NEWARK — It’s either the cyber crime of the decade in the entertainment ticket industry or a sophisticated and perfectly legal business that accomplishes what fans wanting front-row seats did for decades by cutting in line or sleeping outside box offices.

Three men from California pleaded not guilty in federal court in Newark today to illegally buying premium tickets for concerts and sporting events by outsmarting online security systems.

In a 43-count indictment, federal prosecutors allege they committed a host of crimes: including conspiracy, wire fraud and computer fraud.

Lawyers for the defendants, who ran a company called Wiseguy Tickets, have argued they simply devised a lightning-fast way to buy tickets for brokers, who resold them to fans.

“Congress has not yet legislated that ticket brokering is illegal,” said Mark Rush, an attorney for Wiseguy’s founder, Kenneth Lowson, 40, of Los Angeles.

Authorities say the firm used a massive computer network to overwhelm the websites of Ticketmaster and other companies at the precise moment tickets went on sale. They bought only the best seats in the house and targeted the most sought-after shows and sporting events, including NFL playoff games and concerts by Phish, Bruce Springsteen and Dave Matthews Band, according to the indictment.

Several new details emerged about the men during today’s hearing before U.S. District Judge Katharine S. Hayden. Lowson was first contacted by authorities about the investigation at least 14 months ago, his lawyer said. And he met his co-defendant and fellow Wiseguy owner, Kristofer Kirsch, 37, playing Little League baseball in the fourth grade, Rush said.

Thirty years later, the two were at the helm of Wiseguy, snatching up tickets and selling them at big mark-ups to brokers, who in turn sold them at an even higher price to fans, authorities said. The company moved 1.5 million tickets between 2002 and 2009, making $25 million in profits, authorities said

The men, however, are not charged for reselling the tickets. It’s how they bought them, authorities say. Wiseguy Tickets is accused of enlisting a programmer from Bulgaria to create an army of online drones to circumvent security systems and enter ticket-selling web sites ahead of fans. When Ticketmaster and other companies beefed up security, Wiseguy devised new ways to break through, authorities said.

The moves violated several computer fraud laws, according to the indictment.

The company, incorporated in Nevada and headquartered in California, amassed 100,000 different internet addresses, hundreds of emails and an untold number of credit cards to make it appear that each of those automated drones was an individual ticket buyer, authorities said. The firm also operated under a variety of names, including Seats of San Francisco and Platinum Technologies.

Authorities say all those names and addresses were part of a massive scheme to thwart rules limiting who was really buying tickets from the website. That, according to the indictment, amounts to conspiracy and wire fraud.

Lowson and Kirsch entered their not-guilty pleas together with one of the company’s first employees, a computer programmer named Joel Stevenson, 37. A fourth company official, Faisal Nahdi, 36, is expected to surrender, authorities said. His lawyer, John Azzarello, was unavailable for comment today.

Lowson remains in custody pending a bailing hearing today. Assistant U.S. attorneys Erez Liebermann and Seth B. Kosto have argued he is apt to flee if released because he has millions of dollars in assets offshore and has discussed becoming an Indonesian citizen.



Lowson's lawyer has compared Wiseguy's business model to a large-scale modern-day version of paying someone to camp outside a box office to buy premium seats for a big show.

But that single sleep-deprived guy waiting at the box office would only be allowed to purchase a handful of tickets. According to the indictment, Wiseguy scooped up seats by hundreds. The firm grabbed nearly 1,500 of the best seats for three Bruce Springsteen shows at Giants Stadium in 2007. That’s hundreds of times more tickets than any individual would be allowed to buy under the rules of Ticketmaster, now called Live Nation Entertainment.

Kirsch’s lawyer, John P. McDonald, said violating Ticketmaster rules, or terms of service, does not necessarily make a crime. “I’m not so sure the indictment states a crime at all,” he said.