United States v. Gayle Schreier and Irwine Schreier
908 F.2d 645
In the United States Court of Appeals for the Tenth Circuit
Case Number 89-5126, 5127
Before Circuit Judge Logan, Circuit Judge Baldock, and District Judge Dumbauld
Decided on July 13, 1990

Relevancy of the Case: Consideration of intangible property as the basis of a wire fraud charge

Statutes and Provisions Involved

• The Wire Fraud Statute, 18 U.S.C. § 1343

Relevant Facts of the Case

• The defendants’ conduct resulted in the manipulation of the American Airlines Frequent Flyer AAdvantage Program (AAdvantage). The first defendant worked in a travel service office and had access to the airline’s reservation system. This reservation system stored passengers’ names and flight information.
• On multiple occasions, the first defendant accessed this system and modified the passengers’ name to G. Johnson. Johnson is a fictitious person we enrolled as an AAdvantage member.
• Johnson’s account would acquire coupons that can be used to obtain tickets for the airline’s flights.
• The second defendant’s participation is based on his knowledge of the first defendant’s actions. He set up several mail drops. They used these email addresses to create accounts on the AAdvantage program using fictitious names.

Prominent Arguments by the Counsels

• The defendants’ counsel argued that the airline had no interest in the mileage coupons as a property interest. These coupons did not exist until claimed by a member. As a result, the mileage credits are a nullity from the airline’s perspective. The prosecution failed to show that they acquired the airline’s property. If they, at all, acquired property, it was of the actual passengers. However, the prosecution provided no proof of any of those passengers’ complaints.

Opinion of the Bench

• Mileage credited to AAdvantage members is an airline’s liability for accounting purposes. However, this liability only exists if a ticketholder becomes a member of the program and requests the airline to credit the mileage to his account. After the post-flight claim period is over, the potential liability evaporates.
• The defendants have victimised the airlines by fraud through computer access. They replaced non-member passengers’ names in the computer with a fictional name and account number.
• Their indictment is consistent with the court’s analysis and is not fatally defective. The Supreme Court has recognised that taking intangible property may be the basis of a wire fraud charge (Carpenter v. United States, 484 U.S. 19).

Final Decision

• The Court of Appeals affirmed the District Court’s decision.

Srikari Ammanamanchi, an undergraduate student at the NALSAR University of Law, prepared this case summary during her internship with The Cyber Blog India in May/June 2022.