California company settles for $2.4 million for alleged spam

A California company has agreed to a $2.4 million settlement with federal and state officials with regard to a lawsuit against it for allegedly sending unsolicited e-mail messages pitching mortgage services, among other things, officials said Thursday.

Rick Yang and Peonie Pui Ting Chen, both of Los Angeles, who allegedly operated Optin Global Inc. and Vision Media Limited Corp., were sued in April 2005 by Bill Lockyer, California’s attorney general, and the Federal Trade Commission, officials said.

The lawsuit resulted in a freeze on their assets and a temporary restraining order stopping what Lockyer described in a statement as “unlawful spam,” and the defendants went out of business, according to Lockyer.

The two “in just one year flooded computers with almost 2 million spam messages” allegedly pitching mortgage services, car warranties, travel deals, prescription drugs and college degrees, according to Lockyer.

Attempts to reach the two for comment were unsuccessful.

Many of the defendants’ alleged spam messages, according to the complaint, marketed mortgage services, officials said. When directed by hyperlinks to the defendants’ mortgage services web sites, consumers were asked to provide personal information, ostensibly to be shared with mortgage brokers or banks, officials said.

However, the complaint alleged, the defendants sold the personal information to lead companies, which then sold the information to other lead companies, officials said. Ultimately, the information wound up in the hands of mortgage lenders and brokers who then contacted consumers and offered mortgage services, according to the complaint, officials said.

In the proposed settlement, Lockyer and the FTC ask the court to enter a judgment of $2.4 million for damages, civil penalties, and recovery of fees and costs, according to officials.

However, the defendants will not have to pay the full $2.4 million if, within five days after court approval of the settlement, they pay $277,000 in civil penalties, $100,000 to cover fees and costs and execute $500,000 promissory notes on two pieces of property, one in Las Vegas, Nevada and the other in Adams, Mass., officials said.