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First spammers jailed under CAN-SPAM Act

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Two men who were the first to face charges under America's CAN-SPAM Act (Controlling the Assault of Non-solicited Pornography and Marketing) have been sentenced to more than five years in prison for organising and running an international pornographic spamming business that earned them more than $1-million.

A US Department of Justice statement says Jeffrey Kilbride and James Schaffer were sentenced to 72 months and 63 months jailtime respectively, were fined $100 000, and ordered to pay $77 500 in restitution to America Online (AOL). Judge David Campbell also ordered the pair to jointly forfeit more than $1,1-million – the amount of illegal proceeds from their spamming operation.
On June 25 this year, a federal jury in Phoenix convicted Kilbride and Schaffer on eight counts including: violating the CAN-SPAM Act by sending spam messages using falsified headers and domain names, conspiracy, fraud, money laundering, and various obscenity charges. The three-week trial was the first to include charges under the CAN-SPAM Act, a law designed to crack down on the transmission of pornography in commercial bulk unsolicited E-mail messages.
The DOJ statement goes on to say that, beginning in 2003, Kilbride and Schaffer established a spamming operation in the US. Their business model consisted of sending millions of unsolicited E-mail messages which advertised commercial Internet hard-core pornography Web sites. Kilbride and Schaffer earned a commission for each person they caused to subscribe to one of these Web sites. Hard-core pornographic images were embedded in each E-mail they sent and were visible to any person who opened the E-mail.
In late 2003, after the CAN-SPAM Act was passed, Kilbride and Schaffer took steps to relocate their criminal enterprise abroad in an attempt to evade prosecution. By remotely logging in to servers located in Amsterdam, the men were able to make it appear that the messages they were sending originated abroad, when they were actually being sent from Phoenix.
At Kilbride and Schaffer’s trial, eight witnesses testified about the context in which their families, including some children, received the pornographic spam messages. In all, AOL and the FTC received over 1.5 million complaints from spam recipients, including some who had set parental controls to protect their children from accessing graphic sexual content.
The evidence at trial established that the defendants falsified header information and domain names of the messages they sent by creating a fictitious employee at a shell corporation in Mauritius in order to hide their criminal conduct. Further, Kilbride and Schaffer used bank accounts in Mauritius and the Isle of Man to receive and funnel the proceeds from the operation, and to further insulate themselves from detection by US law enforcement.