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BUSTED: Anti Spam Forces Bankrupt Super-Spammer Scott Richter
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By Paul Judge, CTO, CipherTrust,
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Microsoft scores one for the good guys Scott Richter, theself-proclaimed ¡°Spam King,¡± just can¡¯t seem to get enoughattention. Admittedly responsible for sending literally billionsof Unsolicited Commercial Email messages (UCE), Richter madeheadlines 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 toRichter¡¯s father (who is also his attorney), ¡°It¡¯s the legalfees that are battering the company. OptIn is profitable but forthese lawsuits.¡±
At the time of its bankruptcy filing, OptInRealBig.com claimedassets of less than $10 million and liabilities of over $50million. Richter claimed his company made $15 million a yearsending more than 15 million email messages per day. However, in2003, OptInRealBig was dealt a powerful 1-2 punch from Microsoftand Eliot Spitzer, the Attorney General of New York; both suedRichter under local state anti spam laws. Although the New Yorkcase was settled out of court last year, Richter has had no suchluck dealing with Microsoft, whose claims top $19 million.
A Case of Global Amnesia? Richter's company and others like itmarket products ranging from diet pills to pornography. He¡¯salso been accused of using spam to extract personal informationfrom unsuspecting recipients. For instance, one alleged schemehatched by Richter and his associates promised recipients a copyof a "Girls Gone Wild" DVD if the recipient registered on awebsite. The registration information was then used to bombardthe recipient with more and more spam.
Richter contends that his methods are all legal, and that he¡¯sjust a regular guy trying to do right by the world; he¡¯s evengone so far as to claim that he¡¯s a ¡°victim¡± of overzealous antispam companies and prosecutors. ¡°We don't spam,¡± explainedRichter in an August 2004 PC World interview. ¡°The biggestproblem is when people get an email that they think they didn'tsign up for or don't remember signing up for, and they call itspam.¡±
To hear Richter tell it, tens of millions of people simplyforgot that they had previously asked to receive his messages.According to the state of New York, however, he falsified headerinformation and used deceptive routing and domain purchasepractices in order to get his messages through. The lawsuit alsoaccused Richter of using a network of approximately 500 ¡°zombie¡±computers to send his messages. When asked how so many userscould have subscribed and not remember doing so, Richter claimedthe signups must have been via anonymous "partners of ourpartners" web sites, the names of which slipped his mind.
Not Just an Online Threat Evidently not satisfied with stealingbandwidth, Richter also shows a penchant for heavy equipment. Inan unrelated 2003 case, he was put on probation after pleadingguilty to a felony charge of receiving stolen items worth morethan $10,000. According to court records, an informant's tipregarding a stolen Bobcat loader led undercover officers toRichter. Over the course of 13 months, the officers proceeded tostrike deals with him for a Honda generator, hundreds of casesof cigarettes, three laptop computers and other items, alloffered at suspiciously low prices and purchased in some ofDenver¡¯s seediest neighborhoods. In addition to probation,Richter was also ordered to pay $38,000 in restitution for thestolen goods.
Despite his guilty plea, Richter maintains his innocence, sayinghe pleaded guilty to the felony charges because it was "easierto be done with it," and he had "too much stuff going on in mylife."
What¡¯s Next for Scott Richter? The 5-year-old OptInRealBig.com,which employed 25 people last year and had 350 clients, willcontinue to operate under Chapter 11 bankruptcy protection.While the bankruptcy filing shows the power of legislation andlegal action from parties with a vested interest in stoppingspam, Richter is not likely to fade quietly into the sunset.Under Chapter 11 bankruptcy laws, the company must follow acourt-supervised ¡°debt rehabilitation¡± plan to pay offcreditors, but is not required to modify its business practices.None of OptInRealBig¡¯s assets will be liquidated, meaning thecompany¡¯s stable of spam cannons will remain active. The bottomline: Scott Richter will not be required to stop sending UCE inthe immediate future, pending ongoing litigation intended todetermine exactly what spam is in legal terms. In the meantime,the best defense against spam is a comprehensive gatewaysolution that will guard against all manner of email threats,especially spammers like Scott Richter.
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