One of the gravest allegations against both StubHub and Viagogo is that the two secondary platforms [now under the same ownership] facilitate criminal enterprise through the reselling of tickets and then deliberately look the other way, or show a complete lack of curiosity about who their clients are on the selling side and where the volumes and volumes of ticket on offer might have come from.
At The DAIMANI Journal we have covered the various allegations extensively as part of our reporting on Viagogo’s purchase of StubHub.
Thanks to the rapacious conduct of Viagogo in particular, the secondary ticket market has become a high-profile bipartisan political issue in the UK. So much so that Claire Turnham, who founded the Facebook group Victim of Viagogo in 2017 was awarded an MBE in the 2019 New Year’s Honours list for services to consumer rights. So bad has been Viagogo’s conduct that there were six Victim of Viagogo box office windows at Wembley for a series of Ed Sheeran concerts in 2018.
And in February this year, just as the CMA was considering whether to make a formal investigation into ‘Stubagogo’, two ticket touts, who made more than GBP11m through Viagogo and other online selling platforms, were convicted of fraud and jailed for a total of six and a half years.
The extent of StubHub’s lack of curiosity about criminal enterprise facilitated over their sales platform is laid bare in the case of two Chicago White Sox employees who pled guilty in federal court yesterday. Both were key players in a scheme with a ticket broker that sold thousands of tickets to the Sox’s baseball games, costing the team about USD1 million. All the tickets were sold over StubHub; no other sales platform was used.
James Costello, 67, and William O’Neil, 51, who were in the White Sox’s ticket-selling team, admitted their crimes during hearings held by videoconference due to the coronavirus pandemic. Costello pleaded guilty to wire fraud, and O’Neil admitted he lied to the FBI who became involved after a tip-off from a White Sox vice president.
Still outstanding are eleven counts of wire fraud against the third defendant in the case, prolific ticket broker Bruce Lee. Lee also faces two counts of money laundering and will face trial on January 25.
The plea agreements for Costello and O’Neil point to their cooperation with prosecutors in the case against Lee. Their sentencing hearings will be delayed until their cooperation is complete.
A 20-page indictment that became public in January alleged that Lee made US$ 868,369 by fraudulently selling 34,876 tickets during the four baseball seasons between 2016 and 2019 baseball.
The full indictment can be downloaded here.
Costello and O’Neil, as employees in the team’s ticket office, generated thousands and thousands of complimentary and discount tickets — but without the required vouchers. These were then passed to Lee in exchange for cash. Costello, who allegedly collected more than USD100,000 from Lee, used other employees’ ID codes to avoid detection as he accessed White Sox Ticketmaster computers. He eventually recruited O’Neil to help with the scheme.
Schneider said O’Neil lied to FBI agents investigating the scam in March 2019, telling them he’d never given tickets to Lee without the knowledge and consent of the White Sox.
It was Lee who had the account on StubHub, allegedly selling 6,323 tickets during the 2016 baseball season, 17,408 during the 2017 season, 11,115 during the 2018 season and 30 in the run-up to the 2019 season. The tickets were sold below face value in the belief that that would help conceal the source of the tickets, according to the indictment.
However, court records that became public last October show a White Sox senior vice president approached the FBI in October 2018 and reported Lee.
The Sox’s data analytics team had flagged him as a StubHub seller who had ‘sold more White Sox tickets than anyone else by a substantial margin.’ The same analysis showed that more than 96 percent of his ticket sales involved complimentary vouchers, meant for friends and family of the players, youth groups, commercial sponsors and others. They are not meant for sale.
StubHub’s complete lack of curiosity about what was occurring on the sales platform can be seen from the fact that Lee allegedly sold 11,000 tickets during the 2018 season while, according to the Sun-Times, the next most successful three sellers on StubHub sold just 129, 113 and 108 tickets, respectively, across the whole season.
According to Chicago Tribune reporting, the federal investigation isn’t the first time Lee has found himself in trouble over illegal ticket sales, court records show. In 2007, Lee pleaded guilty in Cook County court to a misdemeanour count of ‘selling tickets not in a box office’ and was sentenced to a day in jail, records show. On two other occasions in 2007 and 2008, he was charged with ticket-related offences, but both cases were dropped.
For those of us who follow this secondary market issue closely, the involvement of the FBI, a blizzard of federal criminal charges against a StubHub seller and StubHub’s own lack of curiosity over four whole seasons would normally spell the end of a commercial association.
But as of this morning StubHub is still listed on Major League Baseball’s website as the official fan to fan marketplace of the White Sox.
