Milo Mindbender’s Half-Price Airline Vouchers?

February 17, 2011

On April 1, 2010, Victoria Scardigno, a former sales agent for Continental Airlines at Newark Liberty International Airport in New Jersey, was arrested on wire fraud charges stemming from a $1 million scheme involving the sale of hundreds of fake ticket vouchers.

Let me warn you - don't be dazzled by the million-dollar price tag.  This is less a brilliant crime than a jaw-dropping example of stupidity.

The criminal Complaint and Indictment alleged that Scardigno stole hundreds of vouchers that Continental uses to compensate customers for flight delays, cancellations, or bumping caused by overbooking. Scardigno apparently hatched a scheme to sell the stolen vouchers by telling buyers that they would be redeemable for a round-trip flight anywhere in the world.  What proved to be the tantalizing, wriggling worm at the end of the baited hook was Scardigno's charge for these roundtrippers: between $500 and $600.

The Take

Okay, that much of any crime plan we all can appreciate. You steal something worth $X. You find a way to sell the purloined items for $X-plus.  That "plus" is your take - it's the whole point of any crime. Ya gotta make a buck for the risk of jail.

Unfortunately, the concept of "plus" seemed to have eluded Scardigno. She just didn't seem to get the hang of the whole take thing.

At the time of her arrest, it was alleged that Scardigno sold over 1,750 such vouchers, at a purchase price of approximately $500 to $600; however, as the case developed, the number of vouchers sold appeared to be in excess of  2,100. Many of these vouchers were promised for travel to Israel. Scardigno took in approximately $1 million from the fraud, which was deposited directly into her personal bank account.

The federal prosecutors saw the need to inform us that Continental did not offer such a discounted voucher program . . . like, duh.  Of course, the truly interesting fact that the prosecutors did provide us with is that when passengers attempted to redeem their vouchers through Scardigno, she resorted to a fairly lame solution of using some of her bank funds to purchase tickets. 

Doing the Math

Let me explain why dipping into her own bank funds (albeit the initial proceeds of her crime) wasn't necessarily a sound solution for Scardigno, much less one that was thought through before her life of crime began.  I went online at Continental Airlines' website and found that a round-trip Economy ticket from Newark Airport to Tel Aviv would cost about $1,200. which likely explains why so many folks were happy to shell out about half-price for the Scardigno vouchers. 

And now we arrive at the basic flaw in Scardigno's fraud.  It seems that Scardigno's sophisticated crime here was to sell $500 to $600 vouchers for $1,200 flights, and, thereafter,  she would pay the purchase price for the redeemed flights - which, as we see, was about double what she took in when she sold the vouchers. 

Ummm . . . Ms. Scardigno, ma'am . . . lemme see if I can put this delicately:  You can't sell something for X and then buy it back at 2X and make a profit.  Remember that thing I discussed about your "take?"  Maybe I went a bit too fast for you.  Your "take" from a crime has to exceed your costs.  If your costs of perpetrating a crime exceed your "take," then you need to find another line of work.

Oh, you didn't think that far ahead? What?  Oh, you didn't pass High School algebra?  Okay, maybe that explains it.

Final Reckoning

Apparently, when the enormity of this idiocy caught up to Scardigno, she was unable to afford to redeem the vouchers and most of the purchasers were left holding the bag. Not that it was a total loss for Scardigno, it's alleged that she managed to use some of the fraudulent proceeds to purchase thousands of dollars of luxury goods from the likes of Louis Vuitton and Coach.  Good for you!  Pocketbooks are very useful fashion accessories in prison.

Scardigno, 33, of Weehawken, New Jersey, was charged with one count of wire fraud, which carries a maximum penalty of 20 years in prison, a fine of $250,000 or twice the gross gain or loss, and restitution.

On February 15, 2011, Scardigno pled guilty to the one count of wire fraud in federal court in Manhattan. 

Milo Mindbender's Egg Scam

Because I am a child of the ‘50s and ‘60s, the Great Scardigno Continental Voucher Caper puts me in mind of a similar, business venture in Catch 22, that 1961 iconic novel by Joseph Heller.  If you haven't read the book, run out and buy it; if you did read it, perhaps you recall Capt. John Joseph Yossarian trying to understand how Lieutenant Milo Minderbinder, the mess officer,  bought eggs for seven cents each, sold them for five cents, but still made a profit.  Here's the excerpt of that scene:

"I don't understand why you buy eggs at seven cents a piece in Malta and sell them for five cents."

"I do it to make a profit." 

"But how can you make a profit? You lose two cents an egg."

"But I make a profit of three and a quarter cents an egg by selling them at four and a quarter cents an egg to the people in Malta I buy them from for seven cents an egg. Of course, I don't make the profit. The syndicate makes the profit. And everybody has a share."

Yossarian felt he was beginning to understand. "And the people you sell the eggs to at four and a quarter cents a piece make a profit of two and three quarter cents a piece when they sell them back to you at seven cents a piece. Is that right? Why don't you sell the eggs directly to you and eliminate the people you buy them from?"

"Because I am the people I buy them from," Milo explained. "I make a profit of three and a quarter cents a piece when I sell them to me and a profit of two and three quarter cents apiece when I buy them back from me. That's a total profit of six cents an egg. I lose only two cents an egg when I sell them to the mess halls at five cents apiece, and that's how I can make a profit buying eggs for seven cents apiece and selling them for five cents apiece. I pay only one cent a piece at the hen when I buy them in Sicily."

"In Malta," Yossarian corrected. "You buy your eggs in Malta, not Sicily."

Milo chortled proudly. "I don't buy eggs from Malta," he confessed… "I buy them in Sicily at one cent apiece and transfer them to Malta secretly at four and a half cents apiece in order to get the price of eggs up to seven cents when people come to Malta looking for them."