Hmmm.... I don't know much about how pinball distributors work or their margins. However, I have worked with many (and set-up supply agreements) distributors for other products.

It looks like most of the scam involved shipping Stern pros in-lieu of a more expensive item.

1) Does stern price tier their distributors? If so, a distributor would have a benefit in over-buying and then off-loading extras to a 3rd party. We used to see that in the marker I worked in... the creation of a black market is one of the top arguments in using a tiered system.

2) Does Stern tie the number of LE's you receive to the number of pro that you order? If so, I could see someone over-buying pro's (which i suspect have the smallest margins) in order to get a larger allotment of LE's

In the end... I am not sure if it matters... since it is between Stern to whack the distributor back in place. However, I appreciate the OP for pointing out the scam. Man, you really have to be on toes when buying games.