BIG-TIME SCALPER MAKES MILLIONS OFF MUSIC FANS
25 minutes after tickets went on sale for Adele’s London shows, 310 seats were under Julien Lavallee’s control, charged to 15 different names and aliases who appear making the purchases from 12 different locations in 3 countries. In total, there were 112
High-tech ticket reseller goes global with offshore operation in Isle of Man and lavish Montreal office
Seconds after tickets for Adele’s 2016 world tour went live, the global ticket-harvesting industry was already in high gear.
With robotic efficiency that has confounded and outraged millions of music and sports fans, artists and athletes around the world, high-tech scalpers claimed swaths of seats for the singer’s London show within minutes.
Countless hopeful fans standing in ticket lineups or clicking on their computers at home never had a shot at hearing a “Hello” from Adele.
That’s partly thanks to a 30-year-old Montreal ticket reseller named Julien Lavallee who deployed his mysterious — and highly successful — ticket-acquisition method on Adele shows just as he has on events across North America and the U.K. in recent years.
“He’s one of the biggest bad actors that we’ve become aware of,” says Reg Walker, a London-based security consultant for artists, concert venues and festivals in the U.K. “That puts him in a very, very elite class of ticket touts (scalpers).”
Lavallee’s global scalping business is detailed in documents leaked in the Paradise Papers, a massive cache of offshore corporation records obtained by the International Consortium of Investigative Journalists which includes the Toronto Star and CBC-Radio Canada.
Lavallee has grown his business amid escalating international backlash against what lawmakers in the U.K., the U.S. and Canadian provinces, including Quebec and Ontario, call exploitative tactics that are gaming the ticket marketplace and putting entertainment beyond the reach of millions of fans who can’t compete with large-scale scalping operations.
Twenty-five minutes after tickets went on sale for Adele’s London shows, 310 seats were under Lavallee’s control, charged to 15 different names and aliases used by Lavallee and his organization who appear making the purchases from12 different locations in three countries — addresses that mostly point to UPS stores. In total, there were112 transactions costing nearly $52,000, according to ticket sales data from three Adele shows analyzed by the Star and the CBC.
Lavallee and associates scooped up similar blocks of tickets to high-profile U.K. shows by Drake, Ed Sheeran, Jamiroquai and Metallica, the records show, landing 651 seats in total.
Largely unknown in Canada, Lavallee has turned a modest ticket-reselling company registered to his parents’ suburban Boucherville, Que., home address seven years ago into an international operation with an offshore incorporation on the Isle of Man, lavish new office space in Montreal and a multimillion-dollar empire.
There’s more. In a 2015 document filed to offshore law firm Appleby, Lavallee charts out a plan to “enter the United Kingdom secondary market with a partnership with StubHub.”
He forecast ticket purchases worth “500,000” in the first year, doubling that investment with “1m” in sales (the currency is not indicated), a 2015 email shows.
That partnership amounts to what industry insiders call a bombshell: evidence that the world’s largest ticket-reselling website — which bills itself as a middleman helping fans share tickets — is facilitating massmarket scalping.
“I think if that (partnership) statement is true, that puts a whole different dimension on StubHub’s business model,” says Walker, a leading hunter of “touts” in the U.K. “That’s absolutely disgraceful . . . It very clearly implies a partnership between a tout who we suspect is committing criminal offences working in a partnership with StubHub.”
In August, officials with the Competition and Markets Authority (CMA) raided StubHub’s London office and seized records related to the company’s relationships with major ticket touts, the investigation has learned. No charges have been laid. “We understand the CMA investigation is ongoing and therefore await the outcome of this,” StubHub responded in a written statement.
The U.K.’s National Trading Standards is also investigating Lavallee, the Star and CBC have learned, after his Adele ticket-purchasing spree hit the agency’s radar.
“Lavallee on the first day stuck out like a sore thumb,” said one source familiar with the investigation, which is focused on mass purchases of online concert tickets by scalpers.
“What he is doing is sending something — a bot — a robot — into the system,” said the source. “He just bought 100 tickets and he probably bought them in less than an hour. And that is not possible. It’s not physically possible.”
Lavallee declined repeated interview requests. A written statement from his lawyer says Lavallee’s current Montreal-based company, Ticketaria, “carries out all its activities in accordance with the laws and rules of the jurisdictions in which it operates and sells” and is “proud to collaborate with recognized partners whose online platforms aim to connect sellers and buyers who want to sell and buy tickets, associated passes, merchandise or other goods and/or services associated with events.”
Walker says he will call for a criminal investigation in the U.K. based on the leaked documents. The U.K. Computer Misuse Act covers the use of bots in manipulating ticket systems while the country’s consumer protection laws ban professional traders from “falsely representing oneself as a consumer” — in effect, masquerading as different people to obtain tickets for resale. Once tickets are in hand, British law says, online ticket sellers must provide their identity, address or contact details.
Lavallee ticket-purchasing data reviewed by the Star and the CBC for five different British shows reveals hundreds of tickets bought by multiple aliases tied to numerous false addresses.
StubHub officials declined repeated requests for an interview.
In a written statement, a spokesperson said: “StubHub operates an industry-leading trust and safety operation that has a long history of working with law enforcement to help identify and work toward eliminating any fraudulent or illegal activity on our site. While thousands of transactions occur on StubHub every day, far less than 1 per cent of these transactions run into an issue.”
StubHub, whose stated mission is to “help fans find fun” by enabling “fans to buy and sell tickets,” is well aware of Lavallee’s use of its website for his bulk reselling business, says Walker.
“The staff at StubHub told me that he was one of their biggest global resellers. What was also paradoxical is that I made StubHub aware that we suspected that Lavallee was committing offences in the U.K. to harvest tickets. That would make the tickets criminal property and . . . cause them problems legally.”
The company’s response left Walk- er puzzled: “They said please report it to law enforcement and they’ll be happy to co-operate,” he recalls. “I think it’s the most polite way I’ve ever been told to go away . . .
“If I was operating a website and somebody came to me and said I believe this person is acquiring this property criminally and reselling it through your site, I would want to know about it.”
Walker says the company’s reaction makes more sense in the context of the new leaked documents that show Lavallee’s “importance within their business.” StubHub officials “didn’t want to know anything about” allegations of criminality, he says.
In its response to questions, StubHub never used Lavallee’s name nor offered comment on the Montreal scalper.
Lavallee is just one high-volume scalper in StubHub’s stable.
The eBay-owned company quietly courts mass-market scalping operators like Lavallee through a littleknown, password-protected portal on its website designed for industrial-sized ticket resellers, the investigation has found.
StubHub’s “Top Seller” handbook offers sellers a guide to “manage their business” with preferred rates for those who hit a minimum of $250,000 in sales a year — with increasingly attractive incentives for those who reach “volume thresholds” reaching up to $5 million in sales.
To assist, the company provides its top sellers with software for “bulk uploads,” allowing thousands of tickets to be posted for sale. Once there, members use a “real-time order management system” to manage the “predelivery of a ticket across multiple marketplaces.”
Last year, eBay purchased Ticket Utils, a company that produces software to enable “large sellers on StubHub to enjoy a best-in-class solution for inventory management, ticket distribution and internationalization of their inventory.”
In its written statement, StubHub said the Top Seller program is designed to “incentivize trusted sellers to sell their inventory on our platform, including lower fees and technical support.”
The program follows all relevant laws, the statement reads, and eliminates “fraudulent or illegal activity on our site.”
Lavallee’s business model is detailed in documents he filed in 2015 with Appleby showing impressive revenues of his Quebec numbered company: $6.8 million in North American ticket sales in 2013; $7.9 million the following year. When the Broadway smash musical The Book of Mormon came to Toronto three years ago, Lavallee and his wife scooped 20 tickets online in several orders because of a limit of eight tickets per order, says John Karastamatis, communications director for Mirvish Productions. “We didn’t catch him,” he says. Using separate American Express cards, Lavallee and his wife bought seats for four different performances. One set of four seats were never used, says Karastamatis, adding that he doesn’t know what Lavallee ended up doing with the tickets.
The profit margins for that show were enticing, he says.
While face-value tickets were selling for between $40 and $170, the seats were showing up in the aftermarket for more than $400.
“You can do the math,” Karastamatis says. “It’s quite profitable and you don’t actually have to do a lot of work, you know, you just sit at a computer and you do a little bit of this and a little bit of that and the rest of it kind of takes care of itself.”
In one document sent in 2015, Lavallee wrote about a planned U.K. expansion that, “based on information supplied from StubHub U.K., we expect to have profit margins twice as superior as the current business in North America, working in the 35-40 per cent range.”
Lavallee’s business plan, submitted to Appleby, suggests he would access tickets directly from their source by creating “relationships with venues from the U.K. for premium access to tickets for secondary resale purposes.”
On Oct. 9, 2015, Lavallee successfully incorporated a company in the Isle of Man called I Want Ticket. Three weeks ago, after reporters from Canada and the U.K. began approaching Lavallee with questions for this story, the Isle of Man corporate registry received a dissolution application for I Want Ticket signed by Lavallee.
Lavallee first appeared on U.K. authorities’ radar three years ago, Walker says, when a string of large ticket sales from Canada pointed to a “single controlling mind.”
“We saw this guy, Julian Lavallee, address in Quebec,” says Adam Webb, campaign manager for London-based FanFair Alliance, which monitors online scalpers on behalf of music managers, agents and companies. “Then suddenly you would see in certain blocks, certain shows, an awful lot of tickets being sold by him.”
Hundreds of tickets per show to some of the biggest bands in the business, from U2 to Phil Collins to The Weeknd.
“You could clearly see he was selling a lot of tickets by StubHub,” Webb says. “They’re enabling him. You know they’re effectively harbouring his activities, I would say.”
Based on what Walker has tracked, Lavallee has landed as many as 10,000 tickets in the U.K. in the past three years — all high-demand events with reselling potential in the order of three to five times the face value he had paid.
“You’ve got kids . . . for Justin Bieber and they cue up for . . . half a f---ing day and they are freezing overnight outside the box office and by the time they get to the box office all the tickets are gone,” Walker says. “Some f---ing scalper has ripped them off online . . . For the love of God, if anyone needs a bit of respite, a bit of entertainment, it’s the average guy in the street working his knackers off to feed his bloody family and keep the wolves away from the door.”
The cat-and-mouse game Lavallee and Walker play has become intense as Lavallee’s ongoing success points to the use of increasingly refined bot technology that hits ticketing outlets hundreds of times a minute.
“Every evolution in his activity is making it ever increasingly difficult for us to spot, to the point where unless some action is taken we will lose our ability to track the damage he is doing to the ticket systems. Eventually, he will become impossible to spot,” says Walker.
In the case of the Adele shows, ticket purchase records show dozens of sales, seconds apart, from locations including Quebec, Philadelphia, Flower Mound in Texas, London and Chicago. The tickets were purchased in February 2015 for March 2016 shows.
“This isn’t somebody sitting there typing details over and over again, that’s physically impossible,” Walker says. “Given the success rate, even if you had a dozen people sitting there typing their details over again you would not get these results.”
Lavallee told Scottish journalist Mark McGivern last year in a Twitter exchange that the secret to his success is simple: “We click like everyone else. We have a staff of over 20 people, as well as contracts with venues that allow us to buy certain allotments in exchange for a yearly fee.”
Reselling a concert ticket is no different, he wrote, than a grocery store selling a banana for profit.
“Grocery store buys produce, VITAL to human survival, so even much worse than entertainment and tickets.”
Last October, Lavallee and his associates grabbed 102 tickets over two days to Drake’s U.K. show, the ticket sales data shows. Three months later, they scored 169 seats to Ed Sheeran in 36 minutes, acquiring 183 Sheeran tickets in two days.
In March, they landed 232 seats to Jamiroquai, a British soul/jazz/funk band, over two days. And the same month, 134 Metallica tickets.
In all, he spent nearly $144,000 purchasing the tickets.
StubHub officials have repeatedly spoken out against the use of bot technology, even lobbying governments to legislate against the practice.
“StubHub believes that misuse of these programs harm all parts of the ticket industry, including consumers,” Tod Cohen, StubHub’s vicepresident and general counsel, testified before the U.S. Senate commerce committee last year. “This is why we consistently support anti-bots legislation.”
In response to proposed legislation in Ontario that would regulate bots, StubHub’s submission to the attorney general says, “Bots laws should be strongly enforced and entities who abuse the law should be penalized accordingly.”
A StubHub spokesperson in Canada issued a written statement saying the use of bots to acquire tickets is “unfair and anti-consumer,” in response to questions from the Star and CBC.
During a British parliamentary committee hearing last year, MP Nigel Adams asked Paul Peak, StubHub Europe’s head of legal, this question: “Would it not occur to you or your team, if you saw something that looked a bit fishy on one of your sites, through one of your sellers who was selling multiple tickets, to investigate that seller?”
Peak’s reply: “Absolutely not. We do not police or monitor our site and we are not required to do so.”
Adams pressed: “Many people will be surprised by that answer. It is clear that there is abuse of this market going on. To be clear, you are saying you do not feel you have any responsibility to monitor who is selling tickets on your site?”
Peak: “We have no legal responsibility to monitor our sites.”
Adams, who crusaded for a forthcoming bot ban for bulk ticket sellers, says Lavallee’s name became well worn in the British debate over highvolume scalpers.
“I don’t like a rigged market,” he said in an interview. “And I believe that currently the ticketing industry worldwide has got an element of being rigged to it. Genuine fans . . . (are) . . . being denied access because somebody is using technology potentially to sweep up large amounts of tickets and then immediately sell them (for) huge profits to people. It’s really denying proper access to a market.”
Sitting at his computer, Walker easily pulls up on his computer screen tickets purchased by Lavallee for an upcoming show.
“I think it would be remiss of me not to cancel these tickets off in view of the fact that I suspect that they have been acquired criminally.”
In the U.K., event organizers can cancel tickets they believe have been purchased by scalpers illegally. This amounts to a game of whack-a-mole since cancelled tickets can be placed back up for sale, where they can be scooped up again by scalpers.
The result is that fans who purchase the resold tickets that have been cancelled often don’t know they’re worthless until they show up at the venue. Walker says each year he turns away more than 3,000 such victims, many of them celebrating life milestones — anniversaries, graduations, completed cancer treatments.
“We have people travel from all over the world to see shows in London. And you get people just turn up at the doors and they think they’re going to have the greatest moment of their life and they get to the doors and they’re refused entry. And it’s just awful, it’s just absolutely awful.” rcribb@thestar.ca
“He just bought 100 tickets and he probably bought them in less than an hour. And that is not possible. It’s not physically possible.” SOURCE FAMILIAR WITH THE U.K.’S NATIONAL TRADING STANDARDS INVESTIGATION
“StubHub believes that misuse of these programs harm all parts of the ticket industry, including consumers.”
TOD COHEN
STUBHUB’S VICE-PRESIDENT AND GENERAL COUNSEL