U.S. v. Schreier
| Citation | 908 F.2d 645 |
| Decision Date | 13 July 1990 |
| Docket Number | 89-5127,Nos. 89-5126,s. 89-5126 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Gayle SCHREIER and Irwin Schreier, Defendants-Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (10th Circuit) |
David J. Richman (Mark A. Pottinger, with him on the brief), of Coghill & Goodspeed, Denver, Colo., for defendants-appellants.
Gordon B. Cecil (Tony M. Graham, U.S. Atty., and Ron Wallace, Asst. U.S. Atty., on the brief), Tulsa, Okl., for plaintiff-appellee.
Before LOGAN and BALDOCK, Circuit Judges, and DUMBAULD, * District Judge.
In this direct criminal appeal the only issue is whether defendants Gayle Schreier and Irwin Schreier could have been properly convicted of twenty-six counts of wire fraud in violation of 18 U.S.C. Sec. 1343. 1
The Schreiers' conduct involved manipulation of the American Airlines Frequent Flyer AAdvantage Program (AAdvantage). Gayle Schreier, who worked in a travel service office, had access to American Airlines' (American) computer reservation system, which stores passengers' names and flight information. On a number of occasions, Gayle accessed the system to replace the name of actual passengers who had made particular flights with that of G. Johnson, a fictitious person whom Gayle had enrolled as a member of AAdvantage. Schreier also added the AAdvantage account number assigned to G. Johnson by American. The fictitious G. Johnson, therefore, received mileage credits in exchange for which American would issue coupons that could be used to acquire, without any cash payment, tickets for American flights. The record does not reflect whether the actual passengers, whose names were replaced in the airline computer, were members of AAdvantage. The passengers had not, however, requested that the mileage be credited to their AAdvantage accounts, if they were members, by submitting their account numbers to the airline.
Evidence was presented that coupons were issued in exchange for mileage credited to G. Johnson. The coupons were exchanged for tickets and those tickets were used, although no evidence was presented linking the Schreiers to the issuance or use of the tickets.
Irwin Schreier's participation, by circumstantial evidence, was apparently based on his knowledge of Gayle Schreier's actions and his having set up a number of mail drops, the addresses of which were provided to American as the addresses of fictitious AAdvantage members such as G. Johnson.
The appeal turns on the Schreiers' assertion that the government's proof is fatally flawed because it did not show that the Schreiers acquired property of American; rather, if they acquired property of anyone it was of the real passengers, and the government provided no proof of any complaint by any of those passengers. Defendants assert that American had no property interest in the mileage because, as a property interest, it did not exist until claimed by a member passenger; that in American's hands, the mileage is a nullity, rights and duties associated with property do not arise until an AAdvantage member requests credit for the mileage flown. The Schreiers assert that the fact that the actual passengers had not claimed the mileage prior to flying did not foreclose them from eventually claiming it, because a non-member passenger could enroll in AAdvantage within twenty-four hours after the flight and claim mileage credit in the program. 2 In addition, a member passenger who had neglected to provide American with his AAdvantage account number before the flight could provide that information by phone or mail after the flight and be credited with the mileage flown. Thus, argue the Schreiers, the "mileage" belonged to the passengers at least until the expiration of their twenty-four hour claim period. We do not agree.
Mileage credited to AAdvantage members is considered a liability of the airline for accounting purposes. Because of American's policy allowing retroactive award of mileage, when a nonmember buys a ticket the airline acknowledges potential liability for mileage to this ticketholder. That liability comes into existence only if the ticketholder becomes a member of the AAdvantage program and requests that the mileage be credited to his account. The potential liability evaporates without consequences upon the expiration of the post-flight claim period if the passenger has not enrolled in the program and claimed the mileage.
The Schreiers' scheme involved the accumulation of mileage for which American would not otherwise be liable because it was not claimed by the passengers who actually flew. When liability is created on American's books, through a transfer of mileage from nonmember passengers to members, the victim is American, because that corporation thereby owes a liability that otherwise would not exist. By their device of replacing nonmember passengers' names in the computer with a fictional name and account number, the Schreiers have victimized American, by fraud, and through use of computer access, wire fraud. 3 The wire fraud here is not essentially different from that in United States v. Giovengo, 637 F.2d 941 (3d Cir.1980), where airline ticket agents used their access to computer generated tickets to collect from cash paying customers, pocket the money, returning to the airline as void the tickets the customers bought.
We have examined the indictment; it is consistent with our analysis and is not fatally...
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