PHOENIX - Jeffrey A. Kilbride of Venice, Calif. and James Schaffer of Paradise Valley, Ariz. have become the first individuals to be convicted for sending unsolicited sexually-explicit emails under the Controlling the Assault of Non-solicited Pornography and Marketing (CAN-SPAM) Act of 2003, on charges including conspiracy, fraud, money laundering, and transportation of obscene materials.
Although no evidence was presented that anyone was psychologically harmed by the hardcore material contained in the defendants' spam mailings, the testimony at trial was that Kilbride and Schaffer used false and/or misleading subject lines in their bulk emailings, false "From" addresses and equally false (but different) "Reply To" addresses so that the targets of the email would be unable to track the senders or stop future mailings – all of which are illegal under CAN-SPAM.
The defendants did not operate hardcore sites themselves, but were paid a commission for traffic generated to the sites that hired them – commissions reportedly in excess of $2 million which they channeled through banks in the Republic of Mauritius and the Isle of Man in an attempt to prevent the authorities from tracing it, which led to the federal money-laundering charges.
"Through their international spamming operation, these defendants made millions of dollars by sending unwanted sexually explicit emails to hundreds of thousands of innocent people, including families and children, while simultaneously using sophisticated Internet technology to try to conceal their identity," said Assistant Attorney General Alice S. Fisher.
The case was prosecuted by attorneys Jill Trumbull-Harris, Kayla Bakshi and Bonnie Kane from the Justice Department's Child Exploitation and Obscenity Section, with the assistance of the Assistant U.S. Attorney for Arizona, John R. Lopez, IV.
Of particular interest is that, according to a U.S. Department of Justice (DOJ) press release, after CAN-SPAM was enacted, the defendants "arranged to remotely log on to servers in Amsterdam, to make it look like their spam messages were being sent from abroad, when in reality Kilbride and Schaffer were operating their business from inside the United States. The domain names the pair used were also registered under the name of a "fictitious employee at a shell corporation Kilbride and Schaffer established in the Republic of Mauritius," according to the DOJ press release.
The conviction should be a clarion call to all adult webmasters who believe that, if the government continues its assault on sexually-explicit material on the Web, all they'll have to do is establish offshore servers to host their sites. The Kilbride/Schaffer convictions indicate that if the government can track down the source of the material it wants to prosecute, and that source is U.S.-based, it will prosecute and can obtain convictions in such situations.
The trial is also an indication that the DOJ is taking the CAN-SPAM Act seriously, having obtained its first conviction under the Act last January. At that time, Jeffrey Brett Goodin was found guilty of posing as a representative of America Online's (AOL) billing department and sending thousands of emails seeking personal and credit card information from AOL subscribers, in a practice known as "phishing." Goodin then used that information to make purchases for himself. On June 11, Goodin was sentenced to 70 months in prison (of a possible 101 years) and ordered to pay $1,002,885.58 in restitution to his victims, including almost $1 million to Earthlink.
Also, on June 17, Adam Vitale of Brooklyn, NY, pled guilty to CAN-SPAM violations for having, together with partner Todd Moeller, sent unsolicited commercial emails, also containing false header and address information, to 1.2 million AOL subscribers. Vitale will be sentenced on Sept. 13, facing 11 years in prison and a $250,000 fine.
Finally, in May, the DOJ announced that it had arrested Robert Alan Soloway, owner of Newport Internet Marketing Corp. of Seattle and known as the Spam King. Soloway is facing five counts of identity theft, mail fraud, wire fraud, fraud in connection with electronic mail, and money laundering, which could net him up to 75 years in prison. No trial date has yet been set in that case.
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