The DoJ’s 43-count indictment described a scenario where the men, through their company called Wiseguy Tickets, Inc., were able to fool ticket-vending computers into thinking they were private citizens buying tickets instead of running a mass effort to obtain in-demand seats then resell the booty to ticket brokers.

Indicted were Kenneth Lowson, Kristofer Krisch and Faisal Nahdi, all of Los Angeles, and Joel Stevenson of Alameda, Calif. Lowson, Krisch and Stevenson surrendered to federal authorities today. Nahdi is currently out of the country but is expected to surrender upon his return in the coming weeks.

At the heart of the scheme was how the men from Wiseguy were able to circumvent CAPTCHAs – those graphic representations of words and numbers online ticket vendors ask their customers to type in before proceeding with the transactions.

CAPTCHAs are used to weed out third-party brokers using automated scripts and bots in attempts to purchase as many tickets as possible. The basic idea behind CAPTCHAs is that it is supposed to force a real live human being to type in the information. Special audio CAPTCHAs are used for visually impaired customers.

According to the indictment, the defendants worked with programmers from Bulgaria to develop a nationwide network of computers using automated programs to flood online ticket vendors’ computers at the same moment tickets for in-demand shows went on sale. Apparently, the programs were able to do what the CAPTCHAs were created to discourage – read the squiggles then enter the information.

The programs, called “CAPTCHA Bots” in the indictment, were able to complete the CAPTCHA Challenges faster than mere mortals, resulting more times than not in the men obtaining the best seats in the house for shows by many top artists and bands, including Bruce Springsteen, Barbra Streisand, Bon Jovi and Kenny Chesney.

For example, the DoJ claims the men used CAPTCHA Bots to obtain nearly half of the general admission floor tickets that were available for Bruce Springsteen & The E Street Band’s 2009 Giants Stadium shows in New Jersey.

But the men weren’t just after concert tickets, but tickets to many major events, including Broadway productions of “The Producers” and “Wicked” as well as sporting events such as the 2006 Rose Bowl and the 2007 Major League Baseball playoff games at Yankee Stadium.

“At a time when the Internet has brought convenience and fairness to the ticket marketplace, these defendants gamed the system with a sophisticated fraud operation that generated over $25 million in illicit profits,” U.S. Attorney Paul J. Fishman said. “Today’s indictment represents a significant step forward in the fight against those who use fraud to disrupt E-Commerce and evade computer security.”

Defendants Lowson and Kirsch owned Wiseguy while Stevenson was the company’s chief U.S.-based programmer while Nahdi managed the company’s operations and finances. If convicted each defendant could receive a maximum statutory penalty of five years in prison on conspiracy charges and a maximum 20-year sentence on each wire fraud charge.

But wait, there’s more.

Lowson, Kirsch and Stevenson face additional maximum penalties of five years in prison and a $250,000 fine on each of 19 counts charging them with gaining unauthorized access and exceeding authorized access to computers.

The men could also receive an additional 10 years for each of six counts charging damage to computers used for interstate commerce. Finally, each defendant could be fined $250,000 per count of conviction.

“The allegations in this indictment represent a scheme orchestrated through technology to cheat the public and circumvent fair business practices in the entertainment industry,” FBI Assistant Special Agent IN Charge Edward Kahrer said. “Unfortunately for the defendants, they are the FBI’s first example of what happens to criminals when we combine the talent and resources in our white collar and cybercrime programs. As technology and the world move forward, the FBI will endeavor to remain one step ahead.”