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

Toronto Star - - FRONT PAGE - ROBERT CRIBB AND MARCO CHOWN OVED STAFF RE­PORTERS

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

GARETH CATTERMOLE/GETTY IM­AGES FILE PHOTO

Mon­treal ticket re­seller Julien Lavallee’s busi­ness model is de­tailed in doc­u­ments he filed in 2015 show­ing im­pres­sive rev­enues of his Que­bec com­pany: $6.8 mil­lion in North Amer­i­can ticket sales in 2013; $7.9 mil­lion the fol­low­ing year.

DAVE SEGLINS/CBC

“You could clearly see he was sell­ing a lot of tick­ets by Stub­Hub,” says Adam Webb of Lon­don-based FanFair Al­liance, which mon­i­tors on­line scalpers. “They’re ef­fec­tively har­bour­ing his ac­tiv­i­ties, I would say.”

DAVE SEGLINS/CBC

“He’s one of the big­gest bad ac­tors that we’ve become aware of,” Reg Walker, a Lon­don-based se­cu­rity con­sul­tant in the U.K., says of Mon­treal ticket re­seller Julien Lavallee. “That puts him in a very, very elite class of ticket touts (scalpers).”

STEVE RUS­SELL/TORONTO STAR

John Karas­tama­tis, com­mu­ni­ca­tions di­rec­tor for Mirvish Pro­duc­tions, says that when the 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. “We didn’t catch him."

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