`Wiseguys' Ask U.S. Judge to Dismiss Scalping Charges

Three men accused of beating computer security to buy and scalp 1.5 million seats for events such as Bruce Springsteen concerts asked for dismissal of charges they say seek to turn lawful activity into crimes.

The men, dubbed the “Wiseguys” because they ran Wiseguy Tickets Inc., claim U.S. prosecutors misapplied the Computer Fraud and Abuse Act and wire fraud statute to charge them with illegaly getting ahead of the public to buy premium seats through Ticketmaster, Live Nation Entertainment Inc., Telecharge and other vendors.

The indictment is “a naked effort to punish legal conduct under federal law -- the resale of tickets for events -- by using the Computer Fraud and Abuse Act (‘CFAA’), a statute that has nothing to do with so-called ‘ticket scalping,’” lawyers for the men said in a July 2 motion in federal court in Newark, New Jersey.

Prosecutors claim that after buying tickets on a first- come, first-served basis, the defendants resold them making more than $28.9 million in profit from 2005 to 2008. They were accused of buying 220 of the 440 best seats offered to the public for a Springsteen concert at Giants Stadium in East Rutherford, New Jersey, on July 27, 2008.

Defendants

Kenneth Lowson, 40, Kristofer Kirsch, 37, and Faisal Nahdi, 46, all of Los Angeles, were named with Joel Stevenson, 37, of Alameda, California, in an indictment made public March 1. Nahdi, who is outside the U.S., was never arrested or appeared in court. They were indicted again on April 20. Lowson, Kirsch and Stevenson, who pleaded not guilty on May 4, filed the motion asking U.S. District Judge Katharine Hayden to throw out the case.

Rebekah Carmichael, a spokeswoman for Paul Fishman, the U.S. attorney in New Jersey, declined to comment and said prosecutors will respond in writing by the Aug. 2 deadline.

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

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, the indictment charged.

In their filing, defense lawyers said prosecutors seek to criminalize breaches of contractual terms of service by using automation.

‘Legal Secondary Fraud’

Lawyers led by Lowson’s attorney, Mark A. Rush of K&L Gates LLP in Pittsburgh, said the case isn’t about fraud. Prosecutors, don’t allege the defendants got information restricted from public access, “broke in” to non-public server locations or Web pages, or stole any property or defrauded individual ticket buyers, they wrote in the filing.

Prosecutors said the tickets they illegally bought were for performers such as Miley Cyrus, Barbra Streisand, Kelly Clarkson, Kenny Chesney, Billy Joel and Bon Jovi. Events included seats for the Rose Bowl football game in 2006, baseball playoff games at Yankee Stadium in 2007, the U.S. Open tennis tournament, and a National Football League playoff game between the Philadelphia Eagles and New York Giants in 2009, according to the indictment.

The average resale price was $30 a ticket, Fishman said. The men used aliases, shell corporations and fraudulent misrepresentations to sidestep “virtual queues” that Ticketmaster and other primary ticket vendors offered, prosecutors alleged.

A friend-of-the-court brief in support of the defendants also was filed by the Electronic Frontier Foundation, a non- profit digital civil liberties organization; the Association of Criminal Defense Lawyers of New Jersey; and the Center for Democracy and Technology, a non-profit civil liberties group.

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

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

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