It may have taken an overloaded small e-mail service provider in Washington state to trigger what turns out to be the nation's first legal case - four defendants, all in the Detroit area - under the new and still controversial CAN-SPAM Act.
"Up until now, it's been kind of a losing battle," said Modomail.com owner Lee Wright, at a press conference held by the Federal Trade Commission April 29, "because it's kind of like a fortress, and we didn't have any weapons at our disposal, until something like the CAN-SPAM Act."
Daniel J. Lin, James J. Lin, Mark M. Sadek, and Christopher Chung, all of West Bloomfield, Michigan, were accused of hiding their identities, including using what FTC director of consumer protection Howard Beales said was innocent third parties' names to hide them. They're also accused of failing to include "clear and conspicuous" opt-out information and connection in their spam, providing no physical addresses, making false and unsubstantiated claims about the weight loss patches and human growth hormone products they peddled, and federal mail fraud.
The Lins have yet to be arrested, while Sadek and Chung appeared in federal court and were freed on bond April 28. Laura Parsky, a deputy assistant attorney general in the U.S. Department of Justice's Criminal Division, said the federal arrest warrants were issued the same day. Earlier reports indicated Sadek was stunned when federal agents arrived at his home to arrest him.
"During the last two years, spam has increased exponentially... even though consumers are using filters and following the advice of tech columnists and agencies such as ours," Beales said as the press conference began. "Spammers have resorted to including the e-mail addresses of innocent third parties... or simply forging e-mail headers." Then, referring directly to the case against the Lins, Sadek, and Chung, Beales' tone turned jubilant.
"Today," he said, "I'm pleased to announce a spam dunk." He said the key charge the FTC could not bring without the CAN-SPAM law was a charge of false routing information. "What we've seen consistently," he said, "is spammers breaking lots of laws, and there are lots of different theories we can go after them under. It's a question of choosing the easiest one."
Wright said Modomail began getting bombarded with bounced e-mail coming back to the service in early February. "They were not originating from our service," he said, "but, I guess, from the people who were sending out these spams. But because they had the forged headers, they were coming back to us. At one point, [it was] over a million a day, and had the effect of pretty much shutting us down over a few weeks.
"We've had it happen before, but this specific case brought in about a thousand times more traffic than before," he continued. "It almost actually put us out of business. Along with not allowing us to provide service, it also tarnishes our name. We get complaints every day, when we're not sending out the spam. [But] we're one of many services out there, and it's been great to have this come up. I hope that there's more stuff like this in the future."
Beales all but promised that there would be. "Finding and suing spammers are challenges to law enforcement," said Beales, who noted this case drew more than 10 times the amount of spam from outraged consumers complaining to the FTC than they had received since the agency began investigating spam in 1998 . "The injuries to innocent third parties, spammers using international resources to hide their tracks... these cases show the need for close cooperation between civil authorities, criminal authorities, and international law enforcement," he said.
The FTC filed a formal complaint in federal court April 23 and got a temporary restraining order later the same day. And the Detroit-area quartet are not their only current targets: Beale said the FTC is also suing Global Web Productions, an operation said to emanate from Australia and New Zealand, whom the FTC also accuses of false headers, failure to include clear opt-out option, and making false and unsubstantiated claims, also about human growth hormone but also other dietary products.
U.S. Attorney Jeffrey G. Collins, whose jurisdiction is Michigan's Eastern District, said the Lins, Sadek, and Chung averaged about $100,000 worth of growth from August through January. Collins also said they could face up to five years in prison each for the CAN-SPAM charges and up to 20 years in prison each for concurrent criminal mail fraud charges.
