A scam that cost U.S. airlines millions in ticket sales was broken up Tuesday with the arrests of 16 travel agents.
Law-enforcement authorities said the 16 agents, plus another 15 who are being sought for arrest, worked for about 20 travel agencies in New York, New Jersey, Florida and Texas that legitimately obtained large blocks of airline tickets on credit, sold them at substantial discounts and then went out of business, pocketing the proceeds.
"These defendants misappropriated millions of dollars rightfully due to the airlines, causing substantial economic harm to an industry vital to the economy of this district," said Zachary Carter, U.S. attorney for the Eastern District of New York.
FBI Agent Rodney Davis said a few travelers were stranded at foreign airports after it was discovered their tickets had been obtained fraudulently.
Assistant U.S. Attorney Julie Copeland, who is prosecuting the case, said travelers should have been suspicious of the discounts they were getting. For example, the agents allegedly sold tickets to Pakistan, which normally cost $3,000, for $1,200 and tickets to the Dominican Republic, which ordinarily cost about $400, for $100.
William A. Gavin, head of the FBI's New York office, said such "bust out" schemes have cost the airlines hundreds of millions of dollars since 1992. As part of a two-year investigation into the scam, he said agents set up an undercover travel agency, "Heidi Travel Plus," in New York City.
"Almost immediately, the agency was contacted by travel agents across the country offering discounted tickets," he said. Gavin said the FBI agents ended up buying stolen and counterfeit tickets as well as tickets illegally obtained in the scheme.
The defendants, mostly from New York, were charged with conspiracy to commit mail fraud or wire fraud and face up to five years in prison.