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BUSTED: Anti Spam Forces Bankrupt Super-Spammer Scott Richter

Microsoft scores one for the good guys

Scott Richter, the self-proclaimed "Spam King," just can't seem to get enough attention. Admittedly responsible for sending literally billions of Unsolicited Commercial Email messages (UCE), Richter made headlines again recently when his spam-fed cash cow, OptInRealBig.com, filed for bankruptcy protection in U.S. federal court in his home state of Colorado. According to Richter's father (who is also his attorney), "It's the legal fees that are battering the company. OptIn is profitable but for these lawsuits."

At the time of its bankruptcy filing, OptInRealBig.com claimed assets of less than $10 million and liabilities of over $50 million. Richter claimed his company made $15 million a year sending more than 15 million email messages per day. However, in 2003, OptInRealBig was dealt a powerful 1-2 punch from Microsoft and Eliot Spitzer, the Attorney General of New York; both sued Richter under local state anti spam laws. Although the New York case was settled out of court last year, Richter has had no such luck dealing with Microsoft, whose claims top $19 million.

A Case of Global Amnesia?

Richter's company and others like it market products ranging from diet pills to pornography. He's also been accused of using spam to extract personal information from unsuspecting recipients. For instance, one alleged scheme hatched by Richter and his associates promised recipients a copy of a "Girls Gone Wild" DVD if the recipient registered on a website. The registration information was then used to bombard the recipient with more and more spam.

Richter contends that his methods are all legal, and that he's just a regular guy trying to do right by the world; he's even gone so far as to claim that he's a "victim" of overzealous anti spam companies and prosecutors. "We don't spam," explained Richter in an August 2004 PC World interview. "The biggest problem is when people get an email that they think they didn't sign up for or don't remember signing up for, and they call it spam."

To hear Richter tell it, tens of millions of people simply forgot that they had previously asked to receive his messages. According to the state of New York, however, he falsified header information and used deceptive routing and domain purchase practices in order to get his messages through. The lawsuit also accused Richter of using a network of approximately 500 "zombie" computers to send his messages. When asked how so many users could have subscribed and not remember doing so, Richter claimed the signups must have been via anonymous "partners of our partners" web sites, the names of which slipped his mind.

Not Just an Online Threat

Evidently not satisfied with stealing bandwidth, Richter also shows a penchant for heavy equipment. In an unrelated 2003 case, he was put on probation after pleading guilty to a felony charge of receiving stolen items worth more than $10,000. According to court records, an informant's tip regarding a stolen Bobcat loader led undercover officers to Richter. Over the course of 13 months, the officers proceeded to strike deals with him for a Honda generator, hundreds of cases of cigarettes, three laptop computers and other items, all offered at suspiciously low prices and purchased in some of Denver's seediest neighborhoods. In addition to probation, Richter was also ordered to pay $38,000 in restitution for the stolen goods.

Despite his guilty plea, Richter maintains his innocence, saying he pleaded guilty to the felony charges because it was "easier to be done with it," and he had "too much stuff going on in my life."

What's Next for Scott Richter?

The 5-year-old OptInRealBig.com, which employed 25 people last year and had 350 clients, will continue to operate under Chapter 11 bankruptcy protection. While the bankruptcy filing shows the power of legislation and legal action from parties with a vested interest in stopping spam, Richter is not likely to fade quietly into the sunset. Under Chapter 11 bankruptcy laws, the company must follow a court-supervised "debt rehabilitation" plan to pay off creditors, but is not required to modify its business practices. None of OptInRealBig's assets will be liquidated, meaning the company's stable of spam cannons will remain active. The bottom line: Scott Richter will not be required to stop sending UCE in the immediate future, pending ongoing litigation intended to determine exactly what spam is in legal terms. In the meantime, the best defense against spam is a comprehensive gateway solution that will guard against all manner of email threats, especially spammers like Scott Richter.

Dr. Paul Judge is a noted scholar and entrepreneur. He is Chief Technology Officer at CipherTrust, the industry's largest provider of enterprise email security. The company's flagship product, IronMail provides a best of breed enterprise anti spam solution designed to stop spam, phishing attacks and other email-based threats. Learn more by visiting http://www.ciphertrust.com/pro ducts/spam_and_fraud_protection/ today.

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