Meet The Kings Of Spam

Spam scam, email, online fraud
CBS/AP
Tom Cowles, who heads one of the world's largest bulk e-mail, or spam, businesses, ought to be a happy guy.

By his account, his company makes $12 million a year e-mailing billions of advertisements, mainly to folks who don't want them.

It's an easy job, the way Cowles and others describe it:

You get hired by a client who wants to sell a penile enlarger or an antenna booster. You write a zesty sales pitch. Then, with the help of some cloak-and-dagger software and a massive database of e-mail addresses, you deluge the planet.

If one in a thousand recipients buys it, you're rich.

But Tom Cowles is not a happy guy.

Relentless anti-spam vigilantes have hounded the 35-year-old head of Empire Towers Inc., plastering Cowles' home address and phone number all over the Web. Spam recipients call to tell Cowles how they feel.

"These people will go to the lowest depths," said Cowles, of Bowling Green, Ohio. "I have some phone clips that would make you sick."

Cowles isn't the only hunted spammer. Many others' personal details are listed on anti-spam Web sites such as Spamhaus.org, which seek to shame bulk e-mailers into amending their zealous marketing ways.

Spammers tell of telephoned death threats or deer hearts received in the mail — the same scheme used to intimidate abortion doctors.

But Cowles is also the target of a stalker who has created a Web site larded with pictures of his home, his driving record and a pair of police mug shots from non-spam-related arrests.

"We had to go to a prosecutor to stop this woman from following my wife and taking pictures of her," Cowles said.

While most spam-related attention fixates on the frustrations of avoiding unwanted e-mail, the entrepreneurs causing those frustrations, like Cowles, also have a story to tell.

The so-called spam kings paint themselves as the Robin Hoods of American capitalism, tilting the Internet's sales power away from big corporations that can afford fancy ad campaigns toward the little guy tinkering in his basement.

"This is what the Internet is supposed to be," said Michael Jay, whose Houston-based company, America Find, sends a couple million messages per day advertising $99 background checks. "This is free enterprise at its finest."

"It's the best business that I've ever seen," said Alan Ralsky, 57, of West Bloomfield, Mich., one of the world's most persistent and prolific spammers, according to Spamhaus. "It puts you and I on the same playing field as General Motors."

Spam, after all, is perfectly legal in most places — as long as it isn't fraudulent.

Spammers say the combination of anonymity, volume and extremely low cost makes it worthwhile.

"It's the marketing medium of the future. You can't get around it," said Cowles, whose MassiveFX e-mailing software allows a client to send a billion or so messages per month.

Products vary from insurance to fake diplomas to pornography videos sold by pitches that would make a stevedore blush.

Spammers' blanket approach ensures that more of their messages wind up in the e-mailboxes of school children than those of the few people who might want such products.

None of the bulk e-mailers interviewed admitted to sending porn spam. But some, like Cowles, have been blamed by Spamhaus for it.

"I send out anything that's marketable. But I don't do porn," said Bill Waggoner, who runs Las Vegas-based AAW Marketing. Waggoner said he e-mails ads for mortgages, sexual stimulants, weight loss products and an ointment that purports to ease female sexual dysfunction.

Waggoner said he gets lots of complaints about the ointment — and lots of orders.

"It's not something they sell at the drug store," he said. "But I sell the heck out of it."

Legally speaking, sending a 7-year-old an e-mail advertising hardcore pornography might be a nuisance, but it's not a crime, said Timothy Healy, chief of the FBI's Internet Fraud Complaint Center, based in Fairmont, W.Va.

"There's not much we can do," he said.

Because of their success, Cowles, Jay, Ralsky and Waggoner are among dozens of spammers profiled on the Spamhaus site. They and their compatriots on the site are responsible for about 90 percent of the spam received in North America, said Steve Linford, director of the London-based Spamhaus Project.

"These are organized spam gangs who've been at it for years," Linford said.

To get started, a budding spammer needs a few CDs with millions of e-mail addresses, perhaps a list of foreign Internet servers that can be used to relay messages and a "spamware" mailing program. These cost $2,000 to $5,000 and are usually equipped with cloaking features that help spam evade blocking filters.

Once they're up and running, the spammers face the hazards of the anger they generate.

People annoyed by their spam invariably complain to their own Internet service providers — and the ISPs that sent the messages.

Then, spammers anger their own Internet providers by using lots of bandwidth and attracting so many complaints.

Finally, spammers incur the wrath of anti-spam vigilantes. With the legality of spam still mostly unchallenged, vigilantes like Spamhaus work to unmask spammers and alert their host ISPs.

To stay ahead of vigilantes and filtering software, spammers constantly develop countermeasures.

First among them is cloaking their identities.

Spammers hide by using fake "from" addresses and relaying their messages through anonymous mail servers in places like China.

Bernard Balan, 51, who operates a bulk mail site from Emsdale, Ontario called one-stop-financial.com, says he's gone through "unbelievable hardships" to keep the spam flowing.

"My operating costs have gone up 1,000 percent this year, just so I can figure out how to get around all these filters," said Balan, a former truck driver and pinball machine mechanic.

Five years ago, Balan says, he'd send 30 million messages in a day. Most would get through. He'd earn up to $10,000 in commissions for a good day's work.

Now, even though Balan keeps a database with 240 million e-mail addresses, only a fifth or fewer get through the filters. An average mailing earns him a paltry $250.

Balan and others say they're only in business a few days before vigilantes like Spamhaus blacklist their Web sites, urging ISPs to block them.

These realities mean spammers constantly change their Internet providers and locations, buying service from multiple carriers, often under false names, Linford said.

Cowles, who said his company rents 96 separate Internet accounts, said he schedules new connections with "tolerant" ISPs who only feign vigilance against spam.

"The ISPs are in a precarious position," Cowles said. "If they condone (spam), they're sticking their necks out. If they don't condone it, they lose business. So you negotiate the amount of complaints you're going to get."

More often, said Linford, spammers threaten ISPs with lawsuits to stall the inevitable shutdown.

Dave Codding, president of Internet Direct, an Ohio-based ISP, said his company struggled for a year to get Cowles off his network. Codding said Cowles used a false name to open an account and threatened to sue if he was cut off.

"We spent a lot of money on attorneys to get through the legal muck," Codding said.

On one matter, however, spammers and their nemeses agree: the United States needs a federal spam law.

"Let's impose a working structure that can be adhered to," Balan said. "Without a law, I can do what I want, and the ISP and anti-spammers can do what they want."

Linford believes a U.S. law would limit recipients to those who agree to receive spam.

"It'll stop 90 percent of the problem, and we'll be left with a smaller hard-core group," Linford said. "We can tackle them."

For their part, the spam kings are undaunted.

"It's a war," Jay said. "Let them continue to be hysterical. I take my appropriate precaution and I continue to operate."