A Message from Brian
August 6, 2014
This is my family on Thanksgiving 2013, at the restaurant in Stovepipe Wells, Death Valley, California. A few hours earlier, we’d rescued three Chinese tourists who had spent the night in their car stuck in the snow, and we winched it out and got them back to safety.
Shortly thereafter, we ourselves suffered a single vehicle rollover, destroying the Jeep. Amazingly, none of us were seriously hurt. We were lucky to all make it back. These are the kinds of life events that matter most, and make other bumps in the road seem trivial by comparison.
My latest news is that I can now add to my resume the title "convicted felon." We make up about 2% of the population.
Before I became a science writer and podcaster in 2006, I had a small consulting business doing FileMaker Pro development. It provided a modest family income. In about 2003 my company partnered with another to form "Kessler’s Flying Circus" (a reference to The Great Waldo Pepper, a favorite movie), to give affiliate marketing a try. Affiliate marketing is where you place ads on the web, and if anyone clicks those ads and subsequently makes a purchase, you would get a sales commission of some kind. There are a whole variety of models for this: pay per ad impression, pay per click, pay per sale, etc. These were trailblazing years for fast-growing companies like Amazon, Google, and eBay. A perspective of what those days were like is offered here, from another defendant who was also convicted.
For our first few years we had very little success, making perhaps a few hundred dollars per month. But then, working in close association with eBay and with Commission Junction (the company that managed eBay’s affiliate program) we developed a pair of useful widgets: ProfileMaps, that showed a map of visitors to your MySpace page; and WhoLinked, a WordPress plugin that showed who has linked to your blog. These both included an eBay advertisement. Amazingly these both went viral, and through 2006 and 2007 our ads drove enough new customers to eBay US to earn KFC about $5.3 million dollars. Keep in mind that was the company’s gross revenue; we had overhead and employees and costs like every other company. I was the second highest paid employee, and I did earn over a million dollars personally over 2006 and 2007 before taxes. We put the money toward paying off our mortgage and opening college savings accounts for our kids. Then just as we were about to start saving, everything came to an abrupt end.
On June 18, 2007, our house was raided by armed FBI agents. They had a search warrant from the Treasury Department alleging racketeering, wire fraud, and a raft of other charges. The model we used, which is the same as that used by all other eBay affiliates I knew at the time, was to pass through eBay’s URL along with each advertisement, allowing eBay to read/write whatever affiliate cookie they choose. eBay filed both civil and criminal charges against the affiliates, claiming that this pass-through model was a violation of their Terms & Conditions. This is true, it was a clear violation, and we knew this. But the models of all top affiliates were clear violations. Mainly, you weren’t allowed to place ads on sites that you did not personally own. But we had worked carefully and openly with the eBay team assigned to us to form "interpretations" of the rules that permitted this. Obviously, this was a red flag (among many) and I should have gotten out of the business right away. I didn’t. I was making some money for the first time in my life, and I let myself believe that bending the rules was OK if other people were bending them too. Let’s be clear: what I did was wrong, and I knew it at the time. "Come on, everyone’s doing it!"
On that same day in 2007, I ceased my association with KFC and have had no involvement with affiliate marketing, or anything remotely related to it, ever since.
Although all the lawyers involved felt this should have been strictly a civil contract dispute, the government determined that it constituted wire fraud, a violation of 18 USC § 1343, and that eBay had been victimized by paying KFC commissions on sales that should have been house sales. I fully accept this determination, and fully accept and admit responsibility for every action I was involved in. eBay claimed a loss amount of $200-400K, and I agreed to stipulate to that amount. I was the only person criminally charged from KFC, though we have never been able to determine why I was singled out; we can only guess it was because of my notoriety.
I stress that from the first day to the last day, I offered full cooperation to authorities, and I did make eBay whole through a confidential settlement.
On August 4, 2014, the judge sentenced me to 15 months incarceration, beginning September 2, 2014. In the federal system you must serve a minimum 85% of that time. According to determinations made during your stay, you may be able to transfer to a halfway house near your home at some point during the sentence, which allows you to resume work and see your family. Most attorneys involved felt the sentence was unnecessarily harsh, and the judge stated in his pronouncement that it was based mainly on the deterrence criterion, particularly due to my "minor Internet celebrity" status.
There are a lot of untruths being circulated by bloggers and reporters:
- That I "stole millions of dollars". Completely false. The vast majority of KFC’s earnings, over 90%, were never in dispute. My share of the unearned commissions was about a third of the $200-400K, on which I paid taxes. That doesn’t make it any less of a crime, but absurd exaggerations serve nobody.
- That any individuals were affected. Completely false. The only victim was eBay, and the nature of their loss was a reduced profit (due to paying unearned sales commissions) on new paying customers who had viewed one of our ads.
- A conspiracy theory that my nonprofit Skeptoid Media, Inc. was set up as some kind of shield to hide stolen millions. First, I never had millions in my possession; second, you cannot shield money from the feds. The federal government can seize anything at any time; there is no protection like there is in state cases (e.g., moving to a state that allows you to keep your primary residence). Skeptoid Media exists only for its stated reasons: producing free educational materials and STEM-focused informational and entertainment content, made available to educators and individuals worldwide, concentrating on critical thinking and scientific skepticism.
- That I’m a millionaire who has the gall to beg for donations. Please do not conflate the two. Donations that support the Skeptoid podcast go only to support Skeptoid Media, a good cause. See Skeptoid.org for all available disclosures. Separately, I am not a millionaire and my family is under a huge amount of debt and has no savings at all, but working that out is our problem, not yours, and not Skeptoid Media’s.
In the meantime, the Skeptoid podcast is going to continue uninterrupted, using a combination of banked episodes and guest hosts, so you can continue to expect the same high quality show every week.
My plan is to start production on Principia Curiositas, the long-awaited sequel to Here Be Dragons, as soon as I’m able to return to work. And of course, I plan to continue Skeptoid and other projects.
I am proud of who I am and what I have accomplished to date, and very much regret this stain on my past. But as we all must do with all our regrets, I will incorporate it into who I am, own it, and continue on as best I can.
In short, I’ll see you soon.
I’ll pick this apart in a moment, because it’s full of sophistry and revisionist history that even the public parts of the lawsuit disprove directly, but first I have to point out something else I discovered this afternoon — something that really irritated me when I visited skeptoid.org to read an article someone linked me on Twitter.
Granted, the article itself was odious enough as it stood, wherein Brian argues on record that it’s okay to misrepresent what you’re selling to a customer as long as that customer is happy. The article is from 2006, so he’s on early record defending charlatanry orders of magnitude lesser in impact than his own crimes. One must be internally philosophically consistent if you’re going to bilk eBay and smaller affiliates out of earned income to the tune of millions — surely then psychics bilking customers out of hundreds a pop, earning just enough to make a living on their lies is not so big a deal.
But what really riled me was a mouseover that I discovered by accident. See, Skeptoid has a Twitter feed embedded in its pages, wherein I noticed part of a conversation I was just having on Twitter moments prior. Since none of us were addressing Dunning directly, I figured, “this must be an embedded search instead. I wonder what the search terms are.”
I moused over the “Tweets” link…
You missed a few search terms, Dunning. Now I know how to make sure that when I tweet things about you and your criminal acts, I can remind website readers exactly what you are: a fraudster and a criminal.
I’ll be fisking the statement in my next post. Rebecca Watson makes an excellent stab at it, but I have a few extra things I need to say, as I believe I’m the “conspiracy theorist” he’s referring to, and he’s significantly misrepresented me alongside his misrepresentation of his crimes.
Don’t let him cause the skeptical community to forget his crimes and continue to treat his derivative podcast as some sort of valuable resource that skeptics and others can’t also get from someone who ISN’T a felon convicted of defrauding a company AND the public. As a humanist, I cannot stand by idly, while a convicted fraudster who is going to jail for 15 months, who argues that it’s okay to defraud people, gets a pass by the entire goddamn skeptical community — a community ostensibly devoted to the social justice ideal of keeping people from being defrauded.
We deserve better than this. And we won’t GET better than this if we don’t stand against this nonsense.