Agent scammed Delta out of $1.75M in frequent flyer miles, prosecutors say – msnNOW

Agent scammed Delta out of $1.75M in frequent flyer miles, prosecutors say - msnNOW
Man stole 42 million Delta frequent-flyer miles, prosecutors say
Gennady Podolsky used his position as a travel agent to cheat Delta Air Lines out of $1.75 million worth of loyalty points, according to an indictment.

Where would you go if you had more than 40 million points with an airline? Hawaii 96 times? Seoul 40 times? Federal District Court in Atlanta?

Travel Agent Accused Of Stealing Close To $2 Million In Frequent Flyer Points

Gennady Podolsky, a travel agent based in Chicago, was charged on Wednesday with 12 counts of wire fraud in connection with what prosecutors describe as a 13-month scheme in which he accrued 42 million Delta SkyBonus points, valued at more than $1.75 million.

“His Methods Are Trade Secret”: Travel Agent Gamed Delta Of $1.75 Million

SkyBonus points are earned through a corporate loyalty program through which companies can accrue points that can be redeemed for free flights and rewards from the airline. According to the indictment, filed on Wednesday in United States District Court for the Northern District of Georgia, Mr. Podolsky created a SkyBonus account for a corporation called RGI International with which he is not affiliated.

Mr. Podolsky, 43, would link flights that he booked for clients of Vega International Travel Services, where he worked as a travel agent, to RGI Internationals SkyBonus account, allowing him to fraudulently accrue points, the indictment said.

“Podolsky used his knowledge of the travel industry to take advantage of his travel agency clients,” U.S. Attorney Byung Pak said in a statement. “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.”

Mr. Podolskys conduct relating to that program was not fraudulent, his lawyer, Seth D. Kirschenbaum, said in a statement, adding that the suggestion that Mr. Podolskys conduct somehow disadvantaged his clients is equally unfounded.

Podolskys conduct “was not fraudulent,” they said. “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. Podolskys conduct somehow disadvantaged his clients is equally unfounded.”

He also objected to the governments portrayal of Delta as a victim, claiming that the airline actually netted millions of dollars of profits through its relationship with Mr. Podolsky.

Were happy to see any kind of fraud indicted and continue to work with the F.B.I. and the U.S. Attorneys Office to make sure this case is prosecuted to its fullest extent, the airline said in an emailed statement on Friday.

Mr. Podolsky is accused of running the scheme from March 2014 to April 2015, during which time he was a managing partner and the lead travel agent at Vega International, according a news release from the office of United States Attorney Byung J. Pak.

Airlines are often being swindled through loyalty programs that provide points to frequent fliers, according to Scott Mayerowitz, executive news director at The Points Guy, which provides tips on travel.

There are lots of ways people have abused the points system, he said, mentioning as an example the huge underground market of people who buy and sell the points.

On websites like FlyerTalk.com there are forums in which travelers give one another tips on how to maximize their earning capability and how to use points most effectively.

To give a sense of how many points 42 million is, a big credit card sign-up bonus would be 100,000, according to Mr. Mayerowitz. A 50,000-point bonus is more common, he said, and people are happy with that.

Mr. Mayerowitz explained that while point fraud is common, the sheer size of the alleged scheme made Mr. Podolskys case unique.

If I had 42 million points, I would sip champagne and have wonderful meals in the air with my family, he said. But I would do it without committing fraud.

A man was indicted this week after federal prosecutors say he earned more than 42 million Delta frequent-flyer miles by committing fraud.

Gennady Podolsky is a managing partner of a Chicago-based  travel agency, Vega International Travel Services. According to prosecutors, he earned the miles through Deltas SkyBonus program, which allows businesses to earn frequent flyer “SkyMiles” when their employees travel.

According to the indictment, Podolsky created a SkyBonus account for a fertility center that was owned by a relative of Vegas president. When Podolskys customers flew Delta, booked through Vega Travel, he would enter the fertility centers SkyBonus information, even though the travelers were not employees of the fertility center, nor had any connection to it.

Prosecutors say that Podolsky earned and redeemed more than 42 million SkyMiles this way, which the airline valued at $1.75 million.

Podolsky, a dual Ukrainian and American citizen, has been relatively prolific in his role as a travel agent and advisor. In a 2016 profile in Wired, Podolsky said that he preferred to think of himself as a “creative manager.”

Podolsky could not be reached for comment on Friday, and Delta did not immediately return a request for comment.