Supreme Court Allows Prosecution of Senator’s Poor Use of American Express Points to Move Forward

Two years word broke that Senator Robert Menendez (D-NJ) been indicted on corruption charges In other words, he was charged with being a politician from New Jersey.

Allegedly Senator Menendez accepted gifts of travel and other items of value from a donor in exchange for official acts such as helping 3 girlfriends of the donor to get US visas and intervening with the Department of Health and Human Services to overturn an $8.9 million fine for the donor’s overbilling of Medicare.

However, Senator Menendez claimed that because the donor used American Express Membership Rewards points to pay for his suite at the Park Hyatt Vendome those charges should be dismissed — after all Membership Rewards points aren’t deemed to have value and don’t belong to the member. So the ‘value’ of those points isn’t over the required reporting threshold. As a result he didn’t actually file false documents when he failed to report the gift.

That’s a little like Stuart Markowitz, in LA Law, defending a mohel whose hand slipped by arguing that since the orthodox child would marry an orthodox woman who had never had sex, she wouldn’t have anything to compare the disfigured penis to — and thus there were no damages.

A judge was not persuaded by this, arguing that the Senator received something of value above the reporting threshold, regardless of how it was paid for.

Now the U.S. Supreme Court has refused to block the case based on the constitution’s “Speech or Debate Clause, which shields lawmakers and aides from legal action for legitimate legislative activities.”

Neither the Senator nor the donor are being prosecuted for redeeming American Express points at such a low value. The ~ $5000 in hotel charges were paid for with about half a million American Express points.

And since the donor was also paying for premium cabin flights for the Senator he clearly could have used the American Express points at a higher value redeeming for the flights, and using cash to pay for the hotel.

Perhaps since his travel is being funded this way by donors Menendez is so unconcerned that legislation he’s sponsoring would outlaw competition from low cost carriers and raise airfares.

When news of this Membership Rewards redemption first broke, commenter swag asked,

Gary, your recent post reminded of the time you refused to help a woman book a one way ticket to Iran for her young daughter, because you felt it was wrong.

If you had gotten a call from the donor asking you to help him use his points to book a vacation as an, um, favor, for his friend, the out of state Senator, would you have taken the business? 🙂

And andyandy replied,

@swag: I doubt Gary wanted to be “unindicted co-conspirator #1,” so probably not!

But he could offer to be an expert witness for the prosecution re: the criminally negligent use of MR points.

When South Carolina Governor Mark Sanford engaged in an affair with a woman from Argentina and resigned his office in 2009, it was revealed that he visited her using Delta SkyMiles for business class award tickets. But they were his miles.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community Milepoint.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. This could potentially put a large wrinkle into our hobby. If points can be declared to have a monetary value, then there will possibly be large tax bills in the future for some of us. Also, cash back cards could then be considered taxable. This could get ugly.

  2. @Chris Hopefully it won’t reach that point, but leave it to a politician to screw up the hobby for everyone in the country. And yes this guy is guilty as hell and should have taken a plea instead of making this bogus argument.

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