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Spam King bankrupted by Microsoft

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Microsoft
Security
Legal

A Colorado company sued by Microsoft Corp. under anti-spam laws has filed for Chapter 11 bankruptcy.

A Microsoft lawyer yesterday described the development as the fulfillment of the company's promise when it and New York Attorney General Eliot Spitzer filed lawsuits in December 2003 against Scott Richter and his company, OptinRealBig.com.

"Microsoft and the state of New York said at the time that we would drive him into bankruptcy, and together we have," said Aaron Kornblum, Microsoft's Internet safety enforcement attorney, noting that Richter was once ranked the world's third-largest spammer on the Register of Known Spam Operations.

But Steven Richter, lawyer for the company and Scott Richter's father, strongly disputed the characterization of his son's activities and said the Westminster, Colo., company plans to reorganize and remain in business. The bankruptcy was essentially an effort to consolidate various lawsuits against the company, he said.

"The company is growing, the company is viable, and has no intention of stopping business," Steven Richter said. "This was done just to get some breathing room."

OptinRealBig settled with New York last year for $40,000 in fines and $10,000 in investigative costs. Steven Richter said he considered the relatively small size of the settlement a sign that the New York attorney general didn't believe it had much of a case. Richter said OptinRealBig operates within the bounds of the law.

The company says it "provides vital marketing services to both publicly and privately held clients."

But the news release from Spitzer announcing last year's settlement still termed Scott Richter a "deceptive spammer."

Microsoft is seeking $20 million in damages in its suit. Although the company hasn't yet won a judgment, it is listed in bankruptcy papers as OptinRealBig's largest unsecured creditor, on the basis of that claim. Scott Richter also has filed for personal bankruptcy in Colorado.

The Microsoft lawsuit accuses OptinRealBig of taking part in deceptive bulk e-mail campaigns in violation of Washington state law. Despite Richter's vow to remain in business, Microsoft's Kornblum said the bankruptcy filing means that "a significant spigot of spam is closed."

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