http://abcnews.go.com/Technology/wireStory?id=405409

FTC Sues Las Vegas Porn Operation for Spam

Jan 12, 2005 — By Andy Sullivan

WASHINGTON (Reuters) - A Las Vegas pornography operation that sent out hundreds of thousands of sexually explicit "spam" e-mail messages has been temporarily shut down in the first case of federal spam laws being used against sex marketers, U.S. regulators said on Tuesday.

The Federal Trade Commission said the operation, which runs up to 20 Web sites, did not properly label its e-mail with a "SEXUALLY-EXPLICIT:" tag and violated several other aspects of a year-old anti-spam law.

Six businesses and five men have had their assets temporarily frozen by a Las Vegas federal court and are prohibited from sending out any deceptive spam as the case proceeds, the FTC said.

Only one of the men charged actually sent out the e-mail but the others are held liable because they hired him, said Eileen Harrington, associate director of the FTC's Marketing Practices Division.

"It's not just people who push the button to send the spam who can be held liable," Harrington said at a news conference.

Unwanted pornography and other forms of spam account for up to 85 percent of all e-mail, up from roughly 55 percent when the CAN-SPAM Act took effect one year ago.

The defendants included explicit content in their messages, did not label them properly, did not label them as advertisements and did not provide a way for consumers to stop getting them, all violations of the CAN-SPAM Act, Harrington said.

Some of the messages falsely claimed that access to the Web sites was free, a violation of deceptive-business laws, Harrington said.

Those charged could be required to give up the money they made from the operation and prevented from sending out any more deceptive e-mail. The FTC does not have the authority to put people in jail or levy fines for a first offense.

Charged in the complaint were Global Net Solutions, Open Space Enterprises Inc., Southlake Group Inc. and WTFRC Inc., all based in Las Vegas; Global Net Ventures Ltd., based in London; and Wedlake Ltd., which is believed to be based in Riga, Latvia.

Dustin Hamilton, Gregory Hamilton, Tobin Banks, Philip Doroff and Paul Rose were charged as individuals.

None of the defendants or companies could be immediately reached for comment.