Spam ringleader fined $15 million

A US Federal Judge has ordered a New Zealander to pay the US Federal Trade Commission (FTC) more than $15 million for his unlawful role as the ringleader of an international spam network.

Lance Atkinson, now a resident of Pelican Waters, Queensland in Australia, told the Christchurch High Court last year that he was a part of the spamming operation.

He paid $NZ100, 000 and financial penalty plus costs (about $8000).

New Zealand’s Department of Internal Affairs Deputy Secretary Keith Manch said the FTC took separate action against him but not his brother Shane and Christchurch courier Roland Smits.

They were ordered to pay $100,000 and $50,000 respectively for their role in the operation.

“These settlements marked the final stage of Operation Herbal King, an investigation conducted by the Department’s Anti-spam Compliance Unit, the FTC and other overseas agencies.

“Within three months of the passing of the Unsolicited Electronic Messages Act in 2007, the Department had shut down the New Zealand component of ‘Spamhaus,’ ranked as the largest pharmaceutical spamming operation in the world.

“The spam gang deceptively marketed products such as male-enhancement pills, prescription drugs and weight-loss pills,” Mr Munch said.

The operation organised and paid affiliates around the world to send spam emails marketing ‘Herbal King,’ ‘Elite Herbal’ and ‘Express Herbal,’ branded pharmaceutical products.

Mr Munch said ‘Tulip Lab of India’ manufactured and shipped these brands through ‘Genbucks Affiliate Programme’ of ‘Genbucks Ltd,’ a Mauritius based company.

US resident Jody Smith, the American accomplice of Atkinson in the network, had to forfeit almost all his assets to the FTC.

“He will pay about $US 212,000 and will assign any rights he has to $US 91,000 frozen in the name of one of his co-defendants, and $US 547,000 that may be held for his benefit in an Israeli bank.

“In addition to the amount ($US 15.15 million) that Atkinson and his company, ‘Inet Ventures Pty Ltd,’ have been ordered to pay, the three companies affiliated with Smith are liable for $US3.77 million,” Mr Munch said.

It is understood that Smith is awaiting sentence on a criminal charge of conspiracy to traffic counterfeit goods and faces up to five years in prison.

Mr Manch said the Department appreciated the cooperation received from the FTC.

“The FTC provided technical information making it possible for our investigators to identify the spammers and obtain evidence of the offending,” he said.