Judge awards ISP $1 billion in spam damages

DECEMBER 20, 2004

Believed to be the largest spam judgment ever; by Grant Gross


Antispam activists disagree about whether a $1.08 billion judgment Friday
against three spammers in Iowa will discourage others from sending
unsolicited bulk e-mail.
Judge Charles Wolle, with the U.S. District Court for the Southern District
of Iowa, awarded what is believed to be the largest spam judgment ever to
Robert Kramer, owner of CIS Internet Services, an Internet service provider
in Clinton, Iowa. Kramer accused the three companies of sending his
5,000-customer ISP millions of pieces of spam between August and December
2003.

Wolle, using an Iowa antispam law and a U.S. racketeering law, ordered Cash
Link Systems Inc. in Hollywood, Fla., to pay Kramer $360 million; AMP Dollar
Savings Inc. in Mesa, Ariz., to pay $720 million; and TEI Marketing Group
Inc. in Palm Harbor, Fla., to pay $140,000. The Iowa spam law allows damages
of $10 per spam sent, plus punitive damages.

Kramer doesn't expect to collect the entire judgment, but he hopes to
collect at least enough money to cover the damages caused by the spam, said
his lawyer, Kelly Wallace, of Wellborn and Wallace LLC in Atlanta. The
damages total "several hundred thousand dollars," and the spammers have
"considerable assets," Wallace said.

"This is the best kind of law you can practice on the civil side," said
Wallace, whose law firm specializes in suing spammers. "You feel good at the
end of the day. We're putting spammers out of business."

But Laura Atkins, president of the antispam group SpamCon Foundation,
questioned whether the award would actually stop many spammers. The three
companies are likely to pay a small fraction of the judgment, she said, and
many spammers are based in Florida because the law there allows those filing
bankruptcy to keep significant assets.

Another factor may make collection difficult in this case. Cash Link
Systems, which used unsolicited e-mail to advertise a cashless ATM, had its
assets seized in July by the U.S. Securities and Exchange Commission. The
SEC accused Cash Link Systems of conducting a fraudulent investment scheme.

The judgment was the largest against a spammer that Atkins can recall, and
she said it may cause some small-time spammers to think twice after seeing
the judgment, but will not affect large-scale spammers. The defendants "will
file for bankruptcy, they'll reincorporate under a new name, and they'll
move on."

Spam prosecutions resulting in jail time, such as a Virginia case in
November that included a jail sentence of nine years, would be more
effective in discouraging other spammers, Atkins said. "Spammers can avoid
the judgment, but jail is different," she said.

But John Levine, a board member of the Coalition Against Unsolicited
Commercial Email, said the judgment could help educate spammers and judges
about spam law. "This should help get the message across that spamming is
illegal, that you can actually get in trouble ... if you do it," said
Levine, who is also chairman of the Internet Research Task Force's antispam
group.

The case is also an opportunity to show judges the damage spam does, Levine
said. "Spam law is so new," he added. "That's one educated judge, and 10,000
to go."

The lawsuit may also allow Kramer's ISP to seize the computers owned by the
spammers, slowing their opportunity to start a new spamming business, Levine
said.

Kramer accused Cash Link Systems of sending his ISP 60,000 pieces of spam a
day, and AMP Dollar Savings of sending 120,000 pieces of spam a day, between
August and December 2003. TEI Marketing Group, marketing software that
buyers could use to "find out anything about anyone," was accused of sending
the ISP 1,400 spam messages.

AMP Dollar Savings was a bulk e-mailer for hire, sending pitches for
mortgage refinancing, penis enlargement pills and Cash Link Systems' ATMs,
said Wallace Kramer's lawyer. "If you can sell it with spam ... they were
doing it," he said.

Phone numbers listed for Cash Link Systems and AMP Dollar Savings have been
disconnected.