GrayAnderson

Gods, there are so many issues with this indictment/statement:
(1) First, there's the idea that he "took advantage of" those customers. I rather take exception to that phrasing insofar as it implies that the customers in question were victims. I can see Delta being "taken advantage of", but not customers (unless some of them are asserting that they were denied the ability to attach a SkyBonus number to their reservation).

(2) Second, there's the valuation. Either the indictment should get thrown out (or at least, dismissed without prejudice with the prosecutor being told to "try again") on the valuation of the miles, the prosecutor should be formally reprimanded for misrepresenting the value of the points, or Delta should be investigated for accounting fraud: Trying to assert $0.04/mile for SkyPesos would be a stretch. Trying to do it for the (far cheaper) SkyBonus points value? I think you can argue for somewhere between $0.003 to $0.01/point, but with the indictment value that's anywhere from a 4:1 to 12:1 difference. That's not a good-faith upper limit on the value of the points, that's fraudulent misrepresentation.

The argument for accounting fraud would be that asserting that value on unredeemed points would allow Delta to defer a lot of profit into future years (when points either expire unredeemed or get redeemed for far less than their face value). If there are a billion SkyBonus points out there, Delta would be asserting a liability of $40m (versus a realistic liability of anywhere from $3-10m) in "unearned revenues". When the points get "cashed out", they would show the lower cash expense and the balance would get kicked through as profit. Some elements of this could be argued to be reasonable handling of unclear liabilities, but the overall scale reminds me of a sort-of "Enron in reverse" (in this case, effectively hiding assets which can be brought out later and thus smoothing overall fiscal performance, and potentially "hiding" a slump in business through a push on award availability). I would hold this out to be a fairly insidious move because airlines are, in general, probably going to be "sitting on" several large categories of unearned revenues (FFP miles, corporate program points, and advance-purchased tickets), so hiding $50-100m of inflated liabilities from the FFP/corporate program side of things will probably go missing/unnoticed alongside a few billion dollars from prepaid tickets.

...which leads to (3), I'd love to see the prosecutor get called out on this at a town hall on the campaign trail. "Mr. Such-and-such, in that case you asserted an absurd value of Delta SkyMiles. If you can't attach a reasonable value to something like that, how can we expect you to have any clue when it comes to the federal budget?"

Edit: And this is a pretty good example of a case that nobody wants to have end up in front of a jury. The defense won't want it because of what I would argue is effectively over-charging. The prosecution won't because I could see a jury finding the idea of the prosecution's valuations as being so absurd (presuming they stick with the $0.04/point valuation) that, if aggressively impeached, the jury could turn around and find them to be less-than-credible as a result. It wouldn't be jury nullification per se so much as deciding that one side has overstated their case to the point that they lose credibility (e.g. "If you're blatantly lying about the value of the points, are you also lying about how the program was intended to work?"), particularly if they were to determine that Delta gained a good deal of business from the program.

Edit 2: So, I checked. Presuming that the vast majority of the travel in question was Level 2/non-hub travel (6 points per dollar) and that the rest sort-of washed, 42m SkyBonus points would involve about $7,000,000 in travel (before taxes and fees and before accounting for the 10% bonus that would have kicked in). If that was accrued through valid purchases over the course of 13 months (per the indictment, the timeframe was about that long), I have to confess that I have a very hard time feeling sympathy for Delta (especially given the over-statement of the valuation) and I think a worthwhile question to Delta is "Would you have preferred that Mr. Podolsky have booked with another airline?"

On the other hand, if it was mostly Level 1/non-hub (30 points per dollar)? Well, the amount of paid travel drops but at that point the indictment would be worth a stiff question at the next shareholder's meeting (namely, "In this indictment, a value of $0.04/point was asserted for SkyBonus points. Given that non-hub travel in premium cabins generates 30 points per dollar spent, does this mean that Delta has intentionally designed a program to give away more in benefits than Delta generates in revenue from the underlying ticket sales?").