FBI indicts 19 for internet related fraud

A federal grand jury in Dallas returned an indictment this week charging 19 individuals with conspiracy to commit wire and mail fraud. 15 of the defendants are charged with email fraud. All in all, these defendants are accused of defrauding various companies, from telcos to web developers, of $15,000,000.

[I]f convicted, the conspiracy charge carries a maximum statutory sentence of 30 years in prison and a $1 million fine. Each of the obstruction charges carries a maximum statutory sentence of 20 years in prison and a $250,00 fine. If a defendant is convicted on a felony and also on false registration of a domain name, the penalty for that felony conviction is doubled, or increased by seven years, whichever is less. Restitution could be ordered.

False registration of a domain name will add up to 7 years onto any sentence. This is probably one reason so many spammers are now hiding behind domains by proxy. That won’t add to their jail time if they end up convicted of a felony.
This description from the FBI press release sounds very familiar:

The conspirators created, purchased and used  shell companies to hide the true identity of the owners or operators of the companies, or the relationships between the companies. They also established P.O. Boxes, commercial remailer services, shell offices, apartments, or other physical locations to hide owners’ or operators’ identity or the relationships between the companies. They assumed multiple fake identities to hide true ownership of the shell companies and made materially false representations to their victims, by mail, fax, telephone, e-mail, or other communications, to obtain goods and services from them.

I know a number of spammers who have a series of shell companies in order to hide the relationships between their various websites. They have one shell that’s used for their advertisers. They have another shell that’s used for their affiliates and they have lots of shell companies and domains that are used in their emails.

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And the ugly…

Getting back to my series on the good, the typical and the ugly in the ESP field, and there is some very ugly out there. I have 3 examples of the ugliness out there and what ESPs and legitimate senders are competing with.
The fake ESP
A spammer approached me early on in my consulting career, asking me to help him set up a fake ESP. He wanted to set up his corporate network so that to an outsider it would look like he was selling ESP services and thus had a large number of customers. There wouldn’t be any customers, however, all the mail would be coming from his company. When the blocking got bad enough, and it would as he would purchase addresses from anywhere, he would “disconnect” the responsible customer. My role was to help him come up with a plausible sounding acceptable use policy and then contact the ISPs when he “disconnected” the customer. I declined to participate in this scheme. This doesn’t appear to have stopped him, though, if the rumors I hear are to be believed.
Waterfalling
Related to the fake ESP scheme is waterfalling. Spammers acquire lists of email addresses and then begin the process of cleaning them by mailing. In some cases, they mail through fake ESPs, as above. In other cases, they actually spread their traffic out across legitimate ISPs. As they mail the lists through the ESPs, they remove unsubscribes, bounces and complaints. When the list reaches a set cleanliness, they move it to another ESP. They repeat this, gradually moving through cleaner and cleaner ESPs. Eventually, they move the list to their own network and sell mailings to it as an opt-in list. It’s not opt-in, it’s just cleansed of all negative responders.
The companies abusing ESPs to clean their lists do tarnish the reputation of ESPs. While the responsible ESPs do disconnect the waterfallers, they usually do so after problems are detected. That being said, there are some companies that are constantly looking for “partnerships” at ESPs and the ESPs turn them away during the sales cycles.
Affiliates
While not necessarily an ESP problem there are some large companies out there that hire spammers to send acquisition email for them. They also send their own mail, both marketing and transactional, through ESPs. The issue for ESPs come when the URL blocks happen and the bad reputation of their customer’s mail bleeds back to the ESPs IP addresses. The ESP becomes known as “one of those places that mails for X” and their reputation falls accordingly. In some cases, even if the mail through the ESP is clean and opt-in, the ESP finds itself blocklisted for just doing business with a company that hires spammers.
I’ve had a couple clients recommended to me by ESPs because the ESP was dealing with a persistent spam block around this particular customer. The mail the customer sent through the ESP was opt-in, but the client was using an extensive network of affiliates to send spam for them. I collected a lot of examples of their spam from various affiliates, even gave them a couple of examples from my own email addresses. One of those addresses has not been actively used in 6 years. My client tells me they talked to their affiliates and that the affiliate assured them I had signed up, I just forgot. The client chose to believe the affiliate over me, despite the fact that I had many other examples. That client lost their ESP (and good for the ESP) but is still sending spam. I just got one advertising their stuff yesterday, at the same address I gave to them years ago, all images, hashbusters, domain hidden behind proxy, coming from a snowshoer network.
All of the companies I’ve talked about here describe themselves as legitimate email marketers. Even the company telling me I opted in to their mail was defending themselves and their affiliates as legitimate email marketers.

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Blocking of ESPs

There’s been quite a bit of discussion on my post about upcoming changes that ESPs will be facing in the future. One thing some people read into the post is the idea that ISPs will be blocking ESPs wholesale without any regard for the quality of the mail from that company.
The idea that ESPs are at risk for blocking simply because they are ESPs has been floating around the industry based on comments by an employee at a spam filter vendor at a recent industry conference.
I talked to the company to get some clarification on what that spam filtering company is doing and hopefully to calm some of the concerns that people have.
First off, and probably most important, is that the spam filtering company in question primarily targets their service to enterprises. Filtering is an important part of this service, but it also handles email archiving, URL filtering and employee monitoring. The target market for the company is very different than the ISP market.
The ISPs are not talking about blocking indiscriminately, they are talking about blocking based on bad behavior.
Secondly, this option was driven by customer request. The customers of the spam filtering appliance were complaining about “legitimate” mail from various ESPs. Despite being reasonable targeted the mail was unrequested by the recipient. While ESPs use FBLs and other sources of complaints to clean complainers off rented or epended lists at ISPs, the option is not available for mail sent to corporations. Enterprises don’t, nor should they have to, create and support FBLs. Nor should employees be expected to unsubscribe from mail they never requested.
This option is the direct result of ESPs allowing customers to send spam.
Thirdly, this option is offered to those customers who ask for it. It is not done automatically for everyone. The option is also configurable down to the end user.
While I haven’t seen the options, nor which ESPs are affected, I expect that the ones on the list are the ones that the filtering vendor receives complaints about. If you are not allowing your customers to send spam, and are stopping them from buying lists or epending, then you probably have not come to the attention of the filtering company and are not on the list of ESPs to block.

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Cyber Monday inundation

The cyber monday inundation of mail has hit my mailbox. There’s been a clear increase in marketing mail over the last week. Unfortunately for those marketers, it’s too much and I am just scanning subject lines and marking as read. I don’t have the time to read all this mail.

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