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US v. Lowson (Oct. 2010 Denial of Motion to Dismiss)

US v. Lowson (Oct. 2010 Denial of Motion to Dismiss)

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Published by: JoeSkocilich on Jul 27, 2011
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Case2:10-cr-00114-KSHDocument53Filed
10/12/10
Page1of15PagelD:962
UNITEDSTATESDISTRICTCOURTDISTRICTOFNEWJERSEYDefendantsCriminalNo.10-114(KSH)UNITEDSTATESofAMERICA
v.
KENNETHLOWSON,
a/kIa"Money",
KRISTOFERKIRSCH,
a/kIa"RobertWoods",
JOELSTEVENSONandFAISALNAHDIOPINIONKatharineS.Hayden,U.S.D.J.
I.
IntroductionDefendantsarechargedwithviolationsoftheComputerFraudandAbuseActandthewirefraudstatutearisingfromanallegedschemetocircumventsecuritymeasuresputinplacebyOnlineTicketVendors(OTVs)inordertobuylargeblocksofticketsmeantforthegeneralpublicandthentore-sellthoseticketsatgreatprofitonthesecondarymarket.Defendantsarguethattheirconductisnotcriminal,andthatinfactthegovernmentseekstocriminalizewhatotherwisewouldbeabreachofcontractactionforviolatingthetermsofserviceforticketsales
onOTVs'websites.Thedefendantsstate,"ThisIndictmentdoesnotseektopunishcomputer
fraud,itinappropriatelytriestoregulatethelegalsecondarymarketforeventticketsalesthrough
anoverreachingprosecution."
(MovingBr.5.)Thegovernmentcountersthatthiscaseis
anythingbutnovel,andthat"[e]achandeverystepofthewayis[a]traditionalfraud...
the1
 
Case2:10-cr-00114-KSHDocument53Filed
10/12/10
Page2of15PagelD:963samethingthatweseeincourteVeryday."(Oralargumenttranscript17:7-11.)Thedefendants,accordingtothegovernment,"liedaboutwhotheywere.Theyliedabouttheirbusinessmodel.Theyliedwhentheyimpersonatedthousandsofindividualticketbuyers.Andtheyliedwhentheyestablishedthousandsoffalseemailaddressesanddomainnames."(Opp'nBr.1.)Theyawninggapbetweenthegovernment'sandthedefendants'positionsisnotlostontheCourt,andithighlightsandechoestensionsinothercourts'viewpointsonwherethelinefallsbetweenwhatiscivillyactionableconduct,andwhatiscriminal.DefendantsnowmovetodismisstheSupersedingIndictment("theindictment").Forthereasonstobediscussed,theCourtdeniesthedefendants'motion.II.LegalStandardAnindictment,ifvalidonitsfaceandreturnedbyalegallyconstitutedandunbiasedgrandjury,"'isenoughtocallfortrialofthechargeonthemerits.'"
UnitedStates
v.
Vitii/o,490
F.3d314,320(3dCir.2007)(quoting
Costello
v.
UnitedStates,
350U.S.359,363(1956))."Anindictmentisgenerallydeemedsufficientifit[](1)containstheelementsoftheoffenseintendedtobecharged,(2)sufficientlyapprisesthedefendantofwhathemustbepreparedtomeet,and(3)allowsthedefendanttoshowwithaccuracytowhatextenthemaypleadaformeracquittalorconvictionintheeventofasubsequentprosecution."
Id.
(quoting
UnitedStates
v.
Rankin,870
F.2d109,112(3dCir.1989))(internalquotationmarksomitted).Whereanindictmentisvalidonitsface,amotiontodismissisappropriateonlyafterthegovernmenthashadanopportunitytopresentitsproofsattrial.
UnitedStates
v.
Forero,
623F.Supp.694,699(E.D.N.Y.1985).Inotherwords,amotiontodismissanindictmentisnota
2
 
Case2:10-cr-00114-KSHDocument53Filed
10/12/10
Page3of15PagelD:964vehicleforasummarytrialontheevidence,
UnitedStates
v.
Winer,
323F.Supp.604,605(C.D.Pa.1971),andanyfactualassertionsrelatedtoachargemustbetestedattrial.
UnitedStates
v.
Bender,
2003WL282184(S.D.N.Y.2003).
Moreover,onoccasionadefendant'slegalcontentionsmaybesoboundupwiththosefactsthatacourtcannotgrantamotiontodismiss.
UnitedStates
v.
Shabbir,
64F.Supp.2d479,481(D.Md.1999).III.TheWireFraudCountsCounts27-36and37-43oftheindictmentchargewirefraudbytheuseofCAPTCHAChallenges(counts27-36)ande-mails(counts37-43).Tochargethecrimeofwirefraudsufficiently,thegovernmentmustallegethreeelementsoftheoffense:
(1)
thedefendants'"knowingandwillfulparticipationinaschemeorartificetodefraud,(2)withthespecificintenttodefraud,and(3)theuseofthemailsorinterstatewirecommunicationsinfurtheranceofthescheme."
UnitedStates
v.
AIHedaithy,
392F.3d580,590(3dCir.2006);
seealso
18U.S.C.
§
1343(2006).Inaddition,theobjectoftheschememustbeatraditionallyrecognizedpropertyright.
AIHedaithy,
392F.3dat590.First,thegovernmentsufficientlyallegesanextensiveschemeinwhichWiseguysknowinglyandwillfullyengagedtodefraudTicketmaster.TheindictmentallegesthatWiseguyscircumventedcomputercodeandsurreptitiouslyobtainedandresoldeventticketsthatonlineticketvendorswouldnototherwiseselltothem.Accordingtotheindictment,defendantswroteautomatedsoftwaretodefeatthevendors'securitymeasures,includingCAPTCHA,byopeningthousandsofconnectionsandusingCAPTCHABotstoquicklysolveCAPTCHAchallenges.(SupersedingIndict.Count1,
n
7,10.)Thedefendantsallegedlyacquiredsourcecodethevendorsusedtoprotecttheirwebsites,createdadatabaseofCAPTCHAchallengesandtheiranswers,andtestedmeansofnavigatingtoticket"BuyPages"withouthavingtoanswer3

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