Former “Spam King” pays Microsoft $7 million

Microsoft said Tuesday that it had settled a lawsuit against Scott Richter, whom it identified as a former "spam king". The software giant said that as part of the settlement Richter and his company agreed to pay $7 million to Microsoft.

Richter and his company will file a motion on Tuesday to dismiss bankruptcy proceedings they filed in March in the U.S. bankruptcy court in Denver, according to a joint statement by Microsoft and Richter.

A condition of the settlement is dismissal of the bankruptcy cases.

A separate statement from Brad Smith, Microsoft senior vice president and general counsel, said the company will reinvest all of the money, including $5 million, which will go to increase Internet enforcement efforts and expand technical and investigative support to help law enforcers to address computer-related crimes. The joint statement from Microsoft and Richter said Richter had changed his e-mailing practices in part because Microsoft and the office of New York Attorney General Eliot Spitzer sued him in 2003, reports Reuters.

In its lawsuit, Microsoft contended that Richter and his companies violated Washington and federal law by sending junk mail that contained "forged sender names, false subject lines, fake server names, inaccurate and misrepresented sender addresses and obscured transmission paths". Some of these spam messages touted home loans and the like were allegedly sent via compromised PCS.

Richter and OptInRealBig.com continue to deny these allegations but the terms of the settlement oblige Richter to provide a canned quote anyway stating that he'd changed his emailing practices "in part" because Microsoft and the New York Attorney General sued him. "In response to Microsoft’s and the New York Attorney General’s lawsuits, we made significant changes to OptInRealBig.com’s emailing practices and have paid a heavy price. I am committed to sending email only to those who have requested it and to complying fully with all federal and state anti-spam laws," Richter said.

Microsoft’s SVP and general counsel, Brad Smith, commented that because of this litigation, Richter had "fundamentally changed his practices and forfeited ill-gotten gains". He added that Microsoft will continue to combat spam through a combination of technology, consumer education and enforcement.