Scott Richter, one-time spam king and now legitimate e-mail marketer, has reached an out-of-court settlement with Microsoft, officials said Tuesday.

Richter agreed to pay Microsoft $7 million of the $18.8 million in damages it sought nearly two years ago. The settlement still needs court approval before it can be finalized.

Microsoft plans to reinvest $5 million of Richter's payment into its computer-related crimes division to pay for investigative and technical support. The company will also give $1 million to the state of New York to fund computer skills training at community centers.

The last million will go, in large part, to help pay Microsoft's legal fees attached to the Richter case.

Richter was not available for comment at press time.

Eliot Spitzer, New York attorney general, sued Richter and five other spam outfits for $20 million in 2003. At the same time, Microsoft filed a suit of its own seeking damages of $18.8 million under the CAN SPAM Act on behalf of its Hotmail users.

At the height of his spamming activities, Microsoft General Counsel Brad Smith said Richter was responsible for sending more than 38 million e-mails in a year. The legal victory, he said, will not end spam but make it much harder for spammers to conduct their activities on the scale Richter achieved.

''There is still a long way to go, as legal efforts are being complemented by ongoing technological innovation and consumer education, but this week's announcement is a milestone,'' Smith said in an open letter. ''Thanks to strong enforcement efforts, spam is becoming harder for unlawful characters, and the Internet is becoming safer for all of us.''

Richter has spent the past two years trying to bury the ''Spam King'' moniker he gave to himself years ago and reposition himself as a legitimate online businessman. Where once his company was selling ''SpamKing'' t-shirts, OptInBig now collects opt-in e-mail addresses and markets them to interested businesses.

His move towards legitimacy has taken some time. Two years ago he was known as the third-largest spammer on the planet. And it was only last month that Richter was taken off the Spamhaus Project's Register Of Known Spam Operations (ROKSO) list of the 200 most egregious spammers in the world.

Spamhaus leader Steve Linford made the decision reluctantly by, saying in his post to the news.admin.net-abuse.email (Nanae) newsgroup that ''against the odds he appears to have pulled it off, we have not seen spam from Richter for so many months that his time is up.''

This article was first published on internetnews.com.