Thu April 29, 2004 10:06 PM ET
By Andy Sullivan
WASHINGTON (Reuters) - U.S. authorities said Thursday they had arrested two e-mail marketers and were searching for two others in the government's first use of a new law designed to crack down on "spam" e-mail.
U.S. agents have raided a Detroit-area operation accused of sending out millions of e-mail advertisements for a fraudulent weight-loss patch, the Federal Trade Commission said.
Daniel Lin, Mark Sadek, James Lin and Christopher Chung could face up to five years in jail under a new anti-spam law that took effect in January.
They also face mail-fraud charges, which carry a maximum 20-year sentence.
Through their company, Phoenix Avatar, the four defendants earned nearly $100,000 per month selling a diet patch that had no effect at all, the FTC charged.
The defendants used the e-mail addresses of others to cover their tracks, a technique known as "spoofing," the FTC said.
Spoofing is illegal under the new anti-spam law.
Innocent e-mail users were swamped by undeliverable return mail and complaints when their addresses were spoofed, and some were mistakenly labeled as spammers and blacklisted by service providers, the FTC said in a court filing.
Consumers forwarded 490,000 of the company's e-mails to the FTC since January, the consumer-protection agency said.
The operation has been shut down and the defendants' assets frozen pending trial, the FTC said.
"These cases should send a strong signal to spammers that we are watching their operations and working together to enforce the law," FTC Chairman Timothy Muris said in a press release.
A lawyer for one of the defendants said he was considering a constitutional challenge to the law.
"Any time that there is a statute that has any kind of depravation of some rights, there very well might be a constitutional challenge," said Detroit attorney James Feinberg, who said Sadek would plead not guilty.
The FTC said it also filed charges to shut down an Australian operation that it said is responsible for massive amounts of spam in the United States.
The company, Global Web Promotions Pty Ltd., sold a similar diet patch and anti-aging products that experts say do not work, the FTC said.
Unwanted spam messages now account for more than half of all e-mail traffic, according to some estimates.
Daniel Lin, who has not yet been arrested, is listed as one of the Internet's most prolific spammers by the anti-spam group Spamhaus. James Lin has not yet been arrested either.
Feinberg said the two were expected to appear in court on Friday.
Four of the nation's largest e-mail providers used the new law to sue hundreds of marketers in March, but they only sought monetary damages, not prison sentences.
| 