Microsoft has settled its lawsuit with "King of Spam" Scott Richter, with Richter promising to pay the software giant $7 million for sending an estimated 38 billion e-mails a year.

Richter and his online marketing company,, will pay the sum to settle a lawsuit brought again Richter in December 2003. He and his affiliates have also agreed to comply with US federal anti-spam laws and stop sending spam to anyone who does not opt in to receive marketing e-mails.

The settlement depends on the dismissal of bankruptcy cases filed by Richter and his company earlier this year. Richter and OptInBig plan to file for dismissal of those cases later Tuesday.

After refunding its legal costs, Microsoft will pump $5 million of the settlement money back into fighting Internet crime, by providing technical training and forensic assistance to law enforcement staff and developing new technology tools, it said. A further $1 million will provide computers for poor children at community centers in New York state.

Helped by Microsoft, New York attorney general Eliot Spitzer also sued Richter over spam offenses in December 2003. Spitzer settled that case with Richter last July for $50,000.

Microsoft's case, brought in Washington state, accused Richter of sending mass e-mails with misleading subject lines and forged sender addresses in violation of state and federal law. Before mending his ways he sent, or helped others to send, 38 billion unwanted e-mails a year, Microsoft said.

Richter has freely admitted to sending large volumes of unsolicited e-mail and has cheerfully embraced the title of "Spam King". But he has denied breaking any laws, saying his company operated within US regulations including last year's CAN-SPAM Act. As part of Microsoft's settlement, has agreed to three years of oversight.

The case shows that strong partnerships between governments and the private sector are vital for fighting spam and other Internet problems, Brad Smith, Microsoft's general counsel, said in a statement Tuesday. "This one legal victory will not end spam, but it is a relief to know that the magnitude of spam attacks need no longer be measured on this particular Richter scale," he said.