Jeffrey A. Kilbride, 41, of Venice, Calif., and James R. Schaffer, 41, of Paradise Valley, Ariz., were convicted on eight counts in U.S. District Court in Phoenix. Both face a maximum of 30 years in prison, along with a fine of up to $500,000. They'll be sentenced on Sept. 24.
The charges included conspiracy, fraud, money laundering, and transportation of obscene materials. The trial, which began on June 5, was the first to include charges under the CAN-Spam Act of 2003, according to a release from the Department of Justice. The specific law that prosecutors used under the CAN-Spam Act is designed to crack down on the transmission of pornography in spam.
"Through their international spamming operation, these defendants made millions of dollars by sending unwanted sexually explicit e-mails to hundreds of thousands of innocent people, including families and children, while simultaneously using sophisticated Internet technology to try to conceal their identity," said Assistant Attorney Alice S. General Fisher. "This prosecution, the first of its kind under the CAN-Spam Act, demonstrates the Department of Justice's commitment to protect American families from receiving unsolicited spam e-mail."
According to prosecutors, in 2003, Kilbride and Schaffer set up a spamming operation that would eventually gross more than $2 million. Their business model consisted of sending millions of spam messages that advertised commercial pornography Web sites. For each person that followed a link to one of the porn sites, Kilbride and Schaffer earned a commission. Hard-core pornographic images were embedded in each e-mail.
Both men were convicted of two violations of the CAN-Spam Act. One of the counts charged that Kilbride and Schaffer sent multiple electronic commercial e-mail messages containing falsified header information. The other count stemmed from the fact that they sent spam using domain names that had been registered using materially false information.
Kilbride and Schaffer were also convicted on one count of conspiring to commit fraud in connection with electronic mail and four counts of felony obscenity charges for transporting hard-core pornographic images of adults. Finally, Kilbride and Schaffer were convicted on a federal money laundering charge for moving funds inside and out of the United States to conceal or disguise the nature, location, source, ownership, or control of the proceeds from those materials.
The government noted that when the CAN-Spam Act went into effect on Jan. 1, 2004, Kilbride and Schaffer arranged to remotely log on to servers in Amsterdam, to make it look like their spam messages were being sent from abroad, when actually they were operating their business from inside the United States. They also used bank accounts in the Republic of Mauritius and the Isle of Man to receive and funnel the proceeds from the operation and to further insulate themselves from detection by U.S. law enforcement.
The conviction comes less than a month after the feds arrested Robert Alan Soloway. The man known as the Spam King was the owner of Newport Internet Marketing Corp. of Seattle. He is facing five counts of identity theft, mail fraud, wire fraud, fraud in connection with electronic mail, and money laundering. If convicted on all charges, he could face up to 75 years in prison.
And on June 11, Adam Vitale, 26, of Brooklyn, N.Y., pleaded guilty in federal court to spamming 1.2 million AOL users. He pled to charges of working with co-conspirators in a scheme that violated the CAN-Spam Act. He faces a maximum sentence of 11 years in prison and a fine of $250,000.