Inside Facebook

Earlier this year, we first covered the news that Facebook had filed a federal lawsuit against famed “Spam King” Sanford Wallace, Adam Arzoomanian, and Scott Shaw for crimes under the CAN-SPAM Act, Computer Fraud and Abuse Act, and the California Anti-Phishing Act. Today, Facebook says Judge Jeremy Fogel ruled in US District Court in San Jose that the case will proceed.

Wallace, making an unusual personal court appearance, filed for bankruptcy this morning. Nevertheless, Facebook, which has been fighting a number of phishing attacks and scams in recent months, says it intends to fully pursue Wallace and his associates. It sounds like Facebook wants to make a visible example out of Wallace as a deterrent against future scammers.

Wallace’s bankruptcy filing “is not unexpected and only delays our judgment temporarily,” a Facebook spokesperson told us. “We will continue to pursue the judgment and will be reviewing his filing very closely.”

“We see Fogel’s ruling as a strong deterrent against spammers. Spammers feel that they are immune from criminal prosecution. Fogel’s ruling demonstrates that judges will enforce restraining orders and spammers who violate them face criminal prosecution. This appears to have had an impact on Wallace who was in court today. To our knowledge, he has not appeared in any of the many previous cases against him.”

This is not the first time Wallace or Arzoomanian have been accused of malicious marketing practices on social networks. In May of 2008, MySpace won a $234 million judgment against Wallace and business partner Walter Rines for illegal spam and phishing attacks against MySpace users. Wallace has been actively building his “Spam King” reputation since 1997, having been charged with various federal crimes over the last decade.

Facebook’s original complaint, filed February 24, 2009, is embedded below.