Kiwi spam network was 'world's biggest'

Last updated 08:43 16/10/2008

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A vast international internet spam operation run from New Zealand has been cited by American authorities as one of the world’s largest, and for a time responsible for up to a third of all unwanted emails.

In a statement overnight the US Federal Trade Commission (FTC) named Christchurch’s Lance Atkinson as one of the principals of the operation.

Earlier this week New Zealand’s Internal Affairs announced it had lodged a $200,000 claim in the High Court against Atkinson and his brother Shane Atkinson and courier Roland Smits, after raids in Christchurch last December.

It marks the first prosecution since the Unsolicited Electronic Messages Act was passed in September 2007 and they face a $200,000 fine.

The FTC released details of the operation in Washington, saying a US District Court has ordered a halt to the operations of the network.

It said the anti-spam organisation Spamhaus had identified it as the largest spam gang in the world.

FTC said they had received more than three million complaints about spam messages connected to this operation, and estimates that it may be responsible for sending billions of illegal spam messages.

The US District Court had issued a temporary injunction prohibiting defendants from spamming and making false product claims, and has frozen the defendants’ assets to preserve them for consumer redress pending trial.

Washington court papers claim the defendants deceptively marketed a variety of products through spam messages, including a male-enhancement pill, prescription drugs, and a weight-loss pill.

One product called “VPXL” was touted as an herbal male-enhancement pill.

Advertised as “100 per cent herbal and safe,” it supposedly caused a permanent increase in the size of a user’s penis.

FTC say that not only did the pills not work, but they were neither “100 per cent herbal” nor “safe,” because they contained sildenafil – the active ingredient in Viagra.

The defendants also used spam e-mail to sell prescription drugs.

They claimed that the medications came from a bona fide, US-licensed pharmacy that dispenses FDA-approved generic versions of drugs such as Levitra, Avodart, Cialis, Propecia, Viagra, Lipitor, Celebrex, and Zoloft.

The men did not have a pharmacy license and sold drugs shipped from India and were “potentially unsafe”.

The network operated as “Target Pharmacy” and “Canadian Healthcare”. Customers were told that when providing credit card details it was protected by an encryption process.

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FTC investigators found no indication that the websites were encrypted.

They also sold a weight-loss supplement pill purportedly containing Hoodia gordonii, a cactus-like plant found in southern Africa that supposedly could cause users to lose up to six pounds a week. The FTC charged that the claims were false and violated US federal law.

The network recruited spammers around the world to send billions of spam messages directing consumers to websites operated by an affiliate program called “Affking.”

It said some security researchers believe that at one time, nearly one-third of the world’s spam e-mail came from a network of compromised computers, often referred to as a ‘botnet,’ that sent spam promoting the defendants’ websites. Their enterprise included participants in Australia, New Zealand, China, India, Russia, Canada, and the United States.

Lance Atkinson and Jody Smith of Texas ran the operation along with four companies they control: Inet Ventures Pty Ltd., Tango Pay Inc., Click Fusion Inc., and TwoBucks Trading Limited.

The FTC’s complaint alleges that both Atkinson and Smith are liable for the spamming. It holds Lance Atkinson responsible for all product claims, and Smith liable for claims made for the pharmaceutical products.

In June 2005, the FTC obtained a US$2.2 million judgment against Atkinson and another business partner for running a similar spam affiliate program that marketed herbal products.

 

- Fairfax Media

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