Steve Shklovskiy and Yan Shtok, both 23, were sentenced December 27 for masterminding the e-mail scheme that took place in September of 1999 and wreaked havoc on a number of ISPs, said Christopher Johnson, senior litigation counsel for the organised crime strike force of the US Attorney's office in Los Angeles on Wednesday. A US District Court judge ordered the two pay restitution of $US104,000 and serve 27 months in jail.
Shklovskiy and Shtok in September of 1999 with the use of some commercial software were able to harvest e-mail addresses and then send out more than 50 million e-mails through a FlashNet (a division of Prodigy Communications) e-mail account, Johnson said.
The two sent out e-mails that asked job seekers to pay $US35 to learn how to make thousands of dollars by working out of their homes stuffing envelopes, he said. On one occasion, the pair spent 24 hours sending spam and on one other 26-hour period in mid-September 1999, he said. Many of the messages were targeted at colleges or markets where typically people are in need of work.
The job seekers were supposed to send the registration fee to a post office box in Los Angeles. If the recipient tried to reply to the e-mail, the job seeker would discover the e-mail address from bigbear.net, which is controlled by Mountain Telecom, was not active, Johnson said.
Mountain Telecom in Big Bear Lake, California, could not be reached for comment. But the ISP told prosecutors that the spam caused the company to receive more than 100,000 complaints and at one time it hired three full-time people to deal with them, Johnson said. Disgruntled users also may have caused Mountain Telecom's servers to shut down and impacted the Web service of some 500 companies using the ISP's network, he added.
US Postal Service inspectors staked out the post office boxes during a five-week period, Johnson said. At the same time, postal service inspectors began deciphering the IP (Internet Protocol) addresses of the spam and learned that Shtok had paid for the FlashNet e-mail account with a credit card, Johnson said.
Ultimately, four men were arrested for their roles in the scam in November 1999. The two other men pleaded guilty to lesser charges and in July 2000 received three years probation, Johnson said.
Search warrants were issued and used to search the homes of Shklovskiy and Shtok. Prosecutors learned the two had ties to Russian organised crime. Prosecutors also discovered evidence of insurance and medical fraud, Johnson said. It was eventually determined that the two defrauded victims out of between $US250,000 and $US300,000. None of the money was ever recovered, Johnson said.
Prior to the sending of the 50 million e-mails in September 1999, for more than a year the men were also involved in spamming tens of thousands of people with similar e-mails, Johnson said. These spam attacks impacted ISPs like America Online, AT&T's Worldnet and MindSpring Enterprises, Johnson said.
If collected, most of the restitution money, about $US100,000, will go to Mountain Telecom for lost revenue dealing with the spam and the complaints it generated. The remainder will go to fraud victims who were identified, Johnson said.
New technology provided a quick avenue for a scam that with traditional mail would have cost millions of dollars, Johnson said.
"To do the same fraud with real mail, it would cost $US16.5 million in postage to send out the same volume," he said. "The Internet has provided a new avenue for these crooks."