Ryan Pitylak, 24, and his partners Mark Trotter, Gary Trappler and Alan Refaeli bombarded consumers with millions of emails under at least 250 assumed names, said Greg Abbott, the Texas attorney general.
"This crackdown effectively shuts down one of the worst spam operators and sends a warning to others who would engage in spam emailing for profit," Abbot added.
In a separate settlement with software company Microsoft, Pitylak agreed to a fine of $1 million dollars and promised never again to send false, misleading or unsolicited commercial emails.
The former student, at one point considered the world's fourth worst spammer, sent emails advertising low-cost mortgages, extended auto warranties and debt-counseling services, among other offers.
He received $3 to $7 for every lead he generated when someone clicked on links in his messages.
In an interview with a Texas newspaper after the settlement, he claimed to have turned against spamming.
"This has been a real good learning experience for me," he told the San Antonio Express.
"The settlement has been a bit harsh but I'm happy to move on with my life."