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UNITED STATES DISTRICT COURT.
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

UNITED STATES OF AMERICA,
Plaintiff,

v.

ROBERT ALAN SOLOWAY,
Defendant.

PLEA AGREEMENT

The United States of America, by.and through Jeffrey C. Sullivan, United States Attorney for the Western District of Washington, and Kathryn A. Warma, Assistant United States Attorney for said District, and the defendant, ROBERT ALAN SOLOWAY, and his attorneys, Richard J. Troberman and Robert J. Wayne, enter into the following Agreement, pursuant to Federal Rule of Criminal Procedure 11(c):

1. The Charges. Defendant, having been advised of the right to have this matter tried before a jury, agrees to waive that right and enter a plea of guilty to the following charges contained in the Indictment:

a. Mail Fraud, as charged in Count 8, in violation of Title 18, United States Code, Section 1341;

b. Fraud in Connection .with Electronic Mail, as charged in Count 18, in violation of Title 18, United States Code, Sections 1037(a)(3) and (b)(1)(A);

and

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c. Willful Failure to File Return, as charged in Count 26, in violation of Title 18, United States Code, Section 7203.

By entering this plea of guilty, Defendant hereby waives all objections to the form of the charging document. Defendant further understands that before entering his plea of guilty, Defendant will be placed under oath. Any statement given by Defendant under oath may be used by the United States in a prosecution for perjury or false statement.

2. Elements of the Offenses.

a. The elements of the offense of Mail Fraud, as charged in Count 8, in violation of Title 18, United States Code, Section 1341, are as follows:

First, Defendant devised or intended to devise a scheme or artifice to defraud, or for obtaining money or property by means of material false or fraudulent pretenses, representations, or promises;

Second, Defendant knew that the promises or statements were false;

Third, the promises or statements were of a kind that would reasonably influence a person to part with money or property;

Fourth, Defendant acted with intent to defraud; and

Fifth, Defendant used, or caused to be used, the mails to carry out or attempt to carry out an essential part of the scheme.

b. The elements of Fraud in Connection with Electronic Mail, as charged in Count 18, in violation of Title 18, United States Code, Sections 1037(a)(3) and (b)(1)(A), are as follows:

First, Defendant materially falsified header information in electronic mail messages;

Second, the electronic mail messages were commercial;

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Third, the volume of the electronic mail messages exceeded 100 messages 2 during a 24 hour period, 1,000 messages during a 30-day period, or 10,000 messages during a 1-year period;

Fourth, Defendant intentionally initiated the transmission of such messages;

Fifth, Defendant did so in or affecting interstate or foreign commerce; and

Sixth, the offense was committed in furtherance of a felony under the laws of the United States or of any State.

c. The elements of the offense of Willful Failure to File Return, as charged in Count 26, in violation of Title 26, United States Code, Section 7203, are as follows:

First, Defendant was a person required to file a federal income tax return;

Second, Defendant failed to file at the time required by law; and

Third, the failure to file was willful.

3. The Penalties. Defendant understands that the statutory penalties for the offenses to which he is pleading guilty are as follows:

a. Count 8 (Mail Fraud): imprisonment for up to Twenty (20) years, a fine of up to Two Hundred Fifty-Thousand Dollars ($250,000.00), a period of supervision following release of Three (3) years, and a One Hundred Dollar ($100.00) penalty assessment.

b. Count 18 (Fraud in Connection with Electronic Mail : imprisonment for up to Five (5) years, a fine of up to Two Hundred Fifty Thousand Dollars ($250,000.00), a period of supervision following release of Three (3) years, and a One Hundred Dollar ($100.00) penalty assessment.

c. Count 26 (Willful Failure to File Return): imprisonment for up to One (1) year, a fine of up to Twenty-Five Thousand Dollars ($25,000.00) for an individual and a fine of up to One Hundred Thousand Dollars ($100,000.00) for a corporation, the
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costs of prosecution, a period of supervision following release of One (1) year, and a One Hundred Dollar ($100.00) penalty assessment.

Defendant agrees that the penalty assessment shall be paid at or before the time of sentencing.

Defendant understands that in addition to any term of imprisonment and/or fine that is imposed, the Court may order Defendant to pay restitution to any victim of the offense, as required by law. Defendant further understands that a consequence of pleading guilty may include the forfeiture of certain property, either as a part of the sentence imposed by the Court, or as a result of civil judicial or administrative process.

Defendant agrees that any monetary penalty the Court imposes, including the special assessment, fine, costs or restitution, is due and payable immediately, and further agrees to submit a completed Financial Statement of Debtor form as requested by the United States Attorney's Office.

Defendant understands that supervised release is a period of time following imprisonment during which he will be subject to certain restrictions and requirements. Defendant further understands that if supervised release is imposed and he violates one or more of its conditions, he could be returned to prison for all or part of the term of supervised release that was originally imposed. This could result in Defendant serving a total term of imprisonment greater than the statutory maximum stated above.

4. Rights Waived by Pleading Guilty. Defendant understands that, by pleading guilty, he knowingly and voluntarily waives the following rights:

a. The right to plead not guilty, and to persist in a plea of not guilty;

b. The right to a speedy and public trial before a jury of Defendant's peers;

c. The right to the effective assistance of counsel at trial, including, if Defendant could not afford an attorney, the right to have the Court appoint one for Defendant;

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d. The right to be presumed innocent until guilt has been established at trial, beyond a reasonable doubt;

e. The right to confront and cross-examine witnesses against Defendant at trial;

f. The right to compel or subpoena witnesses to appear on Defendant's behalf at trial;

g. The right to testify or to remain silent at trial, at which trial such silence could not be used against Defendant; and

h. The right to appeal a finding of guilt or any pretrial rulings.

5. United States Sentencing Guidelines. Defendant understands and acknowledges that, at sentencing, the Court must consider the sentencing range calculated under the United States Sentencing Guidelines, together with the other factors set forth in Title 18, United States Code, Section 3553(a), including: (1) the nature and circumstances of the offenses; (2) the history and characteristics of the defendant; (3) the need for the sentence to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense; (4) the need for the sentence to afford adequate deterrence to criminal conduct; (5) the need for the sentence to.protect the public from further crimes of the defendant; (6) the need to provide the defendant with educational and vocational training, medical care, or other correctional treatment in the most effective manner; (7) the kinds of sentences available; (8) the need to provide restitution to victims; and (9) the need to avoid unwarranted sentence disparity among defendants involved in similar conduct who have similar records. Accordingly, Defendant understands and acknowledges that:

a. The Court will determine Defendant's applicable Sentencing Guidelines range at the time of sentencing;

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b. After consideration of the Sentencing Guidelines and the other factors in 18 U.S.C. 3553(a), the Court may impose any sentence authorized by law, up to the maximum term authorized by law;

c. The Court is not bound by any recommendation regarding the sentence to be imposed, or by any calculation or estimation of the Sentencing Guidelines range offered by the parties, or by the United States Probation Department; and

d. Defendant may not withdraw a guilty plea solely because of the sentence imposed by the Court.

6. Ultimate Sentence. Defendant acknowledges that no one has promised or guaranteed what sentence the Court will impose.

7. Statement of Facts. The parties agree on the following facts in support of Defendant's guilty plea and sentencing. Defendant admits he is guilty of the charged offenses.

a. At all times material, ROBERT ALAN SOLOWAY ("SOLOWAY") was the sole owner, officer, operator and employee of NEWPORT INTERNET MARKETING CORPORATION, also variously known as "Newport IM Corporation," "NIM," and "NPR.," (hereinafter "NIM").

b. SOLOWAY first incorporated and operated NIM in California on or about May of 1997., In or about January, 2000, SOLOWAY moved to Oregon, where he lived and operated NIM from several locations before relocating to Seattle, Washington on or about March 18, 2004. From on or about March 18, 2004, until his arrest on May 30, 2007, SOLOWAY resided at 1200 Western Avenue, Apartment 17E, Seattle, Washington 98101, and operated NIM from his residence at that address.

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c. Beginning at a date uncertain, but at least by March 26, 2006,[1] and continuing until at least May 30, 2007, SOLOWAY and NIM knowingly and willfully devised a scheme to defraud, and for obtaining money and property by means of material false and fraudulent pretenses, representations, and promises; and in executing and attempting to execute the scheme, knowingly caused things to be sent and delivered by the United States Postal Service and private or commercial interstate carriers.

[1 The parties disagree as to when the fraudulent scheme began. For purposes of this Plea, it is sufficient to agree that the scheme began by at least March 26, 2006. However, the government intends to submit evidence at the time of sentencing establishing that the scheme began at an earlier date. While the defendant may object to the governments evidence, and present his own evidence, the parties agree that all this evidence may be presented and considered by the Court in determining the number of victims and the amount of loss and any other applicable Sentencing Guideline enhancement. The defendant reserves the right to challenge the total number of victims and the total loss amount arising from the entire scheme.]

d. The essence of the scheme to defraud was that SOLOWAY and NIM created and published a series of websites ("NIM websites") on the World Wide Web during the period from November 28, 2003, until May 23, 2007, using a variety of "company" names, and hosted with dozens of different domain names. The content of the websites created and published by SOLOWAY and NIM consisted of commercial advertisements for "broadcast email" services and products (that is, SOLOWAY was offering, for a price, to either send out a high volume of e-mail messages on behalf of a customer, or to sell a software product to customers that would enable them to send out their own high volume e-mail messages). On their websites, SOLOWAY and NIM made numerous material false and fraudulent representations regarding the "broadcast email" services and products that they offered for sale. They also made material false and fraudulent representations regarding the availability of technical assistance and the payment of "full 100%" refunds to dissatisfied product customers.

e. The "service" advertised for sale by SOLOWAY and NIM was the transmission over the Internet of a high volume of e-mail messages containing whatever advertisement the customer supplied. Beginning in mid-2006, different "levels" ("bronze,"silver," "gold," and "platinum") of this service were available; with each
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successively "higher" level promising a higher number of e-mailed messages, at a successively higher price. For example, a customer purchasing the "bronze" level of service could purportedly have his "email ad [sent] to 2,000,000 emails over 15 days" for $195.00; and a customer purchasing the service at the "platinum' 'level purportedly would have his "email ad [sent] to 20,000,000 emails over 15 days" for a cost of $495.00.

f. The "product" that was advertised for sale was a "broadcast email package" containing a handbook and software that would provide "everything [the customer would] need to send lifetime broadcast email campaigns to millions of people for free," along with e-mail addresses. Beginning in mid-2006, the number of e-mails ranged from 5,000,000 ("bronze level" for $195.00), to up to 80,000,000 e-mail addresses ("platinum level" for $495.00). SOLOWAY and NIM would send the "broadcast email product" (software) to paying customers via the United States Postal Service or a private or commercial interstate carrier.

g. SOLOWAY and NIM made numerous representations on the NIM websites that were designed and intended to encourage readers to purchase the "broadcast email services" or "product," including the ability of NIM to reach tens of millions of potential customers with "broadcast email"; the relatively low cost of "broadcast email" in relation to its effectiveness as a marketing and sales tool; and the potential significant increases in sales that could be expected by those who purchased the NIM "broadcast email services" or "product."

h. SOLOWAY and NIM made numerous material false and fraudulent misrepresentations on their online NIM websites regarding the "services" and "product" that were there offered for sale, including the following:

1) beginning in May, 2006, SOLOWAY and NIM represented that that their service and package consisted of opt-in e-mail addresses;

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2) that NIM provided "24/7 Customer and Technical Support Department with everything you need";

3) that if a purchaser of the software product did "not receive at least a 400% increase in sales after using [the] broadcast email package for 90 days," the customer could "simply return it ... for a full 100% refund, no questions asked."

i. As a further part of the scheme, SOLOWAY advertised and promoted the NIM websites by generating and transmitting multiple commercial e-mail messages over the Internet, that contained an advertisement for "free" broadcast email services "for charities," and also a hyper-link to the NIM website. The volume of these commercial e-mail messages exceeded 100 in a 24 hour period, 1,000 in a 30 day period, and exceeded 10,000 in any one year period between the dates of January 1, 2004 and May 30, 2007.

j. The multiple commercial e-mail messages generated and transmitted by SOLOWAY and NIM to advertise and link to the NIM websites contained false and fraudulent headers. SOLOWAY and NIM utilized a computer program with the intent of creating the false and fraudulent headers. The headers were false and fraudulent in one of two different ways: 1) the "from" field in the header would contain a false and non-existent e-mail address, or 2) the "from" field in the header would be a copy of the e-mail address contained in the "to" field in the header.

k. The use of false and forged headers hid the identity of the true originating sender (SOLOWAY and NIM) of the spammed e-mail messages from the victim recipients. If the recipient opened the e-mail there would be a link to the NIM website. Further, the technique of using the same address in the "from" and "to" field of the header was intended to circumvent "spam filters" which are designed to keep spam out of network systems or e-mail "in boxes."

l. One of the victims who purchased the "broadcast email product" was M.F. of Cerritos, CA. M.F. first became aware of SOLOWAY and NIM's website after receiving multiple unsolicited commercial e-mail advertisements for the same. M.F. was running a small on-line business, and thought that his business would realize the benefits

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advertised in the NIM website if he purchased their software "product." Relying on the false and fraudulent material representations made on the NIM website, M.F. purchased the "Silver Emailing Package Software" from SOLOWAY and NIM on May 30, 2006, for $195.00 plus shipping and handling. The "email distribution product" was delivered via Fed Ex from SOLOWAY to M.F. on or about June 2, 2006. After using the `product" for approximately five days, M.F.'s Internet Service Provider first threatened to, and then did shut off his internet service, due to transmission of spam, using SOLOWAY'S product. The costs of identifying the problem and the consequences of disconnection from the Internet caused losses to M.F.'s family's business. Without waiting 90 days, M.F. sought a refund of $195 from SOLOWAY and NIM, which was denied. M.F. could not make any followup telephone contact with SOLOWAY or NIM.

m. During calendar year 2005, SOLOWAY received gross revenue from all sources totaling $309,725.00. Although SOLOWAY was required to file an income tax return for 2005, he willfully failed to file an income tax return for 2005 before September 15, 2006, or at any time thereafter.

8. Loss Amount. The parties agree and stipulate that the correct amount of the loss for sentencing purposes will be determined by the Court at the time of sentencing.

9. Restitution. Defendant shall make restitution in an amount to be determined by the Court at the time of sentencing. Said amount shall be due and payable immediately and shall be paid in accordance with a schedule of payments as set by the United States Probation Office and ordered by the Court.

10. Forfeiture. Defendant agrees to forfeit to the United States immediately all of his right, title and interest in any and all property, real or personal, constituting or derived from proceeds traceable to violations of the mail fraud or fraud in electronic mail statutes (18 U.S.C. §§'l 037 and 1341), which are subject to forfeiture pursuant to Title 18,
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United State Code, Section 1037(c)(2), and Title 18, United States Code, Section 981 (a)(1)(C) and Title 28, United States Code, Section 2461(c), which may include some or all of the following assets:

a. Money Judgment
The sum in the amount determined by the Court, at the time of sentencing, representing the amount of proceeds obtained as a result of the offenses charged in the Indictment for which Defendants are jointly and severally liable.

b. Contents of Bank Accounts
The following amount of currency or other monetary instruments credited to or contained in the following account:

1) $5,825.87 contained in West America account; owner: Newport Internet Marketing, account number ****3285.

c. Personal Property
1) 24 pairs of sunglasses with a fair market value of $3,724.34 (detailed inventory contained in Attachment A);

2) 27 pairs of shoes with a fair market value of $7,412.00 (detailed inventory contained in Attachment A);

3) 51 outerware garments with a fair market value of $13,429.00 (detailed inventory contained in Attachment A);

4) 6 pairs of pants with a fair market value of $405.00 (detailed inventory contained in Attachment A);

5) 10 shirts with a fair market value of $780.00 (detailed inventory contained in Attachment A);

6) watch and purse with a fair market value of $575.00 (detailed inventory contained in Attachment A); and

7) electronic equipment with a fair market value of $2,094.00 (detailed inventory contained in Attachment A).

d. Computer
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1) Sony Vaio desktop computer, SN # 3014916, subject to forfeiture as facilitating property under Title 18, United States Code, Section 1037(c)(2).

Defendant agrees to fully assist the United States in the forfeiture of the listed assets and to take whatever steps are necessary to pass clear title to the United States, including but not limited to: surrendering title and executing any documents necessary to effectuate such forfeiture; assisting in bringing any assets located outside the United States within the jurisdiction of the United States; and taking whatever steps are necessary to ensure that assets subject to forfeiture are not sold, disbursed, wasted, hidden, or otherwise made unavailable for forfeiture. Defendant agrees not to file a claim to any of the listed property in any civil forfeiture proceeding, administrative or judicial, which may be initiated.

Defendant further agrees to provide a truthful statement regarding all of his assets, and to make a full and complete disclosure of all assets in which Defendant has any interest or over which Defendant exercises control and those which are held or controlled by a nominee. Defendant further agrees to submit to a polygraph examination on the issue of assets if it is deemed necessary by the United States.

The United States reserves its right to proceed against any remaining assets not identified in this Plea Agreement, including any property in which Defendant has any interest or control, if said assets, real or personal, tangible or intangible, constitute or are traceable to proceeds or facilitated violation of Title 18, United States Code, Section 1037, or are proceeds traceable to violations of Title 18, United States Code, Sections 1341 or 1343.

11. Cooperation with Internal Revenue Service. Defendant agrees to fully cooperate with the Internal Revenue Service and its auditors and agents to determine his income tax liability beginning with calendar year 2005, and continuing with calendar years 2006 and 2007. Defendant understands that this Plea Agreement does not preclude the Internal Revenue Service from assessing and determining any additional civil tax,
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penalties, and/or interest that may be owed by Defendant. In addition, Defendant understands that he is required to pay the costs of the tax offense prosecution for Count 26.

12. Acceptance of Responsibility. The United States acknowledges that Defendant has assisted the United States by notifying the authorities of his intention to plead guilty, thereby permitting the Court to allocate its resources efficiently. If at the time of sentencing, the United States remains satisfied that Defendant has accepted responsibility, then it will recommend a sentence that takes this acceptance of responsibility into consideration. Defendant understands and agrees that the United States will base its recommendation on factors set forth in the United States Sentencing Guidelines, including Section 3E1.1.

13. Non-Prosecution of Additional Offenses. As part of this Plea Agreement, the United States Attorney's Office for the Western District of Washington agrees to dismiss the remaining counts of the Second Superseding Indictment at the time of sentencing, and not to prosecute Defendant for any additional offenses known to it as of the time of this Agreement that are based upon evidence in its possession at this time, or that arise out of the conduct giving rise to this investigation. In this regard, Defendant recognizes that the United States has agreed not to prosecute all of the criminal charges that the evidence establishes were committed by Defendant solely because of the promises made by Defendant in this Agreement. Defendant acknowledges and agrees, however, that for purposes of preparing the Presentence Report, the United States Attorney's Office will provide the United States Probation Office with evidence of all relevant conduct committed by Defendant.

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14. Waiver of Appeal. Defendant is aware that 18 U.S.C. § 3742 gives the right to appeal the sentence to be imposed, and that other federal statutes give Defendant the right to appeal other aspects of the conviction. In consideration of the United States's agreement to dismiss the remaining counts of the Second Superseding Indictment, and not to prosecute Defendant for additional offenses. Defendant knowingly and voluntarily agrees to waive the following rights:

a. The right, conferred by 18 U.S.C. § 3742, to appeal the sentence imposed by the Court;

b. The right to appeal any aspect of Defendant's conviction, including any pretrial suppression matters or other pretrial dispositions of motions and other issues; and

c. The right to bring any collateral attack against Defendant's conviction or sentence, except as it may relate to the effectiveness of legal representation.

15. Statute of Limitations. In the event that this Agreement is not accepted by the Court for any reason, or Defendant has breached any of the terms of this Plea Agreement, the statute of limitations shall be deemed to have been tolled from the date of the Plea Agreement to: (1) 30 days following the date of non-acceptance of the Plea Agreement by the Court; or (2) 30 days following the date on which a breach of the Plea Agreement by Defendant is discovered by the United States Attorney's Office.

16. Post-Plea Conduct. Defendant understands that the terms of this Plea Agreement apply only to conduct that occurred prior to the execution of this Agreement. If, after the date of this Agreement, Defendant should engage in illegal conduct, or conduct that is in violation of his conditions of release (examples of which include, but are not limited to: obstruction of justice, failure to appear for a court proceeding, criminal conduct while pending sentencing, and false statements to law enforcement agents, the Pretrial Services Officer, Probation Officer or Court), the United States is free under this.
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Agreement to seek a sentence that takes such conduct into consideration. Such a sentence could include a sentencing enhancement under the United States Sentencing Guidelines or an upward departure from the applicable sentencing guidelines range.

17. Voluntariness of Plea. Defendant acknowledges that he has entered into this Plea Agreement freely and voluntarily, and that no threats or promises, other than the promises contained in this Plea Agreement, were made to induce Defendant to enter these pleas of guilty.

18. Completeness of Agreement. The United States and Defendant acknowledge that these terms constitute the entire Plea Agreement between the parties. This Agreement only binds the United States Attorney's Office for the Western District of Washington. It does not bind any other United States Attorney's Office or any other office or agency of the United States, or any state or local prosecutor.

Dated this 14th day of March, 2008.

ROBERT ALAN SOLOWAY
Defendant

Richard J. Troberman
Attorney for Defendant

Robert J. Wayne
Attorney for Defendant

Carl Blackstone
Assistant United States Attorney

Kathryn A. Warma
Assistant United States Attorney

Attachment	Date	Size
PleaAgreement.pdf	03/20/08 9:59 am	553.14 KB
ConsentToPlea.pdf	03/20/08 9:59 am	39.36 KB
ReportRecommendationPlea.pdf	03/20/08 10:00 am	29.4 KB