Spam king Christopher 'Rizler' Smith to be released on $50,000 bailJuly 08, 2005
A federal grand jury is considering fraud and money-laundering charges against spammer and Internet drug seller Christopher William Smith.
After two days of testimony about Smith and his off-shore business efforts, Judge Michael J. Davis ordered that Smith be released today on $50,000 bail and to surrender his passports with all of his aliases. He'll also be monitored electronically and needs permission to leave the state.
Smith is charged with contempt of court for setting up an illegal online pharmacy in the Dominican Republic, and using a cash card to withdraw $2,000 from a bank account seized by the government.
Assistant U.S. Attorney Nicole Engisch argued that Smith violated a May 20 court order after his Xpress Pharmacy Direct, which is based in Burnsville, was shut down by federal officials and more than $4 million in assets were seized. Xpress Pharmacy Direct made about $18 million in profits, prosecutors believe. The business filled more than 22,000 orders nationwide under the name of one physician.
Smith was arrested last week at Minneapolis-St. Paul International Airport and taken to the Sherburne County jail after he stepped off a flight from Miami. The government claims that Smith bought a ticket from the Dominican Republic that terminated in Miami, and then purchased a last-minute ticket from Miami to Minneapolis.
In ordering Smith's arrest, Davis found probable cause that Smith violated the court order and that he had fled the country to avoid court jurisdiction.
Smith's Minneapolis attorney, Ron Friedberg, acknowledged that Smith did violate the May 20 order by withdrawing $2,000 from the seized account. But he vigorously denied that Smith broke any laws with his online pharmacy operations in Burnsville or the Dominican Republic, saying his business merely connected patients with a doctor and pharmacies.
While prosecutors pointed Wednesday to statements showing two $1,000 withdrawals from the frozen account, Friedberg said there is no proof Smith made the cash-card withdrawals at a casino in the Dominican Republic.
The contempt-of-court affidavit alleges Smith went to the Dominican Republic and other locations to set up a new online pharmacy and call center. Smith supposedly left four days after Davis issued a preliminary restraining order, barring him from selling prescription drugs at a new or existing company and ordering the shutdown of related Web sites.
Smith, a high school dropout, was an internationally known e-mail spammer when he started the drug business. He was being pursued as Rizler, one of the country's top e-mail spammers who filled the inboxes of billions of e-mail accounts with offers for sexually explicit websites, penis enlargement drugs, generic Viagra and online college degrees. In 2002, Time Warner Cable obtained an injunction barring Smith from selling cable television descrambler devices through e-mails, part of a spamming operation that helped earn him a reputation within anti-spamming circles.
Friedberg said Smith's business was legitimate.
"It's just not against the law. There's nothing wrong with what they're doing."
A string of witnesses told Judge Davis that Smith attempted numerous ways to try to get back into the lucrative Internet pharmacy market.
Katharine Williams, the wife of Smith associate Ronald Miller, testified Wednesday that she flew twice to the Dominican Republic to help deliver about $16,000. The first trip was with Smith's wife, Anita, and the second was with Smith's girlfriend, Cassandra Kerr, she said.
Williams said she refused requests from her husband and Smith to fly down with $100,000. She said she gave the money to former Xpress Pharmacy employee Ramesh Ramnaraine.
Ramnaraine testified Thursday that he sent the $100,000 by Federal Express to an associate of Smith's in Florida. He said he refused requests from Smith and Miller to fly to the Dominican Republic with $900,000 for them.
A contract employee with Xpress Pharmacy, Phillip Tritabaugh, testified that he was paid $1,000 to download a list of about 100,000 customers and gave the list to Ronald Miller five days after the firm was closed by authorities.
Friedberg argued Tritabaugh did not know if the information was about new or old customers.
Also charged with contempt of court were Smith's accountant, Bruce Lieberman of New York, and a business associate of Smith's, the notorious spammer Creaghan Harry of Florida. Harry did not appear in court.
Judge Michael J. Davis delayed ruling on whether Smith's actions violated the court order and set a hearing for Aug. 25.
Though not charged with a crime earlier, Smith now should be held in criminal contempt and jailed for six months, the U.S. attorney's office recommended Tuesday.
Smith's bail was revoked for violating the terms of his release and he remains in custody.
July 6, 2005 Spam king defies judge's orders, got caught and goes to jail
June 16, 2005 Spam pays off, doesn't it Harry?
May 20, 2005 Another major spammer smackdown