LOUISE CHU Associated Press

4:52 a.m. CDT, August 6, 2011

 

SAN FRANCISCO (AP) — A Las Vegas man accused of sending more than 27 million spam messages to Facebook users faces federal fraud and computer tampering charges that could send him to prison for more than 40 years, according to a grand jury indictment.

Sanford Wallace, the self-proclaimed "Spam King," pleaded not guilty during an initial court appearance Thursday after being indicted July 6 on six counts of electronic mail fraud, three counts of intentional damage to a protected computer and two counts of criminal contempt.

The indictment filed in San Jose federal court said Wallace compromised about 500,000 Facebook accounts between November 2008 and March 2009 by sending massive amounts of spam through the company's servers on three separate occasions.

Wallace would collect Facebook user account information by sending "phishing" messages that tricked users of the social networking site into providing their passwords, the indictment said.

He would then use that information to log into their accounts and post spam messages on their friends' Facebook walls, the indictment said. Those who clicked on the link, thinking it came from their friend, were redirected to websites that paid Wallace for the Internet traffic.

In 2009, Palo Alto-based Facebook sued Wallace under federal anti-spam laws known as CAN-SPAM, prompting a judge to issue a temporary restraining order banning him from using the website. The indictment alleges he violated that order within a month, prompting the criminal contempt charges.

The judge in the lawsuit ultimately issued a default judgment against Wallace for $711 million, one of the largest-ever anti-spam awards, and referred him for possible criminal prosecution.

The indictment came after a two-year investigation of Wallace by the FBI, prosecutors said.

"We will continue to pursue and support both civil and criminal consequences for spammers or others who attempt to harm Facebook or the people who use our service," Chris Sonderby, Facebook's lead security and investigations counsel, said in a statement.

Wallace was released after posting $100,000 bond Thursday, and he's due back in court on Aug. 22.

"Mr. Wallace looks forward to defending himself," his lawyer, K.C. Maxwell, said Friday, declining further comment.

Wallace, 43, earned the monikers "Spam King" and "Spamford" as head of a company named Cyber Promotions that sent as many as 30 million junk e-mails per day in the 1990s.

In May 2008, social networking site MySpace won a $230 million judgment over junk messages sent to its members when a Los Angeles federal judge ruled against Wallace and his partner, Walter Rines, in another case brought under the same anti-spam laws cited in the Facebook lawsuit.

In 2006, Wallace was fined $4 million after the Federal Trade Commission accused him of running an operation that infected computers with software that caused flurries of pop-up ads, known as spyware.

If convicted on all counts in the latest criminal case, Wallace could faces more than 40 years in prison and a $2 million fine.