A travel agent “extraordinaire” has been indicted for allegedly committing fraud against Delta Air Lines. Prosecutors say the man scammed 42,000,000 miles from Delta. I see the case differently…
Prosecutors have alleged Gennady Podolsky gamed Delta’s SkyBonus program to reap millions of miles he was not entitled to.
SkyBonus is a business travel rewards program for small to mid-size business. It’s essentially an award stacking program, as tickets earn SkyMiles but when a SkyBonus number is inserted, the company also earns SkyBonus points, a parallel points currency that can be redeemed for upgrades and flights.
The program terms and conditions limit participation to company employees only and exclude travel agencies.
The following companies are not eligible to participate: corporations with a Preferred Carrier Agreement with Delta Air Lines, Air France, KLM Royal Dutch Airlines, Alitalia, or Aeromexico, travel agencies, wholesalers, consolidators and other sellers of travel are not eligible to participate in the Program.
Using a fertility clinic as a cover, Podolsky listed his clients as employees, thereby raking in over 42 million SkyBonus points between 2014 and 2015.
Fraud Or Not?
Federal prosecutors accused Podolsky of fraud:
Podolsky used his knowledge of the travel industry to take advantage of his travel agency clients. Through his access, he allegedly took advantage of Delta Airlines corporate frequent flyer program, illegally reaping millions of SkyBonus points worth more than $1.75 million dollars.
Chris Hacker, Special Agent in Charge of FBI Atlanta, added:
The fraudulent accumulation of frequent flyer miles in the travel industry may seem like a victimless crime, however, large corporations stand to lose significant profits. The FBI will do everything in its power to protect companies and to stop anyone who participates in this corrupt behavior.
But Podolsky’s attorneys are insisting he did nothing wrong:
Gennady Podolsky is a well-respected and highly-skilled travel adviser who has served a loyal clientele for many years. Mr. Podolsky’s conduct was not fraudulent. Indeed, while the government says Delta is a victim, the evidence at trial will show Delta actually netted millions of dollars of profits from its relationship with Mr. Podolsky. The suggestion that Mr. Podolsky’s conduct somehow disadvantaged his clients is equally unfounded.
Delta is certainly happy about the federal prosecutors doing its bidding, telling the Washington Post:
We’re happy to see any kind of fraud indicted and continue to work with the FBI and the District Attorney’s office to make sure this case is prosecuted to its fullest extent.
CONCLUSION
I’m sorry, but I fail to see the crime committed. Certainly Podolsky abused program rules. Delta had every right to shut down his account and confiscate his miles, even though he gave them millions in business. But since when is the FBI fighting to protect frequent flyer miles? The biggest joke is that prosecutors are valuing the SkyBonus points at 4.2 cents each…
This will be a fascinating case to watch.
image: Delta
Totally agree- we have much bigger fish to fry.
I disagree Matthew. “The program terms and conditions limit participation to company employees only and exclude travel agencies.” Listing clients as employees not only is unethical but also a breach of contract.
I agree. But it was not a crime.
Is it fraud? Stating/claiming something that is not true or contrary to the fact(s)?
Utterly ridiculous: forfeiture of the points should be the only penalty. Doesn’t the FBI have real crimes to investigate and prosecute?
Matt,
Agreed, the $0.042/mile valuation…let me have that, please.
And yeah, FBI, aside from chasing a few flimsy college entrance abusers, which “crime” is more significant? Quite the society we live in today…
Which one is more important depends on whether your personal interest was damaged by the act in question. Nevertheless, a crime is a crime, no matter its significancy to several individual with selfish smelly loudmouth.
We live in a world where citizens and tourists are harassed by TSA and at customs while illegal get tuition and benefits in California. The fbi is more interested in going after people who paid for their kids to have spots in college or this guy who took advantage of delta’s program which didn’t verify their contract terms were met, instead of going after rapists, murderers and thieves. They are more worried about a person possessing a pill or plant. They are more worried about someone uploading movies for download against the copyright. I wish conservatives like myself realized that the police and government agents are the bureaucrats and bureaucracy they say they hate and liberals realized anytime they support the creation of another law it means less freedom and more persecutions for people who aren’t committing violence or real tangible crimes. This is a case where jury nullification should come into play. I’m all for protecting businesses against theft but criminal prosecution is excessive and this is more of a case of contract violation than fraud. Delta has a responsibility to verify its requirements are met when it is so easy to use the system against terms.
42 Million Skymiles? Woot, he got himself a fine r/t business to London in February..
If I was on the jury I would vote not guilty just on the fact that the prosecutor is lying about the true value of the “stolen” skymiles. If they lie about one thing what else are they lying about.
You haven’t heard or knew yet how the prosecutor come to that conclusion, how can you say it lies? Just because you didn’t know doesn’t mean it is false. After all, you are not the person who knows everything. You may think you do, but you are not.
You don’t even know how proceeding goes. Hahaha… Stupid.
This article says the crime happened between 2014 and 2015. What happened in 2015? Did Delta cancel the account? If not, why not? Many questions not answered.
Also, I wonder if these corporate program miles expire? I was thinking of getting my company to participate or maybe enroll my company myself.
Serves a crap airline like delta right. They can not lose enough to pay back what they should to passengers. Only wish we could run American out of business.
You are right this will be an interesting case to watch if it goes to trial. For those beating on the FBI, please consider this case was investigated and charged in Atlanta, Delta’s home.
The United States Attorney and FBI Office in Atlanta are going to respond to complaints by local companies and investigate. That is their job. While this may not be important to others, locally it is of importance to a large company in Atlanta and the government will respond to those complaints.
Personally, I am pleased to see the Justice Department respond to this and I’m sure they did a great job investigating it. Expect a guilty plea.