MIKE WENDLAND: Spam king lives large off others' e-mail troubles
West Bloomfield computer empire helped by foreign Internet servers
November 22, 2002
BY MIKE WENDLAND
FREE PRESS COLUMNIST
You might call it the house that spam built.
Alan Ralsky's brand new 8,000-square-foot luxury home near Halsted and Maple in West Bloomfield has been a busy place this month. Outside, landscapers worked against the November cold to get a sprinkler system installed before the ground freezes. Inside, painters prepared to hang wallpaper.
Meanwhile, delivery trucks pulled into the bricked circular driveway with computers, routers, servers and other high-tech gear that will hook up to the high-speed T1 line installed a few weeks ago.
In the lower level of the home, tucked away in a still-unfinished room, will soon be an array of 20 different computers -- the control center of what many believe is the largest single bulk e-mailing operation in the world.
It's an operation still very much in business, despite last month's much-hyped settlement of a lawsuit against Ralsky by Verizon Internet Services. The suit used Virginia's tough anti-spam laws to get Ralsky to promise to stop using Verizon servers and pay an undisclosed fee for sending out millions of unsolicited e-mails to its customers.
Anti-spam groups and Verizon hailed the settlement as a major victory in the war against spam. But that war still feels far away, down on the lower level of Ralsky's home, where racks of computers instruct scores of other computers halfway around the world to fire off millions of e-mails every day.
Ralsky said the legal fuss and settlement costs were a big hit and that things slowed down for a while. But now, after moving a few weeks ago into his new $740,000 house, he claims he's back in business.
"I've gone overseas," he said. "I now send most of my mail from other countries. And that's a shame. I pay a fortune to providers to do this, and I'd much rather have it go to American companies. But I have to stay in business, and if I have to go out of the country, then so be it."
The computers in Ralsky's basement control 190 e-mail servers -- 110 located in Southfield, 50 in Dallas and 30 more in Canada, China, Russia and India. Each computer, he said, is capable of sending out 650,000 messages every hour -- more than a billion a day -- routed through overseas Internet companies Ralsky said are eager to sell him bandwidth.
All this is bad news to the anti-spam movement.
"He's very sophisticated in his activities," said John Mozena of Grosse Pointe Woods, a founder of the Coalition Against Unsolicited Commercial E-Mail (www.cauce.org), a national spam-fighting organization. "He uses hundreds of domains (Internet addresses) to send his spams."
In London, Steve Linford of the Spamhaus Project (www.spamhaus.org) has monitored Ralsky for several years.
"There are probably about 150 major spammers who are responsible for 90 percent of all the spam everyone gets," said Linford. "Ralsky has been the biggest of them, and is certainly still in the top five."
Ralsky used to be easy to locate, with a listed address and phone number. But his attorney, Robert Harrison of Bloomfield Hills, said Ralsky is so hated by anti-spammers that he's had to be less visible.
"There were threats against him, cars driving by and people checking out his house," Harrison said. "Someone even left a package of what appeared to be dog feces."
Today, Ralsky says he is trying to keep a lower profile, operating through cell phones and unlisted numbers. Ralsky agreed to this interview and the tour of his operation only if I promised not to print the address of his new home, which I found in Oakland County real estate records.
Ralsky admits to using lots of different domain names and Internet providers, but said he does nothing illegal. He prefers to call his e-mails marketing messages instead of spam.
Whatever you call it, unsolicited messages now account for 36 percent of all e-mail, up from just 8 percent a year ago, according to Brightmail, a leading anti-spam software maker.
Ralsky has done his share to account for the increase.
"I'll never quit," said the 57-year-old master of spam. "I like what I do. This is the greatest business in the world."
It's made him a millionaire, he said, seated in the wood-paneled first floor library of his new house. "In fact," he added, "this wing was probably paid for by an e-mail I sent out for a couple of years promoting a weight-loss plan."
Ralsky said he turns down many who want his services.
"I don't do any porn or sexual messages," he said, citing a promise he made to his wife, Irmengard. Instead, he sends e-mail come-ons for things like online casinos, vacation promotions, mortgage refinancing and Internet pharmacies.
Ralsky acknowledges that his success with spam arose out of a less-than-impressive business background. In 1992, while in the insurance business, he served a 50-day jail term for a charge arising out of the sale of unregistered securities. And in 1994, he was convicted of falsifying documents that defrauded financial institutions in Michigan and Ohio and ordered to pay $74,000 in restitution.
He lost his license to sell insurance and he declared personal bankruptcy. But in 1997, he sold a late model green Toyota and used the money to pay back taxes on his house and buy two computers.
A friend had told him about mass marketing on the Internet, and he thought it made sense. He bought a couple of mailing lists from advertising brokers and, with the help of the computers, launched a new career that soon was making him $6,000 a week.
In the lower level of his house, working around a half-dozen computers sitting atop temporary tables, two of Ralsky's associates monitored the operation.
One of them, Ralsky's list man, concentrated on finding new names to add to the 250 million e-mail addresses in his database and weeding out canceled accounts.
The other kept track of current campaigns, connecting with the bank of e-mail servers in Southfield and watching as e-mails scrolled line-by-line in rapid fire down the screen.
"There is no way this can be stopped," Ralsky said. "It's a perfectly legal business that has allowed anybody to compete with the Fortune 500 companies."
Ralsky said he includes a link on each e-mail he sends that lets the recipient opt out of any future mailings. He said 89 million people have done just that over the past five years, and he keeps a list of them that grows by about 1,000 every day. That list is constantly run against his master list of 250 million valid addresses.
Ralsky's list man is named Charlie Brown. That's his real name, he said, describing himself as a native of Louisiana who travels the country working as a consultant to bulk e-mailers, developing custom software called harvesting programs that constantly scour the Internet, gaining access to millions of Web sites and mailing lists every day in search of any and all e-mail addresses.
The response rate is the key to the whole operation, said Ralsky. These days, it's about one-quarter of 1 percent.
"But you figure it out," said Ralsky. "When you're sending out 250 million e-mails, even a blind squirrel will find a nut."
Ralsky makes his money by charging the companies that hire him to send bulk e-mail a commission on sales. He sometimes charges just a flat fee, up to $22,000, for a single mailing to his entire database.
Ralsky has other ways to monitor the success of his campaigns. Buried in every e-mail he sends is a hidden code that sends back a message every time the e-mail is opened. About three-quarters of 1 percent of all the messages are opened by their recipients, he said. The rest are deleted.
From that response, Ralsky can monitor the effectiveness of his pitch and the subject line on the e-mail to make sure he's getting maximum return. He said he spends 18 hours a day on the job.
Ralsky said he's frustrated by attacks on his character by the anti-spammers. Linford said his organization has been getting Internet networks around the world to block mail from any Chinese provider that sends Ralsky e-mail.
"When the Chinese providers contact us to ask why their outgoing mail is blocked, we tell them because of Ralsky, and they pull his plug," said Linford. "He moves on to another provider and it starts all over again."
Earlier this month, said Ralsky, somebody told the Chinese government that a Web company from which he leases e-mail servers in Beijing was sending messages critical of Chinese policy.
Police promptly raided the business and confiscated Ralsky's servers. Although they were returned a few days later, Ralsky now tries to cover his tracks better, so opponents won't know what companies and servers he's using.
Linford said he heard of the raid. "It wasn't us that caused it," he said. "But there are a lot of anti-spam activists, and apparently some of them on their own started organizing a campaign to get the Chinese government to think that Ralsky was supporting" the Falun Gong, an outlawed spiritual group the Chinese government considers subversive. "We didn't endorse that, but it shows you how deep the anti-Ralsky feelings are."
Ralsky, meanwhile, is looking at new technology. Recently he's been talking to two computer programmers in Romania who have developed what could be called stealth spam.
It is intricate computer software, said Ralsky, that can detect computers that are online and then be programmed to flash them a pop-up ad, much like the kind that display whenever a particular Web site is opened.
"This is even better," he said. "You don't have to be on a Web site at all. You can just have your computer on, connected to the Internet, reading e-mail or just idling and, bam, this program detects your presence and up pops the message on your screen, past firewalls, past anti-spam programs, past anything.
"Isn't technology great?"
Contact MIKE WENDLAND at 313-222-8861 or mwendland@freepress.com.