Former 'Spam King' pays MS $7m to settle lawsuit

Going straight

Former 'Spam King' Scott Richter has agreed to pay Microsoft $7m to settle an anti-spam lawsuit. The settlement to a December 2003 lawsuit comes a month after Richter - long ranked one of the world's top three spammers - was removed from the Register of Known Spam Operators maintained by the Spamhaus Project. Richter was dropped from the ROKSO list after his outfit OptInRealBig.com cleaned up its act and stopped sending out junk mail that violated US anti-spam rules.

The settlement (announced Tuesday) is conditioned upon dismissal of the bankruptcy cases filed in March by Richter and OptInRealBig at the US Bankruptcy Court in Denver, itself a defensive move prompted by the massive damages a court might have awarded Microsoft if the case had gone to trial. Richter and his company have agreed to pay $7m to Microsoft. The settlement also stipulates that Richter, his company and his affiliates will continue to comply with US federal and state anti-spam laws, such as the CAN-SPAM Act. Richter has also agreed to three years of oversight.

We're in the money

Microsoft has ear-marked $5m of the settlement to expand its net security partnerships with governments and law enforcement agencies worldwide through various training, investigative and forensic assistance initiatives. The software giant is giving $1m to New York community centres to spend in computers. Microsoft doesn't say where the other $1m is going but our guess would be legal fees.

Richter was sued by New York State Attorney General Eliot Spitzer and brought to the brink of bankruptcy by Microsoft over allegations he used a network of 500 compromised computers to send millions of junk emails to hapless Hotmail users. Richter settled the NY lawsuit last July by agreeing to comply with CAN-SPAM and to shell out a modest $50K fine but that still left Microsoft's action hanging over his head.

In its lawsuit, Microsoft contended that Richter and his companies violated Washington and federal law by sending junk mail that contained "forged sender names, false subject lines, fake server names, inaccurate and misrepresented sender addresses and obscured transmission paths". Some of these spam messages touted home loans and the like were allegedly sent via compromised PCS.

Richter and OptInRealBig.com continue to deny these allegations but the terms of the settlement oblige Richter to provide a canned quote anyway stating that he'd changed his emailing practices "in part" because Microsoft and the New York Attorney General sued him. "In response to Microsoft’s and the New York Attorney General’s lawsuits, we made significant changes to OptInRealBig.com’s emailing practices and have paid a heavy price. I am committed to sending email only to those who have requested it and to complying fully with all federal and state anti-spam laws," Richter said.

Microsoft’s SVP and general counsel, Brad Smith, commented that because of this litigation, Richter had "fundamentally changed his practices and forfeited ill-gotten gains". He added that Microsoft will continue to combat spam through a combination of technology, consumer education and enforcement. ®

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