$25 Million Ticket Fraud Scheme Uncovered

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Four men have been indicted in a lucrative online ticket-hacking scheme, in which they were able to obtain tickets to popular concerts, shows and sporting events and resell them at a significant profit.

The employees of Wiseguys Tickets Inc. are alleged to have hacked into the computer systems of such prominent online ticket vendors as Ticketmaster, Tickets.com, MusicToday, and MLB.com. They did so by contracting with sophisticated computer programmers located in Bulgaria, who were able to establish a network of computers that bypassed the safeguards put into place by the online vendors. These computers were able to effectively pose as individual human consumers, yet flooded the online ticket vendors’ websites as soon as tickets for the prime events went on sale. This allowed them to purchase prime seats at the venues—in some cases, as many as half the floor seats which were made available for sale to the general public.

The entertainment events included concerts by Bruce Springsteen and Miley Cyrus, Broadway musicals such as Wicked, and major sporting events, including the 2006 Rose Bowl and 2007 Major League Baseball playoffs. Wiseguys then turned the tickets around, selling them to online brokers at a hefty markup over their face value.

The alleged fraud took place between 2002 and 2009, and netted the perpetrators over $25 million.

A press release from the U.S. Attorney’s office said that the actions of Wiseguys and its employees made it virtually impossible for the average consumer to get a ticket to the events, since, according to the indictment, “tenths of a second could mean the difference between purchasing a seat in the first 10 rows of an event or not being able to see the event at all.”

The four men named in the indictment are Kenneth Lowson, Kristofer Kirsch, Joel Stephenson and Faisal Nahdi. All but Nahdi have surrendered to authorities, while Nahdi, who is out of the country, is expected to surrender in the coming weeks.

According to the indictment, which was unsealed last week, they are charged with conspiracy to commit wire fraud; wire fraud; conspiracy to gain unauthorized access to computer systems; conspiracy to exceed unauthorized access to computer systems; and causing damage to computers in interstate commerce, among other charges. If convicted, they could each face a maximum sentence of five years in prison on the conspiracy charge, as well as 20 years in prison for each charge of wire fraud.

They also allegedly gloated over their fraud, saying that it was “straight domination.”

The suspects will be arraigned later this month.

 

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