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Last updated on April 16, 2014 at 13:24 EDT

Russian Pleads Not Guilty For Global Spam Network

December 4, 2010

A 23-year-old Russian man charged with operating a spam email business that may have accounted for as much as a third of global spam has pleaded not guilty in a US court where he was ordered held without bail.

Appearing in court with a lawyer and an interpreter in tow, Oleg Nikolaenko asked a federal magistrate to consider allowing a form of house arrest in Milwaukee while pending trial.

“He is a citizen and resident of Russia and the government believes if released he would seek to return there and the government wouldn’t be able to prosecute him,” argued prosecutor Erica O’Neil.

Nikolaenko, of Moscow, had no criminal record and had no intention of fleeing, his lawyer said. His wife was also seeking a US visa so she could visit.

US Magistrate Patricia Gorence ordered Nikolaenko held without bail, but said she would consider a release at a scheduling conference to be held on Dec 21.

Nikolaenko was arrested in November while attending an auto show in Las Vegas. He is being tried in Milwaukee because that’s where an undercover FBI investigator ordered Viagra through an e-mail distributed by Nikolaenko’s alleged operation and received bogus herbal pills instead, an FBI spokesman said. Prosecutors said he was carrying $4,000 in cash when arrested.

He was officially charged under a seven-year-old anti-spam law — the CAN-SPAM Act — with running an international network of more than a half million virus-infected personal computers that sent out billions of emails.

The scheme netted Nikolaenko with hefty earnings from sellers of fake Rolex watches and male enhancement drugs before being shut down, according to court documents filed by an FBI cybercrime investigator.

When the “botnet” was operating at full capacity it accounted for nearly a third of global spam, according to the documents.

If convicted, Nikolaenko could face up to three years in prison and a $250,000 fine.

Tracing the sources of the emails and shutting the botnet down was a scrupulous process because return addresses were fake, the government said. Prosecutors were led in the right direction with the conviction of another man in Missouri who was conspiring to traffic fake Rolex watches.

A trial for Nikolaenko may be months away due to the voluminous amount of computer-related evidence that prosecutors need to sift through, O’Neil told Reuters after the hearing.

Magistrate Gorence said that the trial must start no later than February 11.