Six men were charged with “stealing millions of airline frequent flier miles” in the Northern District of Texas. While the Department of Justice doesn’t say this, the court in which charges are being brought includes Dallas and almost certainly means they’re prosecuting a theft of American AAdvantage miles. It seems unlikely that this involves Southwest Rapid Rewards points.
The lead defendant was arrested in Poland in May and extradited, arriving in FBI custody on Friday after weekend travel from Warsaw to Dallas. I’ve been involved in several criminal trials involving miles and points as an expert witness. This is the first one I’m aware of that involved an international arrest and extradition.
The claim is that the main defendant obtained fraudulent access to frequent flyer accounts. Then a group of others sold travel, that he’d then book with miles.
According to the indictment, Mr. Borkowski allegedly hacked into consumers’ airline miles accounts, then used the compromised accounts to book flights for unsuspecting passengers who’d purchased travel through Mr. Oliver, Mr. Lee, Mr. Booker, Mr. Siddique, and Mr. Benton.
The U.S.-based passengers would send their requested itinerary and personal information, including names and dates of birth, to one of the five men, who would then send that information, along with a money order, to Mr. Borkowski. Mr. Borkowski would then book the passenger’s flight with fraudulently obtained miles and send the [PNR]back to the men, who would transmit it to the passengers to generate a boarding pass.
At the same time, the allegation that “[t]he conspiracy involved the loss of millions of earned airline miles” fails to provide context for the value at issue. While the charges could lead to 20 years in prison, “millions” could mean just two million, worth perhaps $28,000.
One thing that bothers me about the case is that the men are charged with conspiracy to commit wire fraud. They stole miles from people’s accounts. If that isn’t clearly a crime, make it one. The tendency to shoehorn conduct into broad statutes is troubling because it means it’s hard to know ex ante when you’re committing a crime and when you aren’t. In this case of course I’m not so concerned, if the conduct is as it’s described.
And since the Justice Department reports that the actions took place “in August 2019” it seems reasonable to me to belief that they’re only prosecuting a subset of the mileage thefts at issue.
Update: Wojciech Borkowski, formerly of FlightFox and a member of the frequent flyer community who has spoken at several events, would like you to know that he’s not that Wojciech Borkowski.
Seriously, let’s actually make some laws. I totally agree. Also, a law against revenge ‘porn’ would be a great idea too.
@ Nathan – Well, that comment took a turn.
@ Gary – One could argue that it’s impossible to “steal” miles when it’s a currency under complete control of the airline: I flown tickets can be canceled, compromised accounts can be restored. Where the fraud or theft occurs is when a ticket is created and a flight occurs. At that point it’s theft. And doing it on a computer makes it wire fraud.
Everything is wire fraud. Makes it easy to know you’re breaking the law ex-ante and even easier to prosecute.
I bought apples at the grocer today using my credit card. Probably means I committed wire fraud in at least three jurisdictions (my state, bank’s state, and New York cause that’s how the world work)
Yeah, I don’t think you can steal miles. They’re better off on hacking or trying to steal services like not paying for a hotel room which would make it a state crime.
$28 thousand, not $2800.
And it probably is theft under state law. Federal law is written to criminalize behavior that states have a harder time prosecuting. Thus, Wire Fraud.
They probably wanted specific proof of cash transfers, emails, illicit logins, etc. for usage of the miles, hence the focus on a specific time – they had them dead to rights on a certain transaction.
US Airways’ mileage promos were so easily exploited that it sometimes felt like theft! Will we be named in a future indictment? : )
In addition to the wire fraud he had four other guys helping him so he could potentially be hit with the RICO statue as well… though I’m not sure how him being a foreigner affects that?
The law should state clearly and unequivocally that it’s a crime for anyone other than the airline to steal your miles.
@tommyleo – Those were fun times. #GrandSlam
As an expert witness in several criminal trials involving miles and points, you were involved in assisting the prosecution on behalf of loyalty program owners/managers?
Their punishment is going to be that they have to fly AA for the rest of their lives!
@GUWonder – I have only been engaged by the defense in these cases.
It is wire fraud. when a transaction takes place in whole or in part electronically then it is wire fraud. Mass State Police officers have been charged with wire fraud for filing false time reports for time not worked via electronic time cards and receiving their paychecks by direct deposit. This is what wire fraud is about.
Uh I don’t think notice as to the potential illegality of their conduct was really an issue in this case. So had the law been written in some other way it would not have changed their conduct in any way. Let’s leave the points commentary up to you and leave the legal commentary up to the lawyers shall we?
Wire fraud is a predicate offense to RICO (Racketeer Influence and Corrupt Organization) Act, and would allow the recovery of treble damages by the airline, in addition to the criminal penalties obtained by the government.