Four men from a San Francisco company called Wiseguy Tickets Inc. have been indicted in a $25 million online ticket fraud scheme, the US Department of Justice announced today.
The four men -- Kenneth Lowson, 40, Kristofer Kirsch, 37, Faisal Nahdi, 36, and Joel Stevenson, 37 -- have been indicted on conspiracy to commit wire fraud and to gain unauthorized access and exceed authorized access to computer systems, and 42 additional counts of wire fraud; gaining unauthorized access and exceeding authorized access to computer systems; or causing damage to computers in interstate commerce.
Wiseguy Tickets would allegedly bypass online ticketing limitations so they could purchase huge blocks of the best seats for the most sought after concerts, live theater, and sporting events.
Vendors such as Ticketmaster, Tickets.com, MLB.com, and MusicToday do not let ticket resellers and brokers buy bulk tickets online. Instead, access is restricted to individuals who must register their sessions through authentication software such as CAPTCHA, an method where the user must type in the letters he sees in a scrambled onscreen image to enter a site. Mechanisms like this are meant to deter automated ticket purchases.
In 2008, Ticketmaster won a suit against Pittsburgh-based RMG Technologies for selling software that let brokers bypass Ticketmaster's authentication systems and online sales limits.
According to the indictment, Wiseguys Tickets developed a network of so-called "CAPTCHA Bots" with a Bulgarian software developer which gave Wiseguys the ability to buy tons of tickets the moment they went on sale. The company amassed its own database of hundreds of thousands of potential CAPTCHA test answers which the bots could then identify and complete faster than a person could. The group disguised their activities by setting up fake companies, fake domains, and fake email addresses.
With these methods in place, Wiseguys managed to buy 1.5 million tickets, including some of the most notoriously expensive shows around. Wiseguys reportedly bought nearly half of the general admission floor seats for a Bruce Springsteen concert in 2008.
Tickets to Bruce Springsteen shows have been so scarce, and sold at such inflated prices, that the Federal Trade Commission has had to get involved.
In what the FTC called a "bait and switch" maneuver, Ticketmaster was reportedly routing customers to an affiliate site called TicketsNow where it would sell tickets to 2009 Springsteen shows at triple or even quadruple their face value. Still other customers reportedly bought tickets directly from Ticketmaster.com but never got them.
Live Nation and Ticketmaster recently settled with the FTC and agreed to provide full refunds to consumers who bought tickets to 14 Springsteen concerts at dramatically inflated prices.
The "Wiseguys," however, won't get off so easily. Each defendant faces up to five years in prison on the conspiracy charges, and up to 20 years in prison for wire fraud; plus a further $250,000 fine per count of hacking (a.k.a., "gaining unauthorized access and exceeding authorized access to computers").
Copyright Betanews, Inc. 2010