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Man pleads guilty in AA Gift Card/Ticket Scam

Man pleads guilty in AA Gift Card/Ticket Scam

Old Sep 12, 20, 6:54 pm
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Man pleads guilty in AA Gift Card/Ticket Scam

Interesting article...but another twist. If you are part of the Marriott Bonvoy Facebook pages-either the one run by members or the Insiders one run by Marriott, a member of both Billy Schwarze is very active. He's the subject of the article.

summary: William Joseph “Billy” Schwarze, 27, pleaded guilty Tuesday in U.S. District Court in St. Louis to one felony count of wire fraud. The plea will recommend probation and he’ll be order to repay AA about $180,000 for his scam, which involved using credit cards to purchase nonrefundable gift cards he’d spend on air fares, cancel the tickets and have his credit cards refunded by exploiting a glitch in American’s computer systems (now patched to preclude similar issues).

​​​​​​https://www.stltoday.com/news/local/...55afb20eb.html

Last edited by JDiver; Sep 12, 20 at 8:20 pm Reason: Add summary to comply with FlyerTalk Rule 7
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Old Sep 12, 20, 7:36 pm
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I'm not sure how he saw this ending well for him. Yes, AA's IT systems use carrier pigeons, but at some point someone is going to wonder why a single person is requesting hundreds of refunds.
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Old Sep 13, 20, 12:00 am
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Does anyone here understand what William Schwarze actually did here? Buy gift cards and then file chargebacks?
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Old Sep 13, 20, 1:21 am
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Originally Posted by donotblink View Post
Does anyone here understand what William Schwarze actually did here? Buy gift cards and then file chargebacks?
Nope. And the flunkie reporter who wrote the article certainly didn't understand. These law/business "reporters" are often too dumb/lazy/incompetent to figure out what they're even writing about, break it down, and articulate it in a way that an 8th grader can understand. The "reporter" obviously just copied some info from a press release, filed his story, and called it a day.
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Old Sep 13, 20, 2:05 am
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Originally Posted by LAX_Esq View Post
Nope. And the flunkie reporter who wrote the article certainly didn't understand. These law/business "reporters" are often too dumb/lazy/incompetent to figure out what they're even writing about, break it down, and articulate it in a way that an 8th grader can understand. The "reporter" obviously just copied some info from a press release, filed his story, and called it a day.
No kidding. All I got was he bought gift cards and refunded tickets paid for by the gift cards to his credit cards............but that doesn't give any info on how he made money,
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Old Sep 13, 20, 3:00 am
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So I looked up the case on PACER and found the "criminal information" (selected pages attached) that explains the scheme. Evidently Schwarze bought gift cards with real credit cards, then he would use those gift cards to buy AA tickets, and then he went to the AA refunds site... but by entering the Gift Card "MSR" (Miscellaneous Sales Receipt) number rather than a ticket number, he was able to exploit a weakness in AA's refund-system technology to cause AA to refund the gift card while retaining the validity of the tickets bought using the gift card.

So at the end of the day, Schwarze's credit cards were not charged anything (at least, net of refunds), but he was able to enjoy the value of AA tickets bought with gift cards that had been refunded (and presumably in some/many cases, he was able to send others flying in exchange for cash that he kept).

I think this goes in the category of "fool me once, shame on me; fool me twice, you're a federal felon."
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Old Sep 13, 20, 4:16 am
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This seems a bit similar to the case of the well-known blogger who was kicked out of AA (or was it UA?) for somehow discovering a way to re-use vouchers/credits, thereby getting lots of travel without paying the airline.
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Old Sep 13, 20, 8:05 am
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Most interesting thing about this is the probation recommendation. Feds almost always insist that one do 12-24 months in prison for a first-time white collar offense of this magnitude. One can hypothesize there are some huge weaknesses in the case that led the US Attorney to see a very high risk of acquittal, or there might have been some significant cooperation that isn't being discussed.
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Old Sep 13, 20, 8:47 am
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The other thread on this---> Ladue man used online ticketing glitch to scam American Airlines out of $160K
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Old Sep 13, 20, 9:11 am
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This is wrong, wrong, wrong. Ethically, morally, any way you look at it. But criminal? I am not so sure. AA has an easy civil case obviously. I wonder if the probation is because the criminal conviction might be difficult to make stick on appeal.
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Old Sep 13, 20, 9:12 am
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Originally Posted by platbrownguy View Post
So I looked up the case on PACER and found the "criminal information" (selected pages attached) that explains the scheme. Evidently Schwarze bought gift cards with real credit cards, then he would use those gift cards to buy AA tickets, and then he went to the AA refunds site... but by entering the Gift Card "MSR" (Miscellaneous Sales Receipt) number rather than a ticket number, he was able to exploit a weakness in AA's refund-system technology to cause AA to refund the gift card while retaining the validity of the tickets bought using the gift card.

So at the end of the day, Schwarze's credit cards were not charged anything (at least, net of refunds), but he was able to enjoy the value of AA tickets bought with gift cards that had been refunded (and presumably in some/many cases, he was able to send others flying in exchange for cash that he kept).

I think this goes in the category of "fool me once, shame on me; fool me twice, you're a federal felon."
So I make it that there are two glitches on AAís part here. One is refunding a gift card purchase to a credit card, and the other is not cancelling flights where the request had been made and the money refunded. Iím amazed that AA have made this so public and that the share price hasnít tanked once investors realise how creaky their IT infrastructure actually is.
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Old Sep 13, 20, 9:16 am
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Originally Posted by pfreet View Post
I wonder if the probation is because the criminal conviction might be difficult to make stick on appeal.
not a chance. this is wire fraud 101.
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Old Sep 13, 20, 10:13 am
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Originally Posted by pfreet View Post
This is wrong, wrong, wrong. Ethically, morally, any way you look at it. But criminal? I am not so sure. AA has an easy civil case obviously. I wonder if the probation is because the criminal conviction might be difficult to make stick on appeal.
This is a slam dunk wire fraud case (presuming that the backup paperwork is there). It is exactly what the statute is designed for. The sentence is a bit on the low end according to Sentencing Guidelines, but not by much.

Even with probation, the guy faces significant hassles in his life and the felony conviction will cause him endless headaches and bar him from many professions as well as other matters. Average scammer sitting at home who reads this even in one of the clickbait blogs may think twice next time.
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Old Sep 13, 20, 11:02 am
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Thanks platbrownguy for posting the PACER doc and for the concise summary.

This certainly seems to be a slam dunk case of wire fraud under the statute. The root cause of this crime is apparently AA having an idiotic IT system. This wasn't a sophisticated or brilliant crime that required some criminal mastermind to figure out. This is one of those situations where it should be "tough dogie" for AA. They made an obvious mistake, and they should bear the loss. Taxpayer money should not be spent to help AA recover their loss. This should be treated as a civil matter, and the feds should focus on more important cases.

I'm still sickened to see yet another case of the feds are doing the airlines' dirty work, rather than fighting for real justice in important cases. The US Attorneys' limited resources should not be spent bailing out the airlines because their IT system let this guy get away with something so easily preventable.
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Old Sep 13, 20, 11:24 am
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Originally Posted by LAX_Esq View Post
Thanks platbrownguy for posting the PACER doc and for the concise summary.

This certainly seems to be a slam dunk case of wire fraud under the statute. The root cause of this crime is apparently AA having an idiotic IT system. This wasn't a sophisticated or brilliant crime that required some criminal mastermind to figure out. This is one of those situations where it should be "tough dogie" for AA. They made an obvious mistake, and they should bear the loss. Taxpayer money should not be spent to help AA recover their loss. This should be treated as a civil matter, and the feds should focus on more important cases.

I'm still sickened to see yet another case of the feds are doing the airlines' dirty work, rather than fighting for real justice in important cases. The US Attorneys' limited resources should not be spent bailing out the airlines because their IT system let this guy get away with something so easily preventable.
I was just waiting for the contrarian post.

So, by this metric, someone who steals from a store should be left alone by the DA and police.. let the store handle it as a civil matter instead of involving feds and state. I mean, Target could hire armed guards right?
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