Yahoo! awarded by US Court against lottery fraud scammers

Yahoo awarded by US Court against lottery fraud scammersBy order of US District Judge Laura Taylor Swain on 5.12.2011 in the matter of Yahoo Inc. as Plaintiff against Daiann Nakchan et al. as Defendants (case file No. 08 Civ. 4581) Plaintiff's motion for judgment by default is granted, The Clerk of Court is respectfully requested to enter judgment in favor of Plaintiff and against Defendants Nakchan, Chinedu Mbonu, Chibuzor Mhonu, Ausdith Investments Ltd., and Alamin Industrial Corp., jointly and severally, in the total sum of $610,039,500 (comprising a statutory damages award of $27,000,000 under 1117(c), and a statutory damages award of $583,039,500 under the CAN-SPAM Act).

Plaintiff must file and serve its attorneys' fees award request, supported by detailed contemporaneous time records and relevant biographical and billing rate information, with a courtesy copy provided for Chambers, no later than December 21, 2011. Any opposition to the fee request must be filed, with a courtesy copy for Chambers, by January 23, 2012. Any reply must be filed and served by February 6, 2012.

The Yahoo! Lottery Fraud

For some users around the world, Yahoo! is not just the name of a notorious search engine but is the manager of an ever-winning lottery too.

The lottery is clearly not directly or indirectly managed by Yahoo! as well as by other worldwide search engines that are easily awarding users with sum of money by email.

Indeed, there are groups of individuals and corporations, mostly from Nigeria and Taiwan, that perpetuate lottery fraud beneath different search engines’ name.

Yahoo! is one of the most famous victims while scammers answer the names of Daiann Nakchan, Adebimpe F. Pogoson, Emmanuel C. Onyema, Aisha Buhari, Chinedu Mbonu, Chibuzor Mbonu, Chika Mbonu, Ausdith Investments Ltd., Chen Chien-Chang, Chen ChienZhou, and Alamin Industrial Corp, but in several cases, they remain unnamed.

Nigeria and Taiwan as the heaven of email scammers

Nigeria and Taiwan are well-known to chronicles for hosting lot of email scammers and fake servers.

Inside the lottery fraud scheme, the scammers send random hoax emails to unknown users telling them they have won high lottery prizes. Obviously, the recipients never entered those lotteries and most of them would never ever open and answer an email like this.

But every fifty users tossing spam emails there is always the curious one searching for the lucky strike that responds to such good news, uppermost when they come from the serious and trustable Yahoo! company.

Yahoo!’s name and marks used to persuade recipients to provide their personal information

In fact, all hoax emails are send under Yahoo!’s name, graphical, marks and signs to make the fraud more persuading.

Once the first email is addressed by the recipient, they send a second email informing that if you want your prize to be awarded you have to pay a fee and provide some personal information. Few steps away from large amount of money, the poor user often answers entering required information as name, address, phone number and bank account. All data that scammers use to further a wide range of credit and identity scams.

Over 11.000.000 emails informing recipients they won non-existing lottery

Yahoo! has ascertained that Lottery Fraud communications from 2006 to 2009 amount to over 11.000.000 emails, a considerable number that strongly required Yahoo! to immediately disclaim the fraud for not losing its high-level range among search engines.

Lottery fraud is a common cyber-criminal tactic to harvest personal information and access to bank accounts. Internet companies as Yahoo! and Microsoft are joining their efforts to win over email scammers, with the help of international Banks that offer funds to help to restore cyber-victims from their financial loss.

Steps to the judgement by default

Yahoo! files action on May 16, 2008, against Companies and Individuals not identified. After identifying some specific perpetrators, Yahoo! files three further Amended Complaints naming additional defendants and dismissing others. The Court finding evidence of Defendants’ guilty, grants judgement by default on December 2011.

Plaintiff moves for judgement but Defendants do not participate

Plaintiff Yahoo! Inc. moves for judgment by default asserting trademark infringement, counterfeiting, unfair competition, false designation of origin, and other related claims against various named Defendants.

None of the Defendants has responded to the Complaint.

The Clerk addresses Yahoo! allegations for factual content is true

The Clerk enters a certificate of default against each Defendant within Liability for Trademark Infringement and Violations of the CAN-SPAM Act, taking all the well-pleaded allegations in Plaintiff's complaint, except those relating to damages, and takes factual content in support of Plaintiff’s motion as true.

The New York district Court’s default judgment

The Judge takes as true Plaintiff’s pleadings and additional proffers and considers it sufficient to establish the alleged violations, making a grant of default judgment appropriate.

The Court addresses three off nine claims while the other are absorbed

The Plaintiff’s claims consist of:

1) trademark counterfeiting and infringement in violation of 15 U.S.C. § 1114;

2) false designation of origin, unfair competition and passing off in violation of 15 U.S.C. § 1125(a);

3) dilution in violation of 15 U.S.C. § 1 125(c);

4) violation of the CAN-SPAM Act, 15 U.S.C. § 7701, et seq.:

5) New York common law trademark infringement;

6) New York state dilution;

7) deceptive trade practices;

8) civil conspiracy;

9) violation of California's Unsolicited Commercial E-Mail Statute, Cal. Bus. & Prof. Code § 17529.5;

10) violation of California's Anti-Phishing Statute, Cal. Bus. & Prof. Code &22948.2.

The Court addresses claims no 1, 4, and 8 granting the motion as to them while finds consideration of residual claims unnecessary.

The trademark counterfeiting and infringement liability grounds pursuant to USC

As to the “Trademark Counterfeiting and Infringement” claim, the Court finds Plaintiff to have fully demonstrated that Yahoo! has a valid mark that is entitled to protection under the Lanham Act by providing copies and descriptions of valid registration of its name and of several Yahoo! marks.

Indeed, Yahoo! have successfully alleged Defendants illicit conduct: perpetrating lottery frauds by sending e-mail messages announcing non-existent Yahoo! Lottery win to recipients; intentionally counterfeiting Yahoo!'s name and marks; misleading recipients by confusion into making them believe that emails were sent by or affiliated with Yahoo!; acting for their only commercial gains; acting without the consent of Yahoo! to use its name or marks.

All these elements are likely to cause confusion as to the affiliation, connection, or association with Defendant, or as to the origin, sponsorship, or approval of the defendant's goods, services, or commercial activities by plaintiff pursuant to 15 U.S.C. 1125(a) (1) (A).

Sufficient evidence to grant the CAN-SPAM Act violations claim

As to “violation of the CAN-SPAM Act, 15 U.S.C. § 7701, et seq.”, the Court finds Yahoo!’s allegations are sufficient to prove that the Defendants transmitted Lottery Fraud e-mails with misleading Yahoo! headings to a protected computer and that recipients were not allowed to submit a reply message to not receive further emails.

Under both the aforementioned points, the Court establishes that Defendants have jointly and severally violated the CAN-SPAM Act.

Civil conspiracy claim under New York State common law is probed too

To find liability of “civil conspiracy” under New York state common law, it is needed to prove a corrupt agreement, an overt act and membership. Yahoo!, states the Court, has successfully alleged evidence of interconnection among Defendants.

They are found to have conspired with others to send the Lottery Fraud emails in order to receive financial benefits.

The connection among scammers is clear where money withdrawn from recipients’ bank accounts were transferred to few bank accounts that gathered all the named Defendants. Everyone of them received funds.

For this reason, the Court states that Defendants are co-conspirators and that jointly and severally are liable for all damages resulting to Yahoo! from the Lottery Fraud.

The statutory damage resolution leads to a high fee order to pay

The Court addresses statutory damages award under 15 U.S.C. § 1117(c) and under CAN-SPAM Act. The law’s provisions allow to consider both compensatory and punitive damages. They are calculated on how far lottery activity has been gone back and on the numbers of counterfeit marks, in the total sum of $610,039,500.

Purposes of the CAN-SPAM Act

The CAN-SPAM (backronym for Controlling the Assault of Non-Solicited Pornography And Marketing) Act of 2003, pursuant to which lays portion of Defendants’ liability, is passed to allow companies as service providers to seek penalties for junk mail.

They can file against spammers, claiming high payout by a fee per email. Scammers are frequently involved in lottery fraud hoax emails in order to solicit personal information from individuals and the Yahoo! case damage amount is one of the highest award ever recorded in judgments under CAN-SPAM, even if it would be hardly enforceable.

Google was also a lottery fraud victim

On June 2010, a US district Court has granted Google Inc. a permanent injunction barring Pacific WebWorks from using Google name or logo. PWW and other unnamed Defendants used “Google Money” fraud to trick users promoting work-at-home money-making scheme and receive illicit funds.

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