Four California men orchestrated a $25 million dollar cyber scheme that manipulated online ticket sites and cheated fans out of seats at thousands of popular sporting events and concerts.
The elaborate operation, which involved hiring computer programmers as far as Bulgaria, allowed the men to snatch up 1.5 million premium seats at concerts by Bruce Springsteen, Miley Cyrus and Bon Jovi, as well as Major League Baseball playoff games at Yankee stadium and the Broadway show, “Wicked” between 2002 and 2009, according to a 43-count federal indictment unsealed by the U.S. Attorney’s Office Monday.
Kenneth Lowson, 40, Kristofer Kirsch, 37, and Faisal Nahdi, 36, of Los Angeles, and Joel Stevenson, 37, of Alameda, were charged with conspiracy to commit wire fraud and to gain and exceed unauthorized access to computer systems.
Authorities said the massive conspiracy run by Wiseguys Tickets, which targeted several events in New Jersey, including concerts and games at Giants Stadium and the Prudential Center, put a spotlight on law enforcement’s ongoing battle against cyber-crime.
“The Wiseguys swarmed the ticket buying market and put themselves at the head of the line,” U.S. Attorney Paul Fishman said at a press conference in Newark.
The four orchestrated an intricately-woven scheme that manipulated ticket sites — including Ticketmaster, Live Nation and Major League Baseball — into selling them the best tickets seconds after the start of an online sale, authorities said.
The operation essentially shut out ordinary fans from purchasing the seats with the best view of the stage or field, and then resold them at a steep markup to price-gouging ticket brokers.
“The public thought it had a fair shot at getting tickets to these events, but what the public didn’t know was that the defendants had cheated them out of that opportunity,” Fishman said.
Fans who were blocked from buying prime seats on online ticket sites were forced to buy tickets with an average mark-up of $30, Fishman said. In extreme cases, the mark-up was as high as $1,000 per ticket, he said.
In July 2008, when tickets went on sale for Bruce Springsteen and the E Street Band at Giants Stadium, Wiseguys was able to purchase and control nearly half of the 440 general admission floor tickets made available to the public for that concert – the tickets closest to the stage.
The investigation began after Bruce Springsteen fans complained that all tickets for the series of shows at Giants Stadium were gone within seconds and immediately listed for resale at steep mark-ups on other sites.
“The federal prosecutors in this case … they’re able to shut down what is a massive illegal scalping operation,” said Rep. William J. Pascrell Jr., D-Paterson. Pascrell has sponsored the BOSS ACT — Better Oversight of Secondary Sales and Accountability in Concert Ticketing — which would require all brokers to register with the Federal Trade Commission and prohibit them from purchasing within the first 48 hours of sales.
“Here is the secondary market rearing its head. Fans knew this a long time ago,” he said. “They knew something was fishy about this. You didn’t have to go to a concert or a sporting event — just listen to your friends getting ripped off.”
The four allegedly hired hackers in Bulgaria to maneuver their way around the CAPTCHA technology that requires ticket buyers to type random, distorted words in order to prove they are not a computer program. The defendants essentially researched thousands of Web sites with CAPTCHA fields and created a database of the random words.
When they bombarded an online ticket site at the start of an online sale, their “bots” were able to fill out CAPTCHA fields faster than humans. They allegedly created and managed hundreds of fake Internet domains and thousands of email addresses to disguise their activities from online ticket sellers, fooling ticket brokers into believing they were buying tickets from individuals, authorities said.
And when online ticket vendors offered pre-sales to fan clubs, Wiseguys employees would register for the fan clubs using fake names and email addresses, authorities said.