U.S. Court Orders Down-Under Spammer to Pay $15M
A U.S. federal judge has ordered the Australia-based alleged leader of a worldwide spamming network to pay more than $15 million to settle charges against him, the Federal Trade Commission announced yesterday.
Lance Atkinson, a New Zealand citizen who reportedly lives in Australia, was ordered to pay the fine after the FTC identified him as the spam gang’s ringleader, the FTC claimed.
According to the FTC, the spam gang deceptively marketed products such as male-enhancement pills, prescription drugs and weight-loss pills.
Atkinson admitted his involvement in the spam network to New Zealand authorities last December and has already paid more than $80,000, according to the FTC.
Atkinson’s accomplice, U.S. resident Jody Smith, agreed to settle charges by turning over nearly all of his assets to the FTC, the commission reported.
Atkinson and Smith recruited spammers from around the world who sent billions of e-mail messages directing consumers to Web sites operated by an affiliate program called “Affking,” according to the FTC’s complaint filed last year.
By using false header information to hide the origin of the messages, and by failing to provide an opt-out link or list a physical postal address, the defendants violated the Can-Spam Act of 2003, the FTC said.
The FTC charged that, using the “Canadian Healthcare” brand name and other labels, the defendants’ spam messages deceptively marketed a male-enhancement pill, prescription drugs, and a weight-loss pill in violation of federal law.
They falsely claimed that the medications came from a U.S.-licensed pharmacy that dispenses FDA-approved generic versions of drugs such as Levitra, Avodart, Cialis, Propecia, Viagra, Lipitor, Celebrex and Zoloft, according to the FTC.
The defendants do not operate a U.S.-licensed pharmacy, and the drugs they sold were shipped from India, had not been approved by the FDA and were potentially unsafe, the FTC said.
The FTC also alleged that Atkinson and Smith made false claims about the security of consumers’ credit card information and other personal data consumers provided when they bought goods.
In operating the online pharmacy, which was called “Target Pharmacy” and later “Canadian Healthcare,” the defendants’ Web site assured potential consumers that “TARGET PHARMACY treats your personal information (including credit card data) with the highest level of security,” the FTC alleged. The Web site went on to describe its encryption process, which supposedly involved “Secure Socket Layer (SSL) technology,” the FTC alleged. However, there was no indication that consumers’ information was encrypted using SSL technology, according to the FTC.
A U.S. district court last fall ordered an asset freeze and a halt to the spam gang’s operation, which was responsible for sending potentially billions of illegal spam messages, and has accounted for more than three million complaints.
Under the terms of Smith’s settlement, he will pay approximately $212,000, according to the FTC. He also will assign any rights he has to $91,000 frozen in the name of an unnamed co-defendant, and $547,000 that may be held for his benefit in an Israeli bank, according to the FTC.
The settlement also prohibits Smith from violating the Can-Spam Act and from making deceptive claims related to either the sale of prescription drugs or pharmacy services over the Internet or the security of Web sites that sell any product or service, according to the FTC. Smith is required to substantiate any claims about the benefits or safety of any dietary supplement, food, or health-related service, the FTC said.
Smith pled guilty in August 2009 to the criminal charge of conspiracy to traffic counterfeit goods and faces up to five years in prison, the FTC said. He is scheduled to be sentenced in December in U.S. District Court for the Eastern District of Missouri, according to the FTC.
