“What followed then was what invariably follows in the wake of every tortured consciousness.”
–Theodore Dreiser, An American Tragedy
I take no joy in writing this. In fact, I thought long and hard about whether I should. Whether I should respect the privacy of the individual. Whether the wider community has a right to know. In the end, though, it is about a public figure in the skeptical community, and not just any public figure. It is, in fact, about a luminary. A shining light. A beacon that has brought many of us out from the swamps of superstition into the light of rationality and reason. The man of whom I write is all of that (and I say this without so much of a whiff of irony), and much more. He started one of the most popular skeptical podcasts out there, a podcast so influential that it has literally changed lives. He was instrumental in starting an important skeptical blog. He has even produced a couple of skeptically themed TV pilots. And yet, he has fallen. And because he has put himself out there as a public figure, the public should know about that fall.
I speak of Brian Dunning. Yes, that Brian Dunning, creator of the Skeptoid podcast, winner of the best science podcast in the Stitcher awards for 2012. I have listened to every episode of Skeptoid, and it has made a profound impact on my life. I like, and respect, Brian Dunning, as many of us do. And yesterday, April 15, 2013, Brian Dunning walked into a federal courtroom in the United States District Court for the Northern District of California (San Jose) and pled guilty to wire fraud, in violation of Section 1343 of Title 18 of the United States Code. Yes, wire fraud. This is, without any doubt, a horrible tragedy for Brian and his family, and for the skeptical community at large. One of our leaders has shown that he is not the man that many of us hoped that he would be.
This case has been pending for a long time. Brian was indicted on June 24, 2010. The docket history available on pacer.gov (publicly available, but you need to sign up for a password and give them a credit card) shows 60 separate docket entries. There were trial dates, and continuances, and stipulations, and motions, and responses, and much more. All leading invariably to where we are now, because once the United States Attorney indicts you, you are pretty much done. The US Attorney, unlike state prosecutors, gets to pick and choose their cases, and they only indict people that they are sure of convicting. Recently Brian, his lawyers, and the US Attorney worked out a plea agreement, the exact details of which are not publicly available (when I tried to retrieve a copy of the plea agreement from Pacer, I was denied access, although I can pretty much get access to any other document associated with the case). Even though the plea agreement is not publicly available, other documents are.
On April 15, 2013, two new documents appeared in a Pacer search for Brian’s case (CASE #: 5:10-cr-00494-EJD-1), a superseding information and an arraignment document (click on the links to view the original documents in .pdf format). The term “information” is a legal term for a charging document that does not have to go through a grand jury. The superseding information outlines the factual allegations against Brian.
Here is the arraignment document, which shows that Brian pled guilty yesterday. Click on the image to make it readable.
As you can see, Brian appeared in court and pled guilty to count one. What does that mean, though? For that, we need to review the superseding information in detail (all the facts described below come directly from the publicly available information on file in the District Court).
According to the information, the wire fraud involved eBay’s affiliate program. Ebay developed an affiliate program, which was a means by which eBay worked with third-party marketers to drive internet traffic towards eBay.
I will let the information speak for itself.
3. Under eBay’s Affiliate Program, it was intended that a third-party affiliate would send visitors to eBay.com from a website associated with an affiliate, and would do so (at least in theory) by suggesting (in some way) that the visitor “click” on the “link” to eBay.com located on the affiliate’s website. If, within specified time periods, such visitors to eBay.com became new active users, won auctions, or made Buy-it-Now purchases on eBay.com, the affiliate received compensation from eBay. A “new active user” was defined to include a user who both set up a new eBay.com account and then placed a bid (whether it was a winning bid or not). For purposes of this Superseding Information, the actions of becoming a new active user, winning an auction, or making a purchase are referred to collectively as “revenue actions.”
4. The affiliate program defined the rates and amounts of compensation that eBay paid to an affiliate These rates and amounts of compensation were based on the monthly totals of revenue actions attributable to that affiliate. For instance, if 1 to 49 of the individuals the affiliate referred to eBay became new active users within 30 days, eBay paid the affiliate $25.00 per new user. As another example, if the individuals the affiliate referred to eBay won auctions for items totaling $99.99 in value within seven days, eBay paid the affiliate 50% of the revenue earned by eBay on those transactions.
The Legal Entities.
The information describes the legal entities and the amount of money involved:
6. The defendant Brian Dunning (“Dunning”) was an individual who resided in the Central District of California. Kessler’s Flying Circus (“KFC”) was a partnership that was owned, in part, by Dunning. Dunning was the sole owner of the company Thunderwood Holdings, Inc., and also did business as BrianDunning.com. Thunderwood Holdings, together with the company Dunning Enterprise, Inc., did business as KFC. The non-person entities are referred to collectively as “KFC.”
7. KFC was a member of the Affiliate Program. In 2006, KFC received approximately $2,000,000 in compensation from the eBay Affiliate Program in the United States. Between January and June 2007, KFC earned approximately $3,300,000 in compensation from the eBay Affiliate Program in the United States. As of approximately June 2007, KFC was the number-two producing account in the Affiliate Program. . . .
The Technology Behind The Scheme
8. eBay used an automated tracking process in an effort to ensure that affiliates received appropriate compensation. This tracking process utilized “cookies.”
10. In the eBay Affiliate Program, when a visitor was referred to eBay.com from an affiliate website, eBay dropped a “cookie” on that user’s computer. This cookie contained information that was used to identify the Affiliate Program member that had directed that particular user to eBay.com. This information, which included ”publisher ID,” referring to the affiliate, and/or a “campaign ID,” referring to a particular program operated by the affilate, is collectively referred to as the “Affiliate ID.”
11. If and when that user later engaged in revenue action on eBay.com, the Affiliate ID would be transmitted by the user’s computer to eBay. An automated tracking process performed the analysis to determine whether the revenue action had occurred within the specified time frames.
How the Scheme Worked–Cookie Stuffing.
12. If a cookie from an affiliate was present on the user’s computer at the time of the revenue action, the affiliate identified by that cookie was credited with the revenue action. If there was not qualifying cookie on the user’s computer at the time of the revenue action, than no affiliate was credited.
18. [T]he defendant disseminated on a large number of web pages computer code that, when those web pages were viewed by a computer user, were designed to cause that user’s computer make a request to eBay’s home page merely for the purpose of prompting eBay’s servers to serve up a cookie, which would then be “stuffed” onto the user’s computer. These cookies contained information that identified an Affiliate ID of KFC. In such situations, the human user never actually clicked on an eBay advertisement or link on Dunning’s affiliate websites.
19. [I]n such situations, the computer code prevented eBay’s home page from actually “loading” on the user’s computer screen. Accordingly, the human user never actually viewed eBay’s home page when an eBay cookie identifying KFC was stuffed onto the user’s computer. Indeed, the human user never knew that his or her computer had made the request to the website (i.e. eBay.com) that had served up the cookie.
20. [T]he defendant provided 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 visitor to a MySpace profile, and “WhoLinked.com,” which showed who was linking to a website or blog. Any visitor to these websites could download either of these applications. Both applications included code that operated as follows: when a user visited a website that had installed Profilemaps or Wholinked applications, the code would cause the user unknowingly to receive an eBay and/or CJ cookie with KFC’s Affiliate ID without the user having clicked on an eBay ad or link, without the user knowing that his or her browser had been redirected to the eBay and/or CJ affiliate tracking server and without the user seeing any content of an eBay site. As a result, KFC would be paid if that user subsequently conducted an eBay revenue action within a certain time frame.
How the money was actually made:
21. [T]he defendant had the expectation and intention that many of the users whose computers had cookies stuffed on them would thereafter visit eBay and engage in revenue actions. If these revenue actions were within the time periods specified in the Affiliate Program, KFC would receive compensation from eBay with respect to these events. The defendant had the expectation and intention that these visits to eBay.com would be of each user’s own accord, and would be separate and apart from any actions taken by the defendant to “drive” those users to eBay.com.
So, according to the superseding information, the wire fraud involved causing cookies to be installed on internet users’ computers without their knowledge. If, by chance, those users later visited eBay and bought something, then an entity owned by Brian (at least in part) would be treated by eBay as if the entity’s website had driven the customer to eBay by means of a direct referral. The entity owned (at least in part) by Brian would then get a commission from eBay, as if the entity’s website had actually been responsible for driving the user to eBay. In reality, the entity’s website would not have driven the customer to eBay, and thus eBay was defrauded. Thus, wire fraud.
The superseding information charged Brian with wire fraud, occurring between May 2006 and June 2007, and on April 15, 2013, Brian pled guilty to that charge.
Possible sentence and next step in the litigation
It is hard to estimate the actual sentence that Brian is facing, as the terms of the plea agreement are not accessible on Pacer.gov. The maximum sentence for a violation of 18 U.S.C. Section 1343 is up to 20 years in the Federal Bureau of Prisons. Federal Judges, though, use sentencing guidelines to guide their decisions in imposing sentences. I used the publicly available sentencing guideline calculator in order to figure out what Brian is looking at. Before I reveal the results, I want to give a few disclaimers: (1) The Plea Agreement may make my calculations incorrect, because the US Attorney may have agreed to a downward departure that I do not know about, because the plea agreement is not publicly available; (2) The Plea Agreement may contain a stipulation that the amount of theft attributable to Brian is less than that stated in the superseding information; (3) I could be mistaken in my factual understanding, and thus inputted information incorrectly into the sentencing calculator. Additionally, I believe that Brian will be statutorily eligible for a sentence to probation, but I do not see that as a reasonable possibility considering the amount of loss, but you never know. Maybe Brian has a really good lawyer and will get probation.
Subject to these caveats, the sentencing calculator indicated that Brian is facing a sentence of 70 to 87 months in prison, or between 5.8 years and 7.25 years. I believe that he would be eligible for early release after serving 85% of his sentence, with time off for good behavior.
If the US Attorney were to do something like stipulate in the plea agreement that the total loss was $1,000,000, the sentencing range would change to 46-57 months. Again, perhaps there are stipulated downward departures that could reduce it even more.
Additionally, the arraignment document says that there is an evidentiary hearing regarding loss on August 8, 2013. Perhaps Brian’s lawyer will attempt to show that the losses to eBay were actually much less than my low-ball assumption of $1,000,000 (it would be nice to have access to the plea agreement, which might provide illumination on this point, but I do not). If he could get the loss down to, say $100,000, the sentencing guidelines might go as low as 24-30 months in prison.
Whatever the plea agreement says, and whatever happens at this hearing on August 8, I think it is fair to say that Brian is looking at spending a significant amount of time in a very bad place.
When someone does a podcast like Skeptoid, and they speak into our earbuds once a week, we start to think of them as a friend, even though we do no know them. I am sure that a good many of us feel that way about Brian. Many of us have looked up to him, and considered him a beacon of reason. And yet, here we are. A hero has fallen.