I had a discussion about a similar issue with the concierges in the 1K room on Sunday. We were talking about the NBA referees who cashed in their Full Fare First Class tickets, purchased low fare Y tickets, used certs to upgrade (they were mostly all 1K's) and pocket the difference. Not a good thing, and obviously the IRS became involved.
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Yeah, that was a heck of a scam. Who would've thought the IRS would have caught on to that one?