IT Law : Godfather of Spam in prison

"Godfather of Spam" goes to prison for four year

Alan Ralsky, the so-called "Godfather of spam" was yesterday sentenced by a federal judge in Detroit to spend the next 51 months of his life in prison for wire fraud, mail fraud, and violations of the CAN-SPAM act.

Not content simply to move boxes of pills or to sign people up for new mortgages, Ralsky's operation instead pulled in millions of dollars through "pump and dump" schemes of thinly traded stocks in companies you've never heard of. Millions of e-mails would announce some hot new "Internet IPO!!!!!" just about to drop, and—amazingly—some people would want in on the action. Since the stocks in question were low-volume "pink sheets" stocks, even low levels of activity could boost the stock price, at which point the owners would sell and forward tens of thousands of dollars from Hong Kong to the Standard Federal Bank in Troy, Michigan.

This might not sound like a good way to get rich, but the government's court documents showed just how lucrative the practice could be. Consider the list of following payments that arrived from Hong Kong in just one month, July 2005:

• July 5: $180,826.61
• July 11: $211,595.76
• July 14: $13,532
• July 22: $780,295.98
• July 26: $65,590.71
• July 27: $424,963.73
• July 27: $23,702

A scheme like this required a certain amount of sophistication, and Ralsky appears to have run it like a real business. He was the chief executive, and his son-in-law, Scott Bradley, was the chief financial officer. John Bown, CEO of network administration company GDC Layer One, was the "chief technology officer and network systems manager" for the spammers. William Neil served as the chief operating officer and registered many of the hundreds of bogus domain names used by the group.

The conspiracy was global. Although Ralsky and Bradley both lived in West Bloomfield, Michigan, members of their team operated from New York, Brazil, California, Hong Kong, and Dayton, Ohio, and included coders, a stockbroker, a Chinese CEO, and network admins.

Ralsky has been at his tricks for years, and eventually acquired a reputation as one of the world's top spammers. Court documents show that when the spammers recruited someone who claimed he could get 20 million e-mails a day into AOL and Hotmail, the man was awestruck to find out that he was joining Ralsky's operation. "King of spam wants to rent me," he wrote in an instant message. "Cool." (The man eventually made several hundred thousand dollars from his work for Ralsky.)

The Spamhaus description of Ralsky says that "he has grown from a small time operator, under the 'Additional Benefits' moniker, to one of the bigger spam houses on the Internet with a gang of fellow morally challenged types working with him to pump out every type of sleazy deal and scam offer into millions of internet users' mailboxes."

Ralsky wasn't always careful. He would recruit coders from sites like "special ham" (spam) using the "amr777" handle, and his team tried to cloak its e-mail discussions about proxies by using the fairly transparent replacement "p's," "peas," "proximate," and "p s."

Ralsky and company earned more than $2.6 million between May 1 and December 1, 2005 alone, but the feds were closing in. A three-year investigation by the FBI, the US Postal Inspection Service, and the Internal Revenue Service (with a little help from the SEC) untangled the conspiracy. In 2007, the government moved to indict the entire conspiracy.

Yesterday, the lead defendants were finally sentenced after pleading guilty in June 2009. Ralsky and his son-in-law got 51 months and 40 months in jail, respectively, and had to forfeit the cash associated with the spamming scheme. They will be on probation after their release. How Wai John Hui, the Chinese/Canadian CEO who helped arrange the stocks for use in the scheme, also got 51 months. John Bown got 32 months for setting up a botnet used to send the e-mails. A handful of others will be sentenced today.

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IT Law : Apple beats Psystar

Apple earns key legal victory against Psystar

By AppleInsider Staff

Published: 04:05 PM EST

In a crushing defeat for the clone Mac maker, Psystar was on the losing end of a crucial court decision in the company's ongoing legal battle with Apple.

Judge William Alsup ruled this week in a summary judgment that Psystar infringed on copyrights owned by Apple in order to place Mac OS X on unauthorized computers built and sold by the Florida corporation. In addition, Psystar was found to be in violation of the Digital Millennium Copyright Act by circumventing Apple's protection barrier that prevents installation of its operating system on third-party hardware.

"Psystar infringed Apple's exclusive right to create derivative works of Mac OS X," the ruling reads. "Specifically, it made three modifications: (1) replacing the Mac OS X bootloader with a different bootloader to enable an unauthorized copy of Mac OS X to run on Psystar's computers; (2) disabling and removing Apple kernel extension files; and (3) adding non-Apple kernel extensions."

Alsup also denied Psystar's own motion for summary judgment, in which the company attempted to prove that Apple engaged in copyright misuse. The judge ruled that Apple's End User License Agreement only attempts to control use of Apple's own software, which is within its rights.

The summary judgment does not mean that the trial is concluded, however. A number of issues remain to be resolved. Apple has alleged that Psystar has engaged in breach of contract, trademark infringement, trademark dilution, and unfair competition, among other activities.

The ruling was issued Nov. 13 in a San Francisco court. Another hearing has been scheduled for Dec. 14, and trial between the two companies is due to start in January 2010.

The decision came after both companies requested summary judgments, which turned into a positive for Apple and a significant defeat for Psystar.

It's just the latest of many setbacks for Psystar as it has attempted to defend itself from Apple's suit. In September, a member of the Psystar defense teamwithdrew himself from the case. And in July, the Florida-based corporation brought on a new legal team after it emerged from bankruptcy.

The company -- which sells machines with Snow Leopard, Apple's latest operating system, preinstalled -- in October began to license its virtualization technology to third-party hardware vendors. The Psystar OEM Licensing Program intends to allow Intel machines made by companies other than Apple to run Mac OS X 10.6.

Will Anwar be ambushed by trial? (The Nutgraph)

Will Anwar be ambushed by trial?

DATUK Seri Anwar Ibrahim has failed in his bid, at the Court of Appeal, to obtain evidence from the public prosecutor about his alleged act of sodomy with a young former aide. Layperson reactions have naturally been cynical, dismissing the judgment as political in nature.

Indeed, the Court of Appeal's interpretation of Section 51A of the Criminal Procedure Code (CPC), by which it made its judgment, is worrisome from a justice perspective. The judgment nullifies the efforts of the parliamentary select committee which proposed the CPC amendments in 2006 requiring pre-trial disclosure by the prosecution to the defence. The legislature's intention was to "prevent trial by ambush" but the Court of Appeal's judgment in Anwar's sodomy case seems to overturn that principle.

But is Section 51A as clear cut as it is meant to be? And is splitting hairs over its meaning scuppering Anwar's chances for a fair trial?

Meaning of words

Section 51A was introduced to widen the scope of evidence that the defence could obtain from the prosecution. At first reading, it comes across as a clear obligation for the prosecution to make available to the defence evidence that it intends to use during trial.

Section 51A . Delivery of certain documents The prosecution shall before the commencement of the trial deliver to the accused the following documents: A copy of the information made under section 107 relating to the commission of the offence to which the accused is charged, if any; A copy of any document which would be tendered as part of the evidence for the prosecution; and A written statement of facts favourable to the defence of the accused signed under the hand of the Public Prosecutor or any person conducting the prosecution.

The meaning of the words "shall" and "any document" is clear, says member of the Bar Council's criminal law committee, Datuk Baljit Singh Sidhu, who is also the author of Criminal Litigation Process.

"The intention of 51A is to put both parties in a trial on equal footing in the interest of justice. That was parliament's intent. The word 'shall' should be taken to mean 'must'.

Baljit Singh (pic courtesy of

Baljit Singh)

"If the court does not interpret 'shall' as being mandatory, then there is no point to the amendment," Baljit, who is also Gerakan Federal Territory legal adviser, tells The Nut Graph.

"Any document" should also be taken to mean any type of evidence, Baljit adds. It is all the more important when it involves evidence like DNA, for which scientific expertise and time are required if defence lawyers are to analyse it.

However, the Court of Appeal in Anwar's sodomy case decided there were "limits" as to the kind of evidence the prosecution could be asked to produce before a trial. Hence, it overturned the High Court's decision ordering the prosecution to hand over evidence, which included video footage, medical reports, doctors' notes, and witness statements of alleged victim Mohd Saiful Bukhari Azlan, and others. The bench, in rejecting Anwar's cross-appeal for DNA specimens held by the prosecution, also said that the evidence requested did not fall under the category of evidence in 51A.

"The amendment [to the CPC] is as good as non-existent," SN Nair, one of Anwar's lawyers, tells The Nut Graph.

Merely procedure?

The Court of Appeal's written judgment is not out yet, so Anwar's lawyers are still unclear about the basis of the ruling although they have filed two notices of appeal at the Federal Court Registry.

But it does appear that the court reverted to the law prior to the introduction of 51A on the basis of the prosecution's arguments. "The prosecution went back to pre-amendment law arguing that they had the discretion as to what evidence to give and to decide which facts were favourable to the accused," Nair says in a phone interview.

Clause (c) of 51A(1) requires the prosecution to provide a written statement of facts that are favourable to the defence. According to Nair, evidence that is favourable to the accused can only be found in witnesses' statements.

"In witnesses' statements, there could be evidence that potentially saves the accused. Sharing of these facts means the defence gets to decide what is favourable in the interest of fair trial," Nair says.

The High Court granted access to these statements to Anwar's defence team but it was revoked by the appellate court.

Some prosecutors also argue that 51A is a "procedural" amendment and not a matter of law, says criminal lawyer Richard Wee.

Richard Wee (pic courtesy of

Richard Wee)

"While by and large the courts mostly do tell off the prosecution, there are some who buy that argument. They take the view that if a prosecutor fails to adhere to 51A, it's merely a procedural error," Wee says in a phone interview.

Such an interpretation means the prosecution's case can avoid an inconclusive end. If the court were to view 51A as a law rather than procedure, cases could end up much like how blogger Raja Petra Kamarudin was discharged but not acquitted for sedition, simply because police could not find him.

"Similarly," says Wee, "if evidence is not provided by the prosecution under 51A, the defence should be accorded the right to seek for a discharge not amounting to acquittal."

Wiggle room

The repercussions of procedural rather than legalistic interpretation of the law are alarming. Besides placing prosecution and defence on unequal footing, does it also mean law enforcement need not keep to high standards to ensure thorough and fair investigative work?

Shoddy police work is unfortunately a reality, but that's where the law could have been drafted more precisely to plug the gaps. Wee feels that 51A was not drafted specifically enough to take into account the "practical realities of what happens in court".

Some realities include: The prosecution denies before trial to having found any facts favourable to the accused. Or they may produce other evidence in mid-trial instead of evidence disclosed pre-trial. They may argue that new evidence is required in response to the defence's arguments.

Wee feels the wording about making available documents "which would be tendered as part of evidence" limits the kind of evidence that can be requested for and gives room to the prosecution to wiggle out of it.

"It would have been better to say 'any documents related' to the trial, which would be specific but in a wider sense, covers all other evidence that could be raised during trial," he says.

The obvious conclusion?

Yet, the fact is, there are judges who uphold 51A and ensure it is adhered to, notes Baljit.

"Having case management before trial for evidence to be given to the defence is normal practice and courts will set a date for mention to ensure that all this is complied with," he says.

So if other courts are upholding the law, what else are people to make of how Anwar's appeal was handled other than to think that the judiciary is not free from political interference?