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Microsoft attacks spam in courts

By Brandon Sprague
Seattle Times business reporter

DEAN RUTZ / THE SEATTLE TIMES Microsoft employee Stirling McBride sits in front of a chart showing the complicated process of tracking down a particular spammer. The former U.S. marshal is behind Microsoft's attempts to prosecute the worst offenders.

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So investigators were surprised last year when the path of one case involving spam linked to a pornographic British site led back to private mailboxes in Kirkland, practically under the shadow of Microsoft's Redmond campus.

Those mailboxes, Microsoft investigators say, belonged to a number of interlinked companies that the porn site was registered to. Jason Cazes of Kirkland was the director or part owner of many of the companies.

After a six-month investigation led by Stirling McBride, the company's full-time Internet safety investigator, Microsoft filed suit in King County Superior Court in December against Cazes and 22 others, including 20 "John Does."

The suit alleges the defendants were part of an Eastside spam operation that sent out millions of unsolicited e-mails advertising adult Web sites and penis-enhancement pills during a six-week period last year.

Cazes' lawyer, Mark Kimball, disputed that his client was a spammer and is challenging the suit in court.

Aaron Kornblum, an attorney for Microsoft, would not say how much Microsoft is seeking, but under Washington state's reputedly tough anti-spam law, the company can ask for damages of up to $1,000 per e-mail.

Campaign began in '03

Since early 2003, as unsolicited bulk e-mail proliferated, Microsoft has gone after spammers, sometimes with much fanfare. In December, the company and New York state Attorney General Eliot Spitzer announced joint civil suits against an alleged spamming outfit based in Colorado.

During the announcement, Spitzer said he was seeking $20 million in damages and vowed to "drive them into bankruptcy." He settled the case for $50,000 last month. Microsoft's case is still pending.

Kornblum said Microsoft launched the campaign because its customers list spam as their No. 1 complaint. As operator of Hotmail, the popular free e-mail service with 170 million users, Microsoft has a special interest in attempting to put a crimp in the practice.

Most of the 13 Microsoft suits that have been resolved so far have ended in default judgments, meaning the accused spammers are not even bothering to respond to the suits. A number of others have settled for undisclosed amounts. One case was dismissed.

Last month, a federal judge ordered a California man to pay the company $4 million for allegedly sending out millions of e-mail messages appearing to be from Microsoft.

While the company acknowledges it is not collecting much of the $54 million in judgments it has won so far, Kornblum says it is not only about the money.

"We hope we are having a chilling effect and sending a message that there are legal and financial consequences to this," Kornblum said.

Experts say suing spammers to make them stop is a noble but doomed effort.

"The legal cases carried out in the U.S. have almost no impact on spam," said Steve Linford, director of Spamhaus, a nonprofit in London that tracks spam. Linford says this is especially so because the amount of spam has been skyrocketing lately.

Brightmail, a San Francisco company that sells anti-spam software and tracks trends, said spam volumes in June were at an all-time high, with 65 percent of all e-mails classified as unsolicited bulk e-mail.

Experts point to two reasons why spam has reached such heights this year. Richi Jennings, an analyst based in Britain with Ferris Research, blames new technological advances allowing spammers to infect innocent PCs with viruses that turn them into spam-spewing "zombies."

Some blame new law

Linford blames the federal Can-Spam Act, legislation enacted this year and heartily supported by Microsoft and other technology companies.

"The measure backfired because basically what it did was legalize spamming," Linford said, adding that spammers who were sending 80 million bulk e-mails a day pre-Can-Spam are now sending three times that many.

Spammers only need to put an "opt-out" link — allowing users to remove themselves from the spammer's list — and an active return address to achieve legitimacy.

But Kornblum, the Microsoft lawyer, said the Can-Spam Act, by clearly defining what is legal, has added to the Microsoft legal team's arsenal. The company filed 17 anti-spam cases under the federal law in June, he says.

One of the biggest problems is spamming remains cheap relative to its potential rewards.

Aside from the startup costs of a computer and a server, a would-be electronic direct mailer can buy a CD-ROM with a list of 300 million to 400 million addresses for less than $70, according to Linford. If a spammer gets just one sale out of a million spams, he can make hundreds of dollars a day, he said.

"It's really like the dynamite approach to fishing," said John Reid, a colleague of Linford at Spamhaus.

Kornblum said it's difficult to quantify how much spam costs Microsoft, but he said the company and Internet service providers spend "substantial amounts of money for additional servers to process spam, filtering technologies and additional IT personnel."

Recovering costs

To recover some of that cost, Microsoft has gone after suspected spammers such as the case that brought investigators back to the Eastside.

Kimball, the lawyer representing Cazes in that case, said that his client was not a spammer at all. He says Cazes and another defendant he represents, Lyle "Rich" Larson, operate legitimate pornographic sites.

Or at least they did, until just before Microsoft came knocking on the door to serve them papers. Kimball said they had already shut down the sites because they were not profitable.

"They (Microsoft officials) were a week or more late in terms of stopping people," Kimball said.

He added that he was seeking to get the suit dismissed. "Basically, it is our understanding that there is no evidence linking my clients in any way," Kimball said.

McBride, the Microsoft investigator, said the operation was targeted because it was sending out e-mails to advertise pornography.

The e-mails — with subject lines like "This is funny" or "Is this for real?" — contained a photo advertising a now defunct adult site called Camania.com, which sold live video chat, McBride said.

The transactions for the site were through billing companies, making them hard to track. What's more, the contact information for the sites consisted of anonymous voice and post boxes, he said.

"It's a big shell game," said McBride, a former U.S. marshal, "but most of the time you will find one piece of information that's true."

That piece was on the Camania site itself, McBride said — a phone number to recruit the video chat "talent."

Once the trail pointed toward Kirkland, investigators staked out one of the billing companies' post-office boxes at a local private mailbox outlet to see who would show up. That resulted in Microsoft's suit against Cazes.

Kimball, the attorney, pooh-poohs Microsoft's gumshoe story of hunting the companies down, calling it "dramatic ... and not relevant."

"If they wanted to find Camania or any other of the businesses, they are registered with state of Washington," Kimball said, adding even the names and address of Cazes and Larson are listed on the secretary of state's Web site as well.

Kimball contended his clients did not send out the spam in question and suggested it may have been done by a third-party related to the site.

Skepticism over strategy

The Cazes and Larson trial date is set for May. Spam experts say the spamming problem is not going to be solved by legal interventions, despite some successes.

"You could have 100,000 lawsuits and still wouldn't get them all," said Cameron Elliott, chief executive of Spam Alert, a Seattle-based software company that sells anti-spam software.

Microsoft said the company plans to continue with the anti-spam campaign. Company officials say new enhanced spam filters have reduced bulk e-mail to Hotmail accounts by 60 percent in the past six months.

Brandon Sprague: 206-464-2263 or bsprague@seattletimes.com.

Seattle Times researcher Gene Balk contributed to this story.

Copyright © 2004 The Seattle Times Company

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