky and his crew sent spam e-mails to promote thinly traded "pink sheet" stocks for U.S. companies that were owned and controlled in Hong Kong and China. Ralsky and others then "cashed out" after victims artificially inflated the stock's price when they bought shares. However, victims subsequently suffered financial losses when the stock's' price would inevitably crash.
The spam ring used numerous illegal methods to maximize the number of messages sent by employing technologies designed to evade spam filters. Ralsky also tricked users into buying the fraudulent stocks by sending spam with false e-mail headers, using proxy computers to send spam that masked e-mails' origin, using falsely registered domain names to send spam and misrepresenting the ad content in the e-mail messages.
Altogether, members of the spam ring used various wire communications, the U.S. postal service and e-mail to perpetrate the stock scam, while laundering millions of dollars in profit that was subsequently generated, according to the indictment.
In addition, two other conspirators, How Wai John Hui, of Hong Kong and Canada, received 51 months and John Brown of Fresno, Calif. received 32 months for their roles in the spam ring. Brown was charged with running the botnet that sent the spam while Hui was accused of wire and mail fraud.
Five other members of the crime ring are expected to be sentenced Wednesday.
The sentencing concludes a three-year investigation by the FBI, with the help of the U.S. Postal Inspection Service, the IRS, and the U.S. Securities and Exchange Commission's Philadelphia Regional Office.