Analyzing the Indictment of Senator Bob Menendez

The last time the Department of Justice indicted a sitting United States Senator, it did not end well. The indictment of Senator Bob Menendez suggests DOJ may have learned some lessons.

Senator Ted Stevens of Alaska was indicted for corruption in 2008. He was found guilty at trial shortly before the November elections, and subsequently lost his re-election bid. Before Stevens was sentenced, however, the new Attorney General Eric Holder decided the charges should be dismissed, following findings of widespread prosecutorial and FBI misconduct during the investigation and trial. The incident left DOJ with a serious black eye.

That bit of history is probably bad news for New Jersey U.S. Senator Robert Menendez, who was indicted last week. After the Stevens debacle, DOJ knows it will be under a microscope throughout this prosecution. One would expect, therefore, that before charging another U.S. Senator prosecutors would be absolutely certain they had all their ducks in a row. The detailed allegations of the indictment suggest that’s exactly what they’ve done.

The indictment of Senator Bob Menendez includes multiple counts of corruption

The Structure of the Menendez/Melgen Indictment

Menendez was charged along with Salomon Melgen, a prominent Florida ophthalmologist and businessman. The indictment contains thirteen corruption-related counts against each of them, along with an additional count of false statements that applies only to Menendez. It charges a long-term bribery scheme: over a period of seven years Melgen allegedly gave Menendez a series of expensive gifts along with hundreds of thousands of dollars in contributions to various campaign organizations and legal defense funds. In return, Menendez is alleged to have taken a variety of steps to use his power as a Senator to benefit Melgen.

Count 1: Conspiracy (both defendants)

As is common in many such cases, the indictment leads off with a conspiracy count (18 U.S.C.§ 371). Conspiracy is often used as a vehicle through which prosecutors lay out an entire criminal scheme and tell the story of their case. By its nature the charge requires the prosecution to describe all of the players, what they agreed to do, and the steps they took to fulfill their agreement. In the 68 page indictment, the first 52 pages are devoted to the conspiracy charge.

Count One alleges that from 2006 to 2013, Menendez and Melgen conspired to commit the crimes of bribery and honest services fraud. It lays out in great detail all of the things of value that Melgen gave Menendez during that time, including multiple flights on private jets, repeated use of a villa at an exclusive Dominican resort, a stay at a luxury hotel in Paris, golf outings, meals, and large contributions to a legal defense fund and various campaign organizations that would benefit Menendez.

In exchange, Menendez is alleged to have performed numerous official acts on Melgen’s behalf. These include influencing immigration visa proceedings for three of Melgen’s girlfriends, pressuring the U.S. State Department to influence the government of the Dominican Republic to honor a large contract held by Melgen to provide x-ray equipment at Dominican ports, and trying to influence officials at the Department of Health and Human Services concerning an administrative action seeking millions of dollars in Medicare overbillings that Melgen owed the federal government.

Count 2: Travel Act (both defendants)

The Travel Act, 18 U.S.C. § 1952, prohibits interstate or foreign travel with the intent to further certain criminal activities, including bribery. This count focuses on a trip Menendez took to Paris in 2010, where Melgen allegedly used his American Express points to pay for Menendez’s hotel room valued at nearly $5,000.00. It charges that Menendez, aided and abetted by Melgen, traveled from the U.S. to France in furtherance of the bribe consisting of the hotel stay.

Counts 3, 5, 7, 9, 11, 13, 15, 17: (Menendez)

Counts 4, 6, 8, 10, 12, 14, 16, 18: (Melgen)

The next sixteen counts charge eight different acts of bribery under 18 U.S.C. § 201. Each pair of counts relates to a specific bribe payment, with the odd-numbered count charging Menendez as the public official receiving the bribe and the following count charging Melgen as the person who paid it. For example, Count 3 charges Menendez with accepting a bribe in the form of a round trip flight to the Dominican Republic on Melgen’s private jet in August of 2010, and Count 4 charges Melgen with providing that same flight as a bribe.

Counts 19-21: (both defendants)

Counts 19 and 20 charge honest services wire fraud (18 U.S.C. §§ 1343 and 1346) and Count 21 charges honest services mail fraud (18 U.S.C. §§ 1341 and 1346). Honest services fraud is essentially an alternative way to charge bribery. All three counts allege that the entire seven-year bribery scheme defrauded the United States and the people of New Jersey of their right to the honest services of Senator Menendez.

Count 22: (Menendez)

Count 22 charges Menendez with False Statements, in violation of 18 U.S.C. § 1001. The Ethics in Government act requires members of Congress to file financial disclosure forms detailing gifts and income that they received during the year. This count alleges that when Menendez filed those annual forms, he failed to disclose the many gifts and benefits that he received from Melgen.

greetings from nj

Analysis of the Case – With Friends Like These . . . .

This is a quintessential white collar case, because the facts of what happened are not really going to be the issue. The defendants cannot deny that the flights took place, that the donations were made, or that Menendez took the actions that he did. The paper trail and evidence on all of those is there and won’t be disputed. What the case boils down to is not what happened but why: what was going on in the defendants’ minds?

Menendez has defiantly proclaimed his innocence and has vowed to fight the charges. He says he is angry that prosecutors “don’t know the different between friendship and corruption.” Whatever gifts he received, Menendez says, were given out of friendship, and not as part of a corrupt relationship seeking his influence. Menendez and Melgen have in fact been friends for more than two decades. They have vacationed together and have attended each other’s family events such as weddings and funerals.

In any bribery case the key is proving corrupt intent, or a quid pro quo: were the official actions taken in exchange for the gifts received? That’s why the defense is focusing on friendship: the fact that Menendez and Melgen are long-time friends potentially provides an alternative explanation for Melgen’s largesse. And if the gifts were truly given simply out of friendship – in other words, there was no understanding that Melgen would get something from Menendez in return – then there was no corrupt intent and no bribery.

There are some parallels here to the recent corruption case involving former Virginia Governor Bob McDonnell. The McDonnells also claimed that the gifts they received from their benefactor Jonnie Williams were given out of friendship. One problem for McDonnell, though, was that he had never met Williams before his 2011 gubernatorial campaign and there was no real evidence that they were in fact close friends. Menendez and Melgen, on the other hand, apparently do have a real friendship that dates back to the early 1990s.

(McDonnell ultimately succeeded in having the Supreme Court overturn his corruption convictions. For a discussion of why that case is unlikely to help Menendez, see my post here.)

But the presence of a friendship does not negate the possibility of corruption – it is not either/or. Friends may engage in criminal conspiracies and corrupt behavior together. In fact, it’s more likely that one would engage in such a scheme with a friend: carrying on and concealing a criminal conspiracy for a number of years requires a certain degree of trust and confidence in the other person. If I were prosecuting the case I’d embrace the fact that the two are close friends, not try to deny it: “Of course they’re good friends, ladies and gentlemen. You wouldn’t trust a complete stranger to keep your secrets the way these two trusted each other.”

The critical question is not whether the two are friends, but whether it was friendship alone, rather than a corrupt quid pro quo, that led to the gifts from Melgen. For a number of reasons, I think the “friendship defense” is unlikely to fly.

Concealment: Although the false statements charge against Menendez is tucked away at the end of the indictment, it will be very important at trial. In the Ethics in Government Act reports covering four different years, Menendez failed to disclose any of the private flights, resort and hotel stays, and other gifts he received from Melgen. If one or two such gifts are left off of the reports you can claim it was just an oversight. When none of the gifts over several years are reported, it looks like deliberate concealment.

False statements charges in a case like this are important not just as a stand-alone charge but for the evidence they provide about intent. People generally seek to conceal behavior when they know they have done something wrong. If these were really just gifts from an old friend, there would be no reason not to disclose them as required. Proving that the defendants took steps to conceal what they were doing goes a long way toward proving corrupt intent.

The conspiracy count also alleges that Menendez took steps to hide from his own staff some of the things he was doing on Melgen’s behalf. Depending on the nature of this evidence, it also could be very important to proving consciousness of guilt by Menendez.

The nature of the gifts: It’s going to be hard for a jury to accept that gifts like these were given just out of friendship. In most people’s experience, even very good friends don’t just give each other repeated free travel on private chartered jets and free luxury vacations.

Where the flights are concerned, it’s not just that Melgen allowed Menendez to tag along when he was already flying to his Dominican Republic villa. Melgen would send his jet (presumably from Florida) to pick up Menendez (and frequently a guest) in New Jersey and fly them to the Dominican Republic even when Melgen was not traveling. If his own jet wasn’t available, Melgen arranged to borrow or charter another private jet for Menendez’s use. On another occasion he just bought Menendez a commercial first-class ticket.

This was not just a wealthy guy occasionally giving a friend a ride.  Melgen seems to have been operating a kind of private jet charter service for Menendez. The extraordinary nature of the gifts and of Melgen’s efforts undermines the argument that this was just out of friendship.

Menendez’s behavior: Another problem for the “friendship defense” will be the nature of some of Menendez’s actions. For example, I expect the incident involving the hotel stay in Paris, which forms the basis of count 2 as well as part of the conspiracy charge, will play a prominent role at trial. According to the indictment, Menendez was planning a trip to Paris in April of 2010 to meet a female friend who would be staying at the Park Hyatt hotel. He asked his staff to look into room rates at the hotel and did some other research to see whether any special rates were available.

Then on March 24, 2010, Menendez e-mailed Melgen and asked him to book Menendez a suite or king room at the Park Hyatt. He specified that the room should feature a “king bed, work area with internet, limestone bath with soaking tub and enclosed rain shower, [and] views of courtyard or streets.” He explained that Melgen could book the room through American Express using his reward points, and that the room should be in Menendez’s name. Melgen proceeded to use nearly 650,000 American Express award points to book a Park Executive Suite for Menendez for three nights, nearly a $5,000 value.

I don’t care how close your friendship is, this does not sound like normal friend behavior. When researching rates for a hotel, when was the last time you stopped and thought “Hey, maybe I’ll just ask my good friend to pay for it for me!” And if a friend did offer to give you a trip as a gift, it’s unlikely that you’d respond with a detailed list of specifications concerning what you want the room to be like, as if ordering off a menu.  This was not a situation where Melgen was joining Menendez in Paris and simply agreed to pick up the tab; he just purchased the room for Menendez’s use, following Menendez’s specifications. Expecting a jury to believe that this behavior indicates mere friendship is, as one of Menendez’s fundraisers might say, “a big ask.”

Timing: The timing of benefits given in exchange for official actions can be important circumstantial evidence of a quid pro quo. There are some compelling details about timing in the indictment. For example, on May 16, 2012, Menendez personally met with an Assistant Secretary of State to argue on Melgen’s behalf concerning his contract dispute with the Dominican Republic. On the same day, Melgen and his family donated a total of $60,000 to a New Jersey Democratic political fund and to Menendez’s legal defense fund. (The $20,000 contribution to the legal defense fund had been solicited by Menendez’s staff on April 30, but was only paid on the day Menendez met with the Assistant Secretary. That’s even more compelling: the quid was only paid once the quo was accomplished.)

On June 1, 2012, Melgen donated $300,000 to a SuperPac and earmarked the money for Menendez’s New Jersey Senate race. Six days later, Menendez met with an HHS official to advocate for Melgen in connection with his Medicare billing dispute. Similarly, at the time of the trip to Paris in 2010, Menendez and his staff had already been working for months on Melgen’s behalf in connection with that same dispute.

Odds and ends : There are a few other details that should concern Menendez. For one, politicians in such cases frequently defend their behavior by claiming they were just doing their job by helping out a constituent. Menendez can’t make that argument, because Melgen lives in Florida, not New Jersey. That eliminates one possible alternative explanation for all of Menendez’s efforts on Melgen’s behalf.

The nature of Melgen’s Medicare dispute is also troubling. HHS found that Melgen’s medical practice had been using vials of medicine designed to treat only a single patient to in fact treat two or three, but then was billing Medicare as if a new vial had been purchased for each patient. In addition to being medically unsound and potentially unsafe for the patients, this resulted in Melgen over-billing Medicare for nearly $9 million in medicine that he never used. Jurors may wonder why Menendez worked so hard for so many years to help a doctor who allegedly was potentially endangering his patients while overbilling the taxpayers for millions of dollars.

But Menendez’s real concern has to be whether Melgen will now take a plea. In a case like this, there will be tremendous pressure on the bribe payer to cut a deal and agree to testify against the public official. Melgen could substantially reduce his own prison exposure by agreeing to plead and cooperate. If he does, that will pretty much be game over for Menendez.

Menendez claims that Melgen is a just friend — a really, really, really good friend. The truest test of that friendship may be whether Melgen stands fast with Menendez to fight the charges or agrees to turn on him and testify to save his own skin.

And when contemplating that possibility, Menendez would do well to recall the immortal words of Harry Truman: “If you want a friend in Washington, get a dog.”

dog flag

Update: This discussion refers to the original indictment. On 9/28/15 the court dismissed counts 9-12 of that indictment for failure to allege a specific quid pro quo. The government returned a superseding, 18-count indictment on 10/6/16 that omits those counts and complies with the court’s ruling. The basic nature of the charges remains the same.

Update 4/15/15:  On April 14 Melgen was indicted in Miami on dozens of counts of Medicare fraud. Some of the charges relate to the over-billing scheme discussed above, where Menendez repeatedly attempted to intercede with HHS officials on Melgen’s behalf. 

Update 4/28/17: Melgen was convicted today in Florida of multiple counts of Medicare fraud.  This will increase the pressure on Melgen to testify against Menendez. Their trial is set for September 2017.

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