Bloomberg News

‘Wiseguy’ Owners Avoid U.S. Prison in Ticket-Scalping Case

June 09, 2011

(Updates with Ticketmaster statement in 15th paragraph.)

June 9 (Bloomberg) -- Two men avoided prison after pleading guilty earlier to conspiring to evade computer security by buying and reselling more than 1 million seats for events such as Bruce Springsteen concerts and the Rose Bowl football game.

Kenneth Lowson, 41, and Kristofer Kirsch, 38, were sentenced today in federal court in Newark, New Jersey, to two years of probation and 300 hours of community service. They admitted making more than $25 million by illegally cutting ahead of the public to buy premium seats through vendors including Live Nation Entertainment Inc.’s Ticketmaster Entertainment Inc.

Lowson and Kirsch, two Los Angeles men who co-owned Wiseguy Tickets Inc., pleaded guilty to conspiracy to commit wire fraud and gain unauthorized access to protected computers.

A Wiseguy computer programmer, Joel Stevenson, 38, of Alameda, California, pleaded guilty to a misdemeanor computer crime. U.S. District Judge Katharine Hayden sentenced him to one year of probation.

“I’m pleased,” said Lowson’s attorney Mark Rush after the hearing. “The facts here straddled criminal and civil law. There was no amount of loss here. The secondary ticket market is legal and thriving in this country.”

Hayden also ordered Lowson to forfeit $1.225 million.

Under a plea deal last November, Lowson and Kirsch faced as long as two years in prison. Stevenson faced as long as one year. Hayden said prison was too severe a punishment, and the law was too unsettled.

One Fugitive

The three men were initially charged in February 2010 with a fourth man, Faisal Nahdi, who remains a fugitive.

They pleaded guilty to a conspiracy charge in a 43-count indictment, admitting that they fraudulently bought prime seats to concerts by Springsteen, Miley Cyrus, Bon Jovi, Barbra Streisand, Billy Joel and Kenny Chesney.

They admitted fraudulently buying tickets to the 2006 Rose Bowl and the 2007 Major League Baseball playoffs at Yankee Stadium. They admitted buying almost half of the 440 best general admission floor seats to a July 2008 concert by Springsteen at Giants Stadium in East Rutherford, New Jersey.

Lowson and Kirsch admitted they defeated computer systems that barred automated programs from buying tickets sold on a first-come, first-served basis.

By working with programmers in Bulgaria, California-based Wiseguy Tickets sidestepped technology known as CAPTCHA, which required users to read, then retype, distorted images of letters and numbers to buy tickets, Lowson and Kirsch admitted. They also evaded audio CAPTCHA challenges for the visually impaired.

Tenths of Seconds

By getting around CAPTCHA challenges in tenths of a second, the defendants sped up the purchasing process when other consumers were locked out of the primary ticket market, according to prosecutors.

Rush said that Lowson recently completed a four-month residential alcohol treatment program. He works now for a manager of employee benefits for small and midsize companies, Rush said.

Ticketmaster issued a statement thanking the authorities “for bringing these criminals to justice.”

“Ticket-scalping has moved from back-alley transactions into a multibillion-dollar industry,” a company spokesman, Trevor Francis, said by e-mail. “Prosecuting the Wiseguys represents a victory for fans, especially those fans that have paid the astronomical price every time scalpers have used their sophisticated tools or bots to game the system.”

The case is U.S. v. Lowson, 10-cr-114, U.S. District Court, District of New Jersey (Newark).

--Editors: Mary Romano, Glenn Holdcraft

To contact the reporter on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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