Got caught doing what exactly? Booking tickets on a flight?
If he wasn't using fake names or anything, it sounds like he was just trading his time for free airfare.
The most common reason I've seen is a large corporation cancelling or rescheduling an all-hands / quarterly meeting that everyone above a certain level (e.g. directors / VPs) from non-HQ offices travels to HQ to attend.
For an Oakland to Las Vegas flight, I'd guess a conference, music festival, or sporting event was cancelled.
Statistics generally (there are exceptions of course) makes very broad assumptions about independence and random selection of your samples.
For a group of people as correlated as having the same destination at exactly the same time using the same airplane I would be very wary of applying any statistics at all, even ignoring the possibility of a large group.
Hundreds of otherwise independent people can decide to not show up simultaneously due to terrorist attacks, corona, a cheaper alternative, a conference being cancelled, etc.
I think they don't overbook as much as in the US. They try to avoid bumping off passengers, because the cost of doing it is much higher. They can't just give you an upgrade ticket. They have to reimburse all occurring cost and they have to pay an additional 250-600 EUR compensation depending on the length of the flight.[1]
[1]: https://europa.eu/youreurope/citizens/travel/passenger-right...
I've seen airlines offering compensation worth well more than these minimums, however. Anecdotally it seems fairly common to get hundreds of dollars for a relatively short domestic flight.
Also, the ones they do bump off are the standbys and reduced fare, which is why you don't often hear about fully paying passengers being forced to take another flight - and in any case, if they're still over capacity, the promises of free upgrades and money mostly result in enough volunteers to prevent that from happening.
I'm not sure about any differences in US regulations vs EU regulations for this issue though.
I hope the cops did nothing?
It was the airline's fault for overbooking and they offered bump compensation and the guy took it. It sounds legal to me. If the airline wanted to avoid this they could easily have done that by not overbooking.
Over-booking of flights used to be a huge problem back in the 90's and earlier. You'd get on the plane, someone would be in your seat already, and that's when you found out you didn't get to fly on that flight.
Airlines figured out this pissed people off and started counting tickets before letting people onto flights. If they had too many people waiting to board a flight, they would make an announcement and start offering free stuff to people willing to be bumped or take a later flight (this still happens in rare circumstances today but used to happen on most flights for a few years).
I remember listening to a gate agent threatening to call the cops on a college age guy who was picking up his third free ticket of the week for accepting being bumped off an Oakland to Las Vegas flight. He'd apparently figured out that that flight was always overbooked (which wouldn't have taken a rocket scientist given the high rate of overbooking at the time), and the only reason he got caught was the same agent kept getting assigned to work the counter for that flight often enough to remember his face.
Interestingly, I also flew on a nearly empty flight once during that era. The pilot came on the loud speakers and said "the next time you are wondering why flights are over booked, remember this flight - this plane was booked to 120% capacity (or some other number well over 100%) for this trip."