The Federal Trade Commission won a preliminary legal victory against what it called one of the largest spam gangs on the Internet, persuading a federal court in Chicago on Tuesday to freeze the group's assets and order the spam network to shut down.
The group, which used several names but was known among spam-fighting organizations as HerbalKing, sent billions of unsolicited messages to Internet users over the last 20 months, promoting replica watches and a variety of pharmaceuticals, including weight-loss drugs and herbal pills that supposedly enhanced the male anatomy, according to the commission.
"This is pretty major. At one point these guys delivered up to one-third of all spam," said Richard Cox, chief information officer at SpamHaus, a nonprofit antispam research group.
The investigation provides a clear window into the business of modern spam, which by some estimates accounts for 90 percent of all e-mail sent over the Internet.
To pepper Internet users with its solicitations, the HerbalKing group
The security firm Marshal Software, which assisted the FTC with the investigation, estimated in court documents that the group's Mega-D botnet--named after one of its pill products--was made up of 35,000 computers and could send 10 billion e-mail messages a day. In January, the botnet was the leading source of spam on the Internet, the firm estimated.
FTC investigators also said they monitored the group's finances closely and that it cleared $400,000 in Visa charges in one month alone.
The commission has brought more than 100 cases against spammers and spyware vendors over the past decade. But officials and investigators said this spam operation was perhaps the most extensive they had ever encountered, with ties to Australia, New Zealand, India, China, and the United States.
"They were sending extraordinary amounts of spam," said Jon Leibowitz, an FTC commissioner. "We are hoping at some level that this will help make a small dent in the amount of spam coming into consumers' in-boxes."
The commission asked the federal district court in Chicago to freeze the gang's finances, arguing that its members were using unfair and deceptive advertising practices and violating the Can-Spam Act of 2003. That federal law provides civil and criminal penalties for spammers who falsify information in e-mail messages and fail to offer ways for consumers to refuse further messages.
The government is also pursuing criminal charges against the group. FBI investigators in Chicago and St. Louis have executed search warrants against members of the spam gang, the commission said.
Jody Michael Smith, 29, of McKinney, Texas, was involved in the group's finances, according to the FTC. Reached at his home, Smith said: "I don't even know who these people are who I have been tied to," and referred all inquiries to his Dallas lawyer, John R. Teakell. Teakell did not immediately respond to a request for comment.
United States officials are also working with New Zealand authorities in the case against Lance Thomas Atkinson, 26, a native of New Zealand who now resides in Australia. Atkinson has a history in the spam business. In 2005, the FTC obtained a $2.2 million judgment against him and a business partner for running a similar operation selling herbal pills online.
In conjunction with the investigation in the United States, the Department of Internal Affairs in New Zealand asked a court on Tuesday to impose a fine of 200,000 New Zealand dollars, or $121,000, on Atkinson, his brother Shane Atkinson, and a business partner for violating the country's own spam laws.
The activities of the HerbalKing group, like those of other criminal groups online, were remarkably international in scope. The group was shipping drugs like Propecia, Lipitor, Celebrex, and Zoloft out of India. The FTC also said the group based its Web sites in China, processed credit cards from the former Soviet republic of Georgia and Cyprus, and transferred funds among members using ePassporte, an electronic money network.
As part of its investigation, the commission purchased the "herbal" pills from the group and asked the Food and Drug Administration to test them. That agency found that the pills contained sildenafil, the active ingredient in Viagra, which can be risky for some people with heart conditions.
Antispam researchers lauded the crackdown and said it would send a strong message to other spammers. But they were not confident that spam volumes would decrease.
"This will send some real shock waves through the spamming industry, but even if these guys were running a substantial botnet of compromised computers, there are always spammers looking to take their place," said Graham Cluley, a senior technology consultant at Sophos, a spam-fighting security firm. "It wouldn't be a surprise if people don't notice any difference in their in-box tomorrow morning."