Wednesday, Jan. 12, 2005 | 11:06 a.m.
The Federal Trade Commission has charged several companies and individuals operating out of Las Vegas with sending hundreds of thousands of spam e-mails to sell access to online pornography.
An 18-page complaint was filed in U.S. District Court in Las Vegas on Jan. 3. The complaint alleges that the companies -- Global Net Soltions Inc., Global Net Ventures Ltd., Wedlake Ltd., Open Space Enterprises Inc., Southlake Group Inc. and WTFRC Inc. -- failed to properly label the unsolicited e-mails as containing adult content and violated rules prohibiting sexually explicit material from initially viewable content in the messages.
A judge granted a temporary restraining order on Jan. 5, barring the "deceptive practices" and freezing the defendants' assets. On Tuesday, the majority of the defendants agreed to a "stipulated preliminary injunction" that extends much of the temporary order while the case proceeds, said David Torok, assistant FTC director for the division of marketing practices.
The FTC began investigating the companies and several individuals -- Dustin Hamilton, Tobin Banks, Gregory Hamilton, Philip Doroff and Paul Rose -- after receiving a complaint from a school district employee in California, said Stephen Cohen, an FTC attorney.
The female employee received e-mails from the companies at her work address, Cohen said.
"That was particularly disturbing," he said, adding that a subsequent inquiry turned up "hundreds of thousands" of complaints against the companies.
Representatives for Rose, who is believed to reside in Arizona, and Wedlake Ltd. did not appear in court on Tuesday. In their absence, a judge issued a preliminary injunction against them.
Torok said the FTC thinks that Rose was responsible for sending the spam promoting sites run by the other parties.
"Rose was the guy actually pushing the button," he said.
In its complaint, the FTC said the defendants have "barraged consumers with e-mails containing sexually explicit content."
Instead of labeling the e-mails with a required tag of "sexually-explicit" in the subject lines "defendants have initiated commercial e-mail messages containing materially false or misleading header information," the complaint alleges.
Cohen also said that the defendants failed to provide a valid physical address in the e-mails for the originating company, misled consumers by claiming that the Web sites were free when, in fact, they charge for membership, and failed to provide a conspicuous "opt-out" option for recipients wishing to decline subsequent e-mails.
While Global Net Ventures is incorporated in the United Kingdom and Wedlake is incorporated in Riga, Latvia, Cohen said the FTC believes that all of the companies and individuals have been operating out of Las Vegas.
The complaint lists a 3960 Howard Hughes Parkway, Fifth Floor, address for Global Net Solutions and WTFRC, which had previously been known as Reflected Networks Inc. The complaint also lists a business address of 6363 S. Pecos Road for WTFRC. The complaint said Open Spaces operates at 7311 S. Eastern Ave, Ste. 281, and Southlake Group has an office at 6330 S. Pecos Road, Ste. 100.
Frank Cremen, an attorney representing several of the defendants, could not be reached for comment.
The complaint said that the defendants operated at least a dozen Web sites that require payment to view sexually oriented content. The defendants also controlled the payment site, onlinecharges.com, the complaint said.
Torok said operating sexually explicit Internet sites or sending e-mails promoting them is not illegal if rules are obeyed.
"They have to follow certain formats," he said. "It's what we refer to generically as the plain brown wrapper."
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