The software giant filed a lawsuit against Richter and his company OptInRealBig.com in December 2003, when he was ranked one of the top spammers in the world.
Under the terms of the settlement, Richter and his company must, in addition to paying damages, comply fully with all federal and state anti-spam laws, including the US Can-Spam Act.
Microsoft said that it will use $5m of the settlement to expand its global internet safety partnerships with governments and law enforcement agencies through technical training, investigative and forensic assistance, and the development of technology tools.
The company has pledged an additional $1m to provide many community centres in New York state with broader access to computers for underprivileged children and adults through Microsoft's Unlimited Potential Programme.
Richter claimed today that he had changed his email practices in part because Microsoft and the New York Attorney General sued him in December 2003.
"In response to Microsoft's and the New York Attorney General's lawsuits, we made significant changes to OptInRealBig.com's emailing practices and have paid a heavy price," he said.
Brad Smith, senior vice president and general counsel at Microsoft, added: " When we filed this action Mr Richter was listed as one of the top three spammers in the world.
"Because of this litigation Mr Richter has fundamentally changed his practices and forfeited ill-gotten gains. Microsoft looks forward to a permanent change in Mr Richter's practices."
Under terms of the settlement, and to ensure compliance, Richter and his company have agreed to submit to three years of having their email operations monitored.
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