Stock spam scammer faces slammer
By John Lister
A man who used spam to manipulate stock prices may spend more than seven years behind bars. Alan M. Ralsky is one of five men to plead guilty to a rare combination of spam and wire fraud charges.
According to prosecution evidence, the five are among a group of at least a dozen people who sent out misleading e-mails giving bogus stock tips to inflate so-called penny stocks. These are low-value stocks about which there is little of the informed analysis that is available for major Wall Street stocks. The scammers bought the stock before sending the messages, then waited for people receiving the e-mails to buy the stock and boost the price.
The e-mails often included false or misleading information which led to convictions for two different types of offense. The men were convicted of various wire and mail fraud counts for their actions in artificially manipulating the stock prices.
But they were also convicted under the federal CAN-SPAM act, the biggest such prosecution in that law’s history. The act does not ban spam outright, but rather outlaws the falsification of information in such unsolicited messages. The duff stock info was enough for the five to come into this category.
US attorney general Terrence Berg described Ralsky as “at one time the world’s most notorious illegal spammer.” As part of a plea agreement, Ralsky faces a fine of up to $1 million and a prison sentence of up to seven years and three months; sentencing is scheduled for Oct. 29. His four co-defendants will face lesser sentences in line with their respective roles in the operation. Cases against four other alleged scammers are ongoing.
Past studies have shows that such scams are both effective and a significant part of overall spam. Research in 2006 by Purdue and Oxford University professors said 15 percent of all spams involved stock tips. They found that the average person who responds to such spams loses 8 percent on their investment when the spammers dump their stock and drive the price down. The spammers average a return of between 4.9 and 6 percent by selling the day after sending out the e-mails.
Related:
Entry was posted
on Tuesday, June 23rd, 2009 at 1:05 pm
under
Read more entries by John Lister.
Stumble It!
October 18th, 2009
Thank you SEC for rooting out these scammers. They could not hide behind that wire. Now if they could just get the people selling fake Viagra my spam folder would be empty.