By Kyle Swenson
By Chris Joseph
By Kyle Swenson
By Chris Joseph
By Chris Joseph
By Terrence McCoy
By Kyle Swenson
By Chris Joseph
In January, one piece of paper changed James McCalla's life.
A muscular, six-foot Haitian-American, the 26-year-old McCalla went out to get the mail at his suburban home in Pembroke Pines. He found an official letter from the federal courthouse in Davenport, Iowa. It was a civil judgment.
"$11,200,000,000," the document read.
"I let out a big sigh and just stared at the paper," McCalla says. "Billion, 11.2 billion dollars. I couldn't believe it. Then I started to laugh. I couldn't believe it. I thought, 'You've got to be kidding me. '"
The judgment against McCalla was record-setting. His is the largest civil judgment ever awarded against a spammer the people who make their fortunes by sending millions of unsolicited commercial e-mails across the Internet every day. In McCalla's case, a federal judge ruled that he had sent 280 million e-mails to one Internet service provider alone. In addition to handing down the hefty penalty, the judge barred McCalla from using the Internet for three years.
McCalla's case quickly made news across the Internet, sparking venomous attacks on bulletin boards and in blogs. He's become one of the most reviled men on the Internet.
Reads one anonymous message-board posting: "I hope there is enough reciprocity between states that [the lawyers] can reach to wherever this jerk lives, get a summary judgment that will grab everything down to the roll of toilet paper in the bathroom, and sell it to the highest bidder on the front steps of the local courthouse... Leave him with one change of clothes to go look for honest work in. On foot."
But as spammer cases go, McCalla's is unusual even without the 11-figure judgment. Although the sky-high penalty suggests that McCalla is among the most prolific spammers on the Internet, the evidence does not. The London-based Spamhaus Project, which claims 200 spammers are responsible for 80 percent of the Internet's junk e-mail, has no record of McCalla or his company, JMC Internet Marketing. In fact, McCalla has never been listed in Spamhaus' Register of Known Spam Operations (ROKSO), which includes such well-known spammers as Detroit's Alan Ralsky and South Florida's very own Eddy Marin, who dealt cocaine in South Florida before he started to send millions of e-mails from his Boca Raton office.
"I'm the world's biggest spammer, but I'm not even on the list of the world's spammers," McCalla says. "How's that possible?"
What's more, in a get-rich-quick industry that has turned hucksters into magnates, McCalla has no signs of wealth: He drives a 1998 Honda Accord, the only asset he claims to have. Records show that McCalla has never owned property in Florida, and he claims he does not own real estate in other states or countries.
"Obviously, to some degree, it's weird that someone like McCalla can send out hundreds of millions of messages without Spamhaus noticing," says John C. Mozena, vice president of the Coalition Against Unsolicited Commercial E-Mail (CAUCE). "But that's how much spam is out there. Two hundred and eighty million e-mails? There's so much spam out there today, that's just background noise."
McCalla says he has an explanation for why spam watchdogs didn't notice him before the lawsuit: He's an innocent man who's wrongly been labeled a menace. "I was guilty until proven innocent," he says. Claiming not to have enough money to hire an attorney, McCalla represented himself in the federal lawsuit, which was filed by a small, Iowa-based Internet service provider called CIS. Being labeled a spammer has the same effect as being labeled a child molester or a rapist, McCalla says.
"Once you're called that, everyone believes it's true," says McCalla, who would not be photographed for this article for fear of harassment. "But I'm not a spammer. I don't even know how to send out millions of e-mails."
Spam experts doubt that McCalla's is a case of mistaken identity. "It's so difficult to track a spammer down in the first place, the possibility of being mistakenly identified throughout the legal process is so remote as to be impossible," Mozena says. "I've never seen anyone who has been able to raise doubt to a prosecutor or a jury."
The United States is not only the largest target of spam; it is also the largest producer. Despite the CAN-SPAM Act of 2003, which the federal government enacted in an attempt to curb spam by imposing regulations, 23.1 percent of the world's spam is sent from Internet servers in the United States, according to a recent report by Sophos, a network security firm.
And it's no coincidence that McCalla and dozens of other alleged spammers live in South Florida. The Sunshine State is widely considered the world capital of spam. Of the top ten spammers listed on ROKSO, three are in Florida: Amadeo Belmonte of Data One Marketing, Scott Ramaglia of Ameritech Advertising, and Andrew Chandler of Chat Radio.
"Spammers are hedonists," says Brian McWilliams, a New Hampshire-based business and technology journalist and author of the book Spam Kings. "They go where there's sun, sand, and bikinis. You'd think they'd go somewhere remote, somewhere where they could be off the grid, so to speak. But I've never been able to find any spammers in Montana or Alaska. Most live in your wonderful state."
In fact, there's such a concentration of bulk e-mailers on our sunny peninsula that those in the business of combating spam watched to see how recent hurricanes in Florida affected worldwide spam traffic. After Hurricane Wilma knocked out power to most of South Florida, the amount of spam on the Internet took a noticeable dip, observers say.
The man largely responsible for building the spammer infrastructure in South Florida, McWilliams claims, is Eddy Marin, who at one point was believed to be pumping out 250 million e-mails per day from his Boca Raton office. A Cuban-born South Floridian, Marin is almost a cliché in the notoriously seedy world of spam: He's a convicted felon who moved to spam only after trying his hand at drugs and Internet pornography. He's had a penchant for fast-buck industries.
In the early '80s, during South Florida's cocaine halcyon days, Marin dealt blow. The Broward Sheriff's Office arrested him in August 1984 with 132 grams of cocaine. He served eight months in prison. After his release, Marin expanded his drug enterprise, buying cocaine cheap in Miami and reselling it in Broward and Palm Beach counties, Jacksonville, Illinois, Ohio, New Jersey, New York, Alabama, and Canada. To wash the money, Marin invested the drug proceeds in a local nightclub and limousine service, court records show. Authorities quickly caught on, and in 1985, Marin pleaded guilty to conspiring to distribute five kilos or more of cocaine and received 57 months in prison, plus five years of probation. Also implicated in the case was John Holmes, a former Broward County judge who represented drug dealers, including Marin, after stepping down from the bench (see "Spam Sandwich," December 4, 2003).
In 2000, after his release from prison, Marin operated a company called Opt-In Services, which employed women to dance in front of web cams for Internet users paying $6 per minute. During the early days of Internet pornography, Marin did well. But as competition became fiercer, Marin was forced out.
He moved to another burgeoning industry that takes its tongue-in-cheek name from a 1970 Monty Python skit in which café patrons' conversation is overwhelmed by men singing "Spam, spam, spam, spam. Lovely spam! Wonderful spam!" The implication: Unwanted bulk e-mail drowns out conversation on the Internet.
The first known case of spam came in 1978, when a marketing representative for an L.A. company called DEC sent out a bulk message about a new computer system to message boards on the Advanced Research Projects Agency Network (ARPANET), a precursor to the Internet.
Spam has since evolved into the familiar pitches for Viagra and Cialis, penis-enlargement products, and suspiciously low mortgage rates that we endure today. And that's how Marin has been making his money in South Florida as aspiring bulk e-mailers followed him to the Sunshine State.
"He helped Florida develop into a center for spammers," McWilliams says. "Having a guy like him there created a satellite of companies Internet service providers or web hosting companies that know what spammers want and need."
Although most people assiduously avoid responding to spam, some people do and there's a ton of money to be made in the business. Although exact figures are impossible to obtain the spam industry is one of the few in the world that operates entirely in the dark the wealth accumulated by spammers who have been nabbed suggests that fortunes can be made in a hurry.
Alan Ralsky, considered the world's top spammer, lives in a lavish, 8,000-square-foot house in suburban Detroit. Despite having settled a lawsuit with Verizon Internet Services for an undisclosed amount, Ralsky continues to spam using e-mail servers overseas. In a defiant interview with the Detroit Free Press in 2002, Ralsky who in 1992 served 50 days in jail for selling unregistered securities claimed to charge as much as $22,000 for a single spam blast to the 250 million e-mail addresses in his database.
America Online, fed up with the abundant riches obtained by spammers who flood the company's servers, began to flaunt its legal victories against bulk e-mailers. In March 2004, AOL offered a sweepstakes to Internet users for a 2002 Porsche Boxster convertible that was seized from a spammer as a result of a civil action filed in Virginia, the state where AOL's servers are located and the state that has tough anti-spam legislation on the books known casually as the "AOL law."
In August 2005, AOL seized the assets of another spammer and offered yet another sweepstakes. As a result of a settlement with spammer Brad Bournival, AOL gave away a Hummer, $20,000 in gold bars, and $65,000 in cash all obtained by Bournival using spam proceeds before he had even turned 21 years old.
Internet service providers hope well-publicized cases like these plus million- and billion-dollar civil judgments against spammers will dissuade others from getting into the business. But McWilliams worries that they are actually having the opposite effect.
"Spammers see money being made in this marketplace, and when one spammer is felled by a big lawsuit, others step up or new guys get into the business," he says. "In fact, I think there are times when these lawsuits and stunts such as the AOL sweepstakes backfire because word gets out about how much money is to be made in this business.
"None of this deters spammers. I think it just makes them think, 'Wow, I know this is a risky business, but if I don't get caught, I get to live like a kingpin. '"
In October 2003, Atlanta attorneys Pete Wellborn and Kelly Wallace widely considered among the nation's leading attorneys in anti-spam cases filed a federal lawsuit in Davenport, Iowa, representing CIS, a small Internet service provider operated out of the Clinton, Iowa, home of CIS owner Robert W. Kramer III.
Naming "John Does" as defendants, the lawsuit claimed that spammers had not only sent unsolicited commercial e-mail to CIS users but, worse, had hijacked CIS' identity. When sending out spam, the lawsuit alleged, bulk e-mailers had forged the "from" address to an @cis.net e-mail account a common spammer tactic called "spoofing." For that reason, millions of undeliverable messages and complaints inundated CIS, slowing the company's servers and in some cases shutting them down. The spam messages supposedly from CIS included pitches for get-rich-quick schemes, Internet casinos, a pump-and-dump scheme for a penny stock, and the adult websites teen-pie.com and "Rachel's House."
Wellborn and Wallace believed that multiple spammers were responsible for the mass spoofing. By naming John Does as defendants, the lawyers were able to subpoena Internet service providers linked to the spam in order to identify them.
"In some cases, that's the only way we can identify who is behind the spam," Wallace says. "You have to look at a spammer's e-mails, look at the Internet service providers the e-mails come from, and then look at the websites those e-mails direct people to. Then, if you get a long enough chain of subpoenas, you can identify who is behind the spam."
In the CIS case, a spammer allegedly behind millions of e-mails hawking home refinancing and debt consolidation linked to the website awayoutofdebtfast.com. The spam e-mail read:
THERE IS NOTHING TO LOSE BUT YOUR FINANCIAL PROBLEMS!
YOU ARE APPROVED!
FREE UP THE CASH YOU DESERVE NOW!
No gimmicks no tricks.
In fact, the website awayoutofdebtfast.com was only a middle man that collected debtor information and sold it to actual debt-counseling companies.
To identify the spammer, Wallace looked up the registry information for awayoutofdebtfast.com. Online records indicated that the website was registered to a "J Marketing," with an address in Haiti. The administrative contact was listed as a "J.M." whose e-mail address was email@example.com.
Wallace then subpoenaed Yahoo! for the user information on webgost79. According to its user policy, Yahoo! notifies the account holder of any subpoena it receives and then gives the user ten days to quash the subpoena before Yahoo! turns over the information.
A few days after issuing the subpoena, Wallace says, he received a call from Miami attorney Diana Ho-Yen. Also on the line was Ho-Yen's client, who identified himself as webgost79 but would not give his real name, Wallace says.
"He was yelling at me on the phone," Wallace remembers. "Spam isn't illegal! That's what he kept saying. Spam isn't illegal!"
Ten days after issuing the subpoena, Yahoo! sent Wallace records showing that the man behind firstname.lastname@example.org was one James McCalla, whose address was listed as an apartment on NW 179th Street in Miami. (McCalla says the 79 in the e-mail address refers to 1979, the year he was born.)
Today, McCalla admits that he asked a friend's attorney to call Wallace for information about the subpoena, but McCalla denies that he participated in the phone call. Court records in Broward County indicate that Ho-Yen previously represented one of McCalla's business associates, Pembroke Pines resident Shelley-Ann Jerome, whose company, Omagus, has been accused of being a spam operation in another lawsuit filed by Wallace's firm. In that Broward case, Ho-Yen filed a small-claims action against Coral Springs-based American Debt Counseling after the company failed to pay for "debt consolidation leads."
Wallace was sure he had identified one of the "John Does" in the CIS case and added McCalla's name to the complaint. McCalla responded by announcing that he would defend himself in the Iowa federal lawsuit.
Since McCalla was in South Florida and claimed not to have the financial means to appear in court, Judge Charles R. Wolle agreed to use teleconferencing to hear the case. In his first filing with the court, dated April 20, 2004, McCalla denied all allegations that he was spamming.
"These accusations jeopardize my reputation, and I intend to file a countersuit with an action for defamation if these complaints against me are not rescinded," McCalla wrote.
McCalla admits today that defending himself by phone in a high-stakes civil lawsuit might seem reckless but says he didn't have a choice. "I'm in Florida, and the trial is in Iowa. I can't afford to get there," he explains. "I thought at the time: 'How can they do this? I can't afford a lawyer for $200 per hour. I have no choice. '"
Representing himself, McCalla maintained his innocence in letters to the court. He explained that his company collected leads and provided commissions to "affiliates." Those affiliates would be paid when they sent valid Internet users to McCalla's site to fill out a form requesting information about debt consolidation. His company did not perform e-mail marketing, McCalla says, and his affiliate policy "maintained strict guidelines as to the permissible avenues of affiliate marketing." Spamming was prohibited, he claimed.
Lead generation is big business. Companies nationwide buy lists of people who might be interested in their services. Companies obtain these leads from various sources from carnivals and trade shows (where people provide personal information to be eligible to win prizes) to lists of magazine subscribers. Spam is an increasingly popular way of generating leads. A spammer can blast out millions of e-mails advertising low mortgage rates, and a portion of people who receive the e-mail will follow a link to a website where they provide personal information. The spammer can then sell those "leads" to mortgage companies interested in drumming up new business.
In interviews with New Times, McCalla continues to deny that he sent spam and claims he does not even know how to send out e-mail in bulk. His company, he says, was simply a middle man, selling leads purchased wholesale to individual companies at a markup of about $1 to $2 per lead. McCalla cannot explain where the millions of e-mails linking to his website originated.
"I don't send out e-mail. That wasn't part of the business," McCalla says. "It basically was just buying and selling leads. There was no spamming. I was buying information and selling that information to front-end people. I was buying leads and selling it in small portions to these small companies."
Asked for the names of the companies from which he purchased leads in bulk, McCalla looked down and said, "Let me think." He then claimed he could not recall the name of even one. He also could not explain how he would drive traffic to his website, awayoutofdebtfast.com, if he were not using spam. Pressed about the origin of his website traffic, which would be essential to cultivate leads, McCalla backtracked: "The website was a front. I used it to make people think that's where the leads came from, because I didn't want the companies to know I was just a middle man."
McCalla's waffling doesn't surprise Wallace. "The fact is with all spammers, they know what they're doing is wrong," Wallace says. "They don't have a defense in court. When you follow the bread crumbs and you find the guy and you've nailed him down in records, what's his defense in court? It's either that spam isn't illegal, which they'll lose on, or that you've got the wrong guy."
McCalla's defense is a common one that someone hijacked his e-mail address. An unknown spammer, he says, used email@example.com for e-mail bursts and registered the address as the contact e-mail for at least one spam-related website.
"They had one piece of paper with my e-mail address on it and a reference to a domain, a website, saying that I had bought it," McCalla says. "It's ridiculous. You have no information saying I did any of this. I asked for the information, and there is none. All they have is a whole bunch of e-mails, and they think that I sent them. The only reference they had was a domain that was registered under my e-mail address."
There's a complicating factor in McCalla's defense, however. Another South Florida company implicated in the CIS lawsuit is not only a known spam outfit but a criminal enterprise.
Wallace, the Atlanta attorney, followed a similar crumb trail of subpoenaed information to identify Cash Link Systems, a Hollywood company headed by a man named Alan Levine and formerly known as Ameri P.O.S.
Levine's company operated a scam that bilked 900 investors nationwide out of $15 million. Cash Link sold ATM machines and told investors they could expect profits of $2,000 per month per machine after Cash Link helped them find retail establishments in which to place the ATM machines.
In 2004, the Securities and Exchange Commission shut down Cash Link Systems, claiming in its order that Levine knew he was lying to investors and that the company had netted more than $10 million from the scam in one year. Among the ways Cash Link drove traffic to its website: spam.
On December 17, 2005, Judge Wolle in Iowa placed a $360 million judgment against Cash Link in the CIS case a record at the time. One week later, Levine was sentenced in federal court in Miami to 70 months in prison and ordered to pay $10 million in restitution after pleading guilty to mail fraud.
"There were companies in the lawsuit that were basically spamming companies," McCalla admits. He's sitting at a coffee shop in Pembroke Pines, talking to a reporter in the hopes of, as he says, clearing his name. McCalla is a tall, muscular man with short-cropped hair and a thin goatee that fronts a constant 5 o'clock shadow. He wears a white bracelet around his left wrist. It reads: "Non-violence."
If he's putting on an act to claim that he's a victim and evidence submitted in court and available online suggests that he is acting McCalla has been faithful to the part.
In one letter he submitted to the court, McCalla apologized for being slow in responding. He claimed his means were so few that he lacked even transportation. "I apologize for the delay in responding to your letter. I did not receive the letters... due to the fact that I did not have any means of transportation to my P.O. Box," he wrote.
That's at odds with what Wallace claims. The attorney says he has bank records which he would not share with New Times and which were never submitted to the court that McCalla raked in $250,000 in one quarter from one client alone. "He was getting five figures, low six figures a month," Wallace alleges.
Spammers are notorious for hiding assets, typified by the gold bullion that was among the spammer booty given away in AOL's sweepstakes last year.
Although McCalla bristles at the claim of his hidden wealth "$250,000, I'd certainly like to have that," he says Wolle agreed with Wallace that McCalla had sent about 280 million spam e-mails to CIS. Laws in Iowa allow civil spam judgments against spammers to be calculated at $10 per e-mail, plus punitive damages.
The judgment against McCalla: $11.2 billion.
McWilliams, the technology journalist who authored Spam Kings, became immediately intrigued by the record-setting judgment against McCalla. The reason was simple: "I'd never heard of the guy," he says.
"With an $11.2 billion judgment, I thought surely this guy would be big enough to make it on the ROKSO list," McWilliams explains. "That's the top 200 spammers. You could be an annoying loudmouth and get on the ROKSO list. This guy didn't even rise to that level. He had the misfortune of being sloppy and nailing an ISP that was savvy with spam laws."
In a short entry on his blog about spammers, McWilliams concluded that McCalla was "nothing but a chicken-boner" a derogatory term for lower-level spammers that implies that they sit around and chew chicken bones in front of computer screens as their machines spew out e-mail after unwanted e-mail.
And McCalla's troubles haven't ended with the $11.2 billion judgment. He currently has a case pending against him in Atlanta. Representing EarthLink, Wallace's firm alleges that McCalla sent to EarthLink's servers spam that tried to collect mortgage and home refinancing leads. "James McCalla is without a doubt a spammer," Wallace alleges. Wallace says he has retained private investigators in South Florida to track down McCalla's purportedly hidden assets.
Even if McCalla is hiding his spammer loot, Wallace will have a difficult time collecting. With the AOL cases being high-profile exceptions, most spammers never pay a dime toward civil judgments.
"These huge judgments do seem to be mostly symbolic," McWilliams says. "Collecting money from spammers has proven much more difficult than catching them."
Besides, there's always personal bankruptcy.
For his part, McCalla says he's taking one day at a time. He's going to clear his name, he says. He just needs to find a lawyer willing to take his case. And for now, he's trusting in his Christian faith.
"I do my best not to think about the whole thing," McCalla says. "That way, I don't get down as much. But most of my family and friends know about the judgment. Every once in a while, they'll call me and say, 'Hey, James, we're praying for you. This is something that's happening in your life, and it's going to pass. It's a lesson, something that the Lord is trying to teach you for farther down the road.' But it's hard. How would you feel if you had an $11 billion judgment against you? One thing I'm afraid of is, let's say I do start making some money and one day I wake up and my bank account is frozen. Somebody has a judgment against me, and they can get money out of me whenever they want.
"This has caused a lot of negative publicity for me," he continues. "It has defamed my name. Because of them, when you looked up my name on the Internet, I'm the biggest spammer in the world based on this court case. I hate to even see what my name looks like on the Internet now."
But for McCalla, life must go on. He has changed careers and seems to have a knack for being the middle man. He has joined the ranks of a profession only marginally more respected than spamming.
McCalla is now a real estate agent.
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