Note to spam king: You got nailed

June 2, 2006

By Howard Witt
Tribune senior correspondent
Published June 2, 2006

AUSTIN, Texas
For every weary Internet user who has ever slogged through an e-mail inbox infested with junk spam, payback time has finally arrived.

The State of Texas and Microsoft Corp. have just throttled a 24-year-old University of Texas graduate once ranked among the world's worst purveyors of spam, fining him at least $1 million, stripping him of most of his ill-gotten assets and forcing him to stop sending nuisance e-mails forever.

The punishments are contained in settlements of two civil lawsuits filed by the Texas attorney general and Microsoft against the spammer, Ryan Pitylak, who admitted to sending out a mind-boggling 25 million e-mails every day at the height of his spamming operation in 2004.

What's more, Pitylak now says he has been reborn as an anti-spammer, and he is offering his skills to Internet companies to help them fight the same computer-clogging spam he used to transmit.

The lawsuit settlements were reached quietly last month in U.S. District Court although neither state officials nor Microsoft representatives have spoken publicly about them.

Some details, however, were discovered this week during a review of public files associated with the lawsuits, which invoked a new federal law intended to curb the flow of unsolicited spam that by some estimates accounts for 60 percent of all Internet e-mail traffic.

In the Microsoft case, Pitylak agreed to a fine of $1 million and promised never again to send out false, misleading or unsolicited commercial e-mails. Terms of the settlement in the state's case against Pitylak were not revealed in the court files, and a spokesman for Atty. Gen. Greg Abbott declined to comment because details of the agreement were still being finalized.

Pitylak, who graduated last month from the University of Texas with undergraduate degrees in economics and philosophy, said he is in the process of selling his Austin house, which is appraised at $430,000, and a 2005 BMW luxury sedan to help pay the fines and legal bills.

He also insisted in an interview that his junk-mail days are over.

"I started to realize [spam] is bad for business and bad for society, and I wanted to do something to resolve that," Pitylak said, adding that the revelation was helped along by the lawsuits he faced.

Demonstrated business skills

Pitylak said he is setting off on two new consulting ventures: Selling his anti-spam expertise to Internet service providers and advising young entrepreneurs on how to start up companies.

"He definitely learned how to run a business," said William Paul Lawrence, Pitylak's attorney. "But his choice of business starting out maybe wasn't the best one."

Pitylak was the subject of a Tribune investigation in July 2004 that unmasked a network of more than 200 front companies he and a partner set up to send out unsolicited, anonymous e-mail messages that landed in the inboxes of uncountable millions of Americans.

At the time, Pitylak was listed as the 4th-worst spammer in the world by the Spamhaus Project, a London-based international clearinghouse that tracks spammers and works closely with law-enforcement officials.

Pitylak's e-mails touted low-cost mortgages, extended auto warranties and debt-counseling services, among other offers, and he received between $3 and $7 for every lead he generated when someone clicked on the links contained in his messages.

An extensive sample of the e-mails reviewed by the Tribune and traced back to Pitylak appeared to violate numerous provisions of the Controlling the Assault of Non-Solicited Pornography and Marketing, or CAN-SPAM, Act, a law passed by Congress in 2003 in a bid to thwart spammers. The law forbids e-mail marketers from sending out false or misleading messages and requires them to provide recipients with a way to opt out of receiving future mailings.

In January 2005, acting as a result of the Tribune's story, Abbott and Microsoft sued Pitylak for violating the anti-spam law, seeking nearly $500 million in damages.

Pitylak declined this week to reveal how much he earned from his spamming operation, which he started he was 20.

"I really don't want to glorify the business of being in the spam industry," he said. "The money I made in that business is not something I feel comfortable talking about."

But in a posting in April on his personal blog, Pitylak described "the extravagant lifestyle of successful spammers" who preferred to conduct their business meetings in "expensive places" like Las Vegas and New York City.

"Spammers like to show off their `nouveau riche' money," Pitylak wrote. "From bank rolls of hundreds wrapped around with a rubber band to stacks of bills still covered by the banks' paper band, many spammers would literally spend all this cash in one place."

In one of his new ventures, Pitylak is advising college students on setting up their own small businesses as a leader of Bootstrap Student, a networking group for budding entrepreneurs.

The founder of the Bootstrap Network, Bijoy Goswami, said he was skeptical at first that Pitylak could serve as an appropriate role model, given the spammer's background.

"He was what I would call a `dark side' bootstrapper," Goswami said. "But he said he had learned a lot from the process of being sued, and why he shouldn't be doing things that way, so I said great, let's work together. He has turned a new leaf and become the anti-spam guy."

But it's not entirely clear that Pitylak has left all his old ways behind.

Old trick, new setting?

One of Pitylak's favored ploys as a spammer was to register and abandon hundreds of assumed names for his e-mail companies with the Texas secretary of state, which helped him obscure his true identity.

Two months ago, he incorporated a new company named Unlock City and then registered an assumed name for it. A few days later he filed another application to withdraw the assumed name, according to records in the secretary of state's office.

Susan Arenella, the Austin attorney who filed the papers for Pitylak and whose signature appears on the documents, said in an interview that she did not know who Pitylak was and declined to answer questions about the filings.

Pitylak insisted he was doing nothing unusual, but had simply changed his mind about the name for a new Internet city guide he is designing.

"In no way would I go down that path again of assumed names," he said.

Source: http://www.chicagotribune.com/news/nationworld/chi-0606020162jun02,1,6312104.story?coll=chi-newsnationworld-hed