Ticketmaster has agreed to a $ 10 million fine after federal prosecutors said the company used illegally obtained passwords to hack into competing CrowdSurge’s computer systems to harm their business, according to the Department of Justice and News.
The massive fee is part of Ticketmaster’s deferred prosecution agreement for a five-count criminal investigation into computer intrusion and fraud, according to a statement from the U.S. Attorney’s Office on Wednesday.
The case stems from former employee Zeeshan Zaidi, head of Ticketmaster’s Artist Services division, who pleaded guilty in October 2019 to charges of conspiracy to commit computer hacking and wire fraud in the scheme. According to news reports, Zaidi was the supervisor for Stephen Mead, a former CrowdSurge CEO.
“Ticketmaster employees have repeatedly – and illegally – accessed a competitor’s computers without authorization using stolen passwords to illegally gather business intelligence,” said Seth DuCharme, acting U.S. Attorney for the Eastern District of New York, in the statement. ‘Furthermore, the employees of Ticketmaster held a’ whole ‘section where the stolen passwords were used to gain access to the victim’s computers, as if it were an appropriate business tactic. Today’s resolution shows that any company that obtains a competitor’s confidential information for commercial gain, without authorization or consent, would expect to be held accountable in federal court. ”
A request for comment to Ticketmaster was not answered Thursday. “Ticketmaster terminated Zaidi and Mead in 2017 after their behavior came to light,” Ticketmaster said in an email to Billboard. “Their actions are contrary to our corporate policies and contrary to our values. We are glad that this matter has now been resolved. ”
While the DOJ did not identify the name of the contestant, numerous news reports said it was DUMBO-based CrowdSurge, where Mead worked from 2010 to 2012.
According to Crunchbase, CrowdSurge handled ticket sales for artists such as Alicia Keys, Arcade Fire, Jack White, Macklemore and Ryan Lewis, Paul McCartney and The xx.
Mead, who was hired by Ticketmaster’s parent company Live Nation in 2013, a year after leaving his job at CrowdSurge, retained information on accessing CrowdSurge’s internal concept of ticket websites, the DOJ said.
Variety reports that ‘Mead stored 85,000 company documents on his laptop after leaving his job as general manager of US operations for CrowdSurge. These documents included confidential business plans, strategic and financial information, contracts, client lists, and dozens of usernames and passwords for confidential CrowdSurge tools. ”
Despite signing a severance agreement in which he agreed to maintain the confidentiality of CrowdSurge systems, Mead used his access to monitor their running internal websites to “choke” the competition and to one of ( to steal their signature clients. , ”According to the DOJ.
In 2014, Mead sent an email to Zaidi and a second Ticketmaster driver with multiple sets of usernames and passwords to access one of CrowdSurge’s internal products. He ‘encouraged the drivers to’ shield the hell out of the system ‘, but also warned:’ I must stress that it has access to a [victim company] tool I will be careful what you click as it is best not to click [to] give away that we sneak around, ” reads the statement from DOJ.
In 2014, a senior executive of Live Nation asked Mead to use his access during demonstrations during a company meeting in San Francisco, where Mead reported to the CrowdSurge systems in front of at least 14 employees with his reserved username and password access, DOJ said. . Mead was promoted in 2015 and given a raise for his work.
CrowdSurge was merged with Songkick in 2015, terminating Mead’s access to internal systems, reports the Verge: “In 2017, Songkick sued Live Nation and Ticketmaster for violating antitrust laws. But he soon sold or closed his services, and in 2018 he accepted a $ 110 million settlement – plus an unknown amount to sell some of his remaining assets to Ticketmaster. ‘
In addition to the criminal fee, Ticketmaster must also, under the terms of the deferred prosecution agreement, maintain a compliance and ethics program and report to the U.S. Attorney’s Office for three years. If the company violates the terms of the agreement, the U.S. Attorney’s Office will prosecute Ticketmaster on charges of computer intrusion and wire fraud.