Oleg Nikolaenko, a 23-year old Russian, has pleaded not guilty to federal charges that he is the mastermind behind a notorious botnet, dubbed Mega-D, that controlled a network of infected computers and generated some 10 billion spam e-mails daily, or a third of the world's total.

Nikolaenko was arrested last month by Federal Bureau of Investigation (FBI) agents and is being held without bail.

According to the criminal complaint, Nikolaenko, dubbed the 'Spam King' by the authorities, masterminded a worldwide spam network with the help of infected computers.

The complaint said the FBI and the Federal Trade Commission (FTC) agents have been tracking Nikolaenko's activities since at least 2007 after being tipped off by a seller of counterfeit Rolex watches in Kansas City, who said he had spent over $2 million with spammers to sell his products. The person was arrested for selling fake watches and had pleaded guilty to creating spam marketing.

The complaint said the trail led the agents to a co-conspirator in Australia, who controlled a digital currency account with a company registered in the British Virgin Islands and, finally, Nikolaenko.

According to FBI Special Agent Brett Banner, who specializes in Internet crimes, the authorities, armed with subpoenas from a grand jury, got Nikolaenko's Google mail records and found executable files like the malware that ran the botnet.

In November 2009, a California network security company called FireEye succeeded in crippling the botnet by persuading U.S.-based Internet service providers (ISPs) to shut down the computers that were used to command and control more than 500,000 infected private computers, including about 135 in Wisconsin.

The action helped Mega-D's output, which had already been cut to about 12 percent of all spam - nose-dive to less than 0.1 percent within a period of three days.

However, around the same time, Nikolaenko, who was visiting Las Vegas to attend a specialty automotive show, returned to Russia early to repair the botnet. According to Banner, he was successful because by the end of 2009, Mega-D had rebounded so well that it accounted for 17 percent of worldwide spam.

The agents, however, did not give up. They kept on tracking Nikolaenko's movement and on Nov. 4 when he returned from Russsia to attend an automotive show in Las Vegas, he was arrested.

Nikolaenko was indicted on Nov. 16 on one count of violating the 2003 federal CAN-SPAM Act.

Last Friday, Nikolaenko was presented before a federal court judge in Milwaukee and has pleaded not guilty to his charges.

However, Nikolaenko is being held in federal custody without bail. Assistant U.S. Attorney Erica O'Neil had asked the federal judge that Nikolaenko be detained because he has no ties to the United States and would be a flight risk.

If convicted, Nikolaenko could face prison for up to five years. His attorney, Christopher Van Wagner of Madison, claims he is innocent and has a rigorous defense.