Hacking for Tickets
March 12, 2010
It’s not ticket scalping. But a case that the FBI’s Newark Field Office has been working on involves hacking and wire fraud. And so the office decided to have two different squads investigate together.
Mr. Schiff: Hello. I’m Neal Schiff, and welcome to Inside the FBI, a weekly podcast about news, cases, and operations. It’s not ticket scalping. But a case that the FBI’s Newark Field Office has been working on involves hacking and wire fraud. And so the office decided to have two different squads investigate together.
Mr. Frigm: “It was a cooperative effort between our securities fraud/white collar crimes squad, and the cyber squad.”
Mr. Schiff: FBI Special Agent Phil Frigm in Newark, who says the case involves a nearly $29 million scheme involving hacking and fraud.
Mr. Frigm: “The management recognized, I think correctly, that the use of cyber tools is becoming much more prevalent. The bad guys out there are using cyber simply as another tool in their tool belt, if you will, to commit all types of fraud and white collar-type crimes. Several investigators from both squads were paired up for specific investigations, and more specifically, in my case; I was paired up with another agent, Greg Yankow. Greg and I worked together for about the last 18 months or so on a specific case involving the fraudulent purchase and resale of tickets on the secondary market to brokers for concert tickets, sporting event tickets, that type of thing.”
Mr. Schiff: Frigm says there are four subjects in the case.
Mr. Frigm: “Of those four individuals, three have surrendered to the FBI in Newark, and were arraigned. All three of them are currently out on bail. The fourth is currently traveling out of the country and we anticipate that he is going, based on his counsel’s word, he’s going to be surrendering to us on a future date. The charges that they are specifically facing are essentially violations of the Computer Abuse Fraud Act, which is 18 United States Code, Section 1030 specifically, and wire fraud is the other charge they are facing, and conspiracies for both the computer abuse and wire fraud as well.”
Mr. Schiff: Frigm says the alleged conspirators used speedy computers to process requests for tickets before John Q. Public could buy tickets from their regular vendors.
Mr. Frigm: “The simplest way to explain it is, that these guys were, against the wishes of online ticket vendors—ticket vendors have made it very known, both on their websites and public statements, and the artists have made it known as well, that the people they want to be buying the tickets are you and I, the individual fans. Our subjects didn’t adhere to that, and what they were able to do was to create a very complex computer network system that allowed them to use the speed and processing power of computers distributed all over the world to essentially buy those tickets much, much faster than any human could possibly hope to accomplish via online purchasing systems. The other thing that is important to remember is the way tickets are distributed in this way, not only were they taking hands out of the people that were trying to buy online, but those same tickets were the ones that were sometimes available via the box office at the venues. Even the people that walked up to stand in line at a specific venue, before they could ever get to those ticket windows, the tickets they would hope to buy were already purchased online by our subjects. The real innovation, if you will, that these guys put to this, is the use of this extremely complex computer system that allowed them the speed, like I said, that is much faster than a human could ever do it.”
Mr. Schiff: Certainly those of us who try and get tickets online or at the box office aren’t happy when tickets are sold out in a very short amount of time.
Mr. Frigm: “If you were to go out and read and look in a newspaper, as I am sure many people have, that public sentiment is that the system isn’t fair. People are not able to go out and buy these tickets, and I think that this case goes to show that there’s a good reason for that. Our subjects used years of knowledge of the ticketing industry; they used years of knowledge of computer programming and implementation that allowed them to, for lack of a better term, game the system. It allowed them to use these cyber tools to commit these frauds and getting these tickets much faster and much more successfully than the average fan would be able to do it.”
Mr. Schiff: Special Agent Greg Yankow is on the white collar squad at the FBI’s office in Newark. He took this complex case from the criminal investigative side.
Mr. Yankow: “Going out and talking with people and gaining information from interviewing people, reviewing accounting records, reviewing bank records, tracing money from its source to whatever it may be used for throughout the time that the investigation is looking at.”
Mr. Schiff: Yankow says it’s pretty simple when you have to follow the money from a starting point to the other end.
Mr.Yankow: “It just takes time. There are no shortcuts, you have to do the work. It can start out as simple as finding a bank account or finding a check that was used as part of a crime, or that’s discovered as part of an investigation into criminal activity. Then starting with one bank account number and using federal grand jury subpoena powers, you can locate almost anything about an individual and what they are using their money for. For example, this isn’t case-specific, but in general terms, you can take a bank account number found on a check that was deposited from money that you know was stolen. You can take that account number, and through federal grand jury subpoena powers, subpoena all the bank records for that particular account number. When you get those bank records, that money is going to have been used usually from other accounts or have been received from other sources, in the form of deposits or wires, so then you take another step and then you subpoena that information for those accounts that are mentioned. You just keep going step by step by step, and eventually, it’s going to lead back to someone and that’s where we usually get our break.”
Mr. Schiff: Back to Special Agent Frigm. He says there are some very popular concerts in which the public had trouble buying tickets.
Mr. Frigm: “The indictment itself contains some different lists depending on which charges, whether it was computer abuse or fraud, which ones you were looking at. For our purposes, some of the ones that were notable for us that we looked at and focused on, were the Miley Cyrus tour, the 2007 tour. There was a lot of press about that, a lot of people voicing some disgust about the lack of tickets at reasonable prices. Also, the Bruce Springsteen tour, specifically there were three shows he did in July of 2008 at Giants stadium in New Jersey that Newark was obviously concerned with, being that it’s in our territory, the Meadowlands. So we looked at those two concerts. There were also some tickets purchased by our subjects to divisional and serious playoff games for the New York Yankees, I believe in 2007, 2008. The tickets were sold and they purchased tickets to those games in volumes much greater than the average person should be able to.”
Mr. Schiff: Yankow says this particular case involves a lot of transactions and a huge amount of money coming in as revenue.
Mr. Yankow: “The indictment alleges that there were over 1.5 million tickets purchased between 2005 and 2008, with total profits of $29 million during that same time period.”
Mr. Schiff: Eventually there’s going to be a trial as the U.S. Attorney’s office continues working with FBI on this alleged illegal ticket operation. Be careful when you’re buying tickets to shows and concerts and ballgames. Know who the ticket seller is and be sure your ticket is legitimate. If you thing there’s wrong-doing, contact the nearest FBI office. Learn more about cyber and white collar crime investigations on the Internet at www.fbi.gov. That’s our show for this week. Thanks for listening. I’m Neal Schiff of the FBI’s Office of Public Affairs.
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