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Court Orders Spammers To Give Up $3.7 Million

Ruling is first under US SAFE WEB Act
A U.S. district court has ordered key players in an international spam ring to give up $3.7 million they made by sending out illegal email messages pitching bogus Hoodia weight-loss products and a "human growth hormone" pill they claimed reversed the aging process.

In a Federal Trade Commission (FTC) law enforcement action, the court found that the five defendants, located in Canada and St. Kitts, violated the FTC Act and CAN-SPAM Act by participating in the spam operation. The court order bars the defendants from violating the CAN-SPAM Act and from making false or unsubstantiated claims about the health benefits of any food, drug, or dietary supplement.

The FTC charged that the operation used spammers to drive traffic to Websites selling an extract of the Hoodia gordonii plant it claimed would cause significant weight loss, and a "natural human growth hormone enhancer" it claimed would reverse the aging process. The FTC alleged that these claims were false or unsubstantiated, and charged the defendants with deceptive advertising in violation of federal law. It also alleged that the spammers sent e-mail that contained false "from" addresses and deceptive subject lines, and that they failed to provide a required opt-out link or physical postal address.

The case, filed by the FTC in October 2007, marked the first time the agency invoked the US SAFE WEB Act, a federal law designed to protect consumers from cross-border fraud and deception. The legislation enhances the agency's ability to exchange information with foreign counterparts and helps protect consumers from cross-border spam and spyware distribution, as well as Internet fraud and deception. The FTC's complaint charged eight defendants -- Spear Systems (a U.S. company), three other corporate defendants, and four individuals.

The FTC settled with three defendants in the case -- Spear Systems and two individuals, one in the United States and one in Australia -- in May 2008. The agency was unable to reach settlements with the remaining five defendants, who are the subject of the court order announced today: Xavier Ratelle and Abaragidan Gnanendran, of Quebec, Canada; and corporate defendants 9151-1154 Quebec, Inc., 9064-9252 Quebec, Inc., and HBE, Inc. The final orders were entered by the United States District Court for the Northern District of Illinois, Eastern Division.

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