A 23-year-old Russian man pleaded not guilty on Friday to charges he operated a spam e-mail business that may have accounted for a third of global spam, and he was ordered held without bail.

Appearing in a U.S. court in an orange prison jumpsuit with a lawyer and an interpreter in tow, Oleg Nikolaenko asked a federal magistrate to consider allowing him a form of house arrest in Milwaukee pending trial.

He is a citizen and resident of Russia and the government believes if released he would seek to return there and the government wouldn't be able to prosecute him, argued prosecutor Erica O'Neil.

Nikolaenko, of Moscow, had no criminal record and had no intention of fleeing, his lawyer Christopher Van Wagner said. His wife was seeking a U.S. visa so she could visit.

U.S. Magistrate Patricia Gorence ordered Nikolaenko held without bail, but said she would consider an arrangement for his release at a scheduling conference to be held December 21.

Nikolaenko was arrested in Las Vegas in early November while attending a car show, and was carrying $4,000 in cash, prosecutors said.

He was charged under a 7-year-old anti-spam law, the CAN-SPAM Act, with running an international network of more than 500,000 virus-infected personal computers, called a botnet, that sent out billions of e-mails. The scheme earned Nikolaenko hefty fees from sellers of fake Rolex watches and male enhancement drugs before it was shut down, according to court documents filed by an FBI cyber-crimes investigator.

When the botnet was operating at full capacity it accounted for roughly one-third of global spam, according to the documents.

Nikolaenko could face up to three years in prison and a $250,000 fine if convicted.

Tracing the sources of the e-mails and shutting down the botnet was a painstaking process because return addresses were fake, the government said. An Australian seller of fake Rolex watches pointed authorities to Internet bulletin boards where marketers linked up with spammers, many of whom are Russian.

A trial for Nikolaenko may be months away because of the voluminous amount of computer-related evidence, prosecutor O'Neil told reporters after the hearing.

(Writing by Andrew Stern)