FBI "CAPTCHAs" Scalpers Who Hacked Security Codes

Computer hackers engaged in $25 million fraud, indictment says

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    NEWSLETTERS

    AP

    Those squiggly letters that can be almost impossible to read when you buy tickets or some other items online have apparently met their match with some West Coast hackers.

    The U.S. Attorney in Newark, N.J. announced the arrests of four scalpers from California who allegedly defeated the system Ticketmaster uses -- "CAPTCHA" -- and engaged in a $25 million fraud.

    "CAPTCHA" is a cyber security system where you have to type in a match of letters and/or numbers from a distorted or garbled display.

    The intention is, in the case of Ticketmaster, to restrict sales to a concert or other event to, usually, no more than two or four tickets per customer.

    The U.S. Attorney's office says that four individuals who, through their company called "Wiseguys," engaged in a computer hacking scheme to buy and resell more than 1.5 million highly coveted tickets to events nationwide, including tickets to performances by Bruce Springsteen and Hannah Montana, the 2006 BCS Championship Game, and 2007 Major League Baseball playoff games at Yankee Stadium.

    U.S. Attorney Paul Fishman said the tickets cost consumers an average of $30 a piece, with some premium seats going for more than $1,000, before they were turned over to a regular ticket broker at inflated prices.

    The indictment was unsealed with the surrender of three of the defendants, Kenneth Lowson, 40; Kristofer Kirsch, 37; and Joel Stevenson, 37, Monday morning in Newark. Faisal Nahdi, 36, was also charged in the indictment. All four are from California. 

    According to the indictment, Wiseguys employed 10 to 15 people between 2002 and January 2009. The company allegedly deployed a nationwide computer network that opened thousands of simultaneous Internet connections from across the United States, impersonated thousands of individual ticket buyers and defeated online ticket vendors' security systems.

    Wiseguys then sold the tickets that it bought fraudulently over the Internet to ticket brokers in New Jersey and elsewhere, who in turn sold the tickets to the general public, the indictment says. The company allegedly profited from the scheme by charging its ticket brokers a percentage mark-up over the face value of the tickets it obtained.