Laguna Niguel Man Pleads Guilty To Defrauding ebay
SAN JOSE - Brian Andrew Dunning pleaded guilty in federal court in San Jose on April 15, 2013 to wire fraud, United States Attorney Melinda Haag announced.
In pleading guilty, Dunning admitted that, between approximately May 2006 and June 2007, he engaged in a scheme to defraud eBay through so-called “cookie stuffing.” According to the plea agreement, commissions paid to Dunning’s company, Kessler’s Flying Circus (KFC), which Dunning owned jointly with his brother, totaled approximately $5.2 million during that period from eBay’s domestic Affiliate Program.
According to the plea agreement, in approximately April 2005, Dunning and his brother formed KFC, through which they participated in the eBay Affiliate Program. The Affiliate Program was a means by which eBay worked with KFC and other affiliates to drive Internet traffic to eBay’s websites. Under the program, an affiliate was supposed to send visitors to eBay’s website by displaying an eBay advertisement, or link, on the affiliate’s website. If a visitor clicked on the eBay link or ad, he or she was redirected to eBay’s website. If that user subsequently conducted a “revenue action” on eBay’s website within a designated period of time, eBay paid the affiliate a commission for the referral.
Dunning admitted that he carried out his scheme by providing free applications at two of his websites that users could download and use on their own websites: ProfileMaps.info, which showed the physical location of visitors to a MySpace profile, and WhoLinked.com, which showed who was linking to the user’s website or blog. Both applications contained code Dunning had written which operated so that, when a user visited a website that had installed the application, the code would cause the user’s browser to receive a cookie with KFC’s ID number, even though the user did not click on an eBay ad or link, did not see any content from eBay’s website, and did not realize that his or her browser had been re-directed to eBay’s tracking server. As a result, KFC would be paid if that user subsequently conducted an eBay revenue action within a certain period of time.
Dunning, 47, of Laguna Niguel, California, was indicted by a federal Grand Jury on June 24, 2010, and charged with five counts of wire fraud, in violation of Title 18, United States Code, Section 1343. Under the plea agreement, Dunning pleaded guilty to a superseding information, filed on April 15, 2013, that alleged a separate violation of the same statute. In his plea agreement, Dunning admitted that he received payments for revenue actions for which he was not entitled to be compensated, but reserved the right to dispute how much of those payments were attributable to the cookie stuffing scheme.
An evidentiary hearing to determine the loss amount will be held on August 8, 2013, before United States District Judge Edward J. Davila, in San Jose. The maximum statutory penalty for a violation of 18 U.S.C. § 1343 is 20 years imprisonment and a fine of $250,000, or twice the gross gain or gross loss from the offense, whichever is greater, plus restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
David R. Callaway and Kyle F. Waldinger are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Elise Etter, Rawaty Yim, and Elizabeth Garcia. The prosecution is the result of an investigation by the Federal Bureau of Investigation.