Cautionary tale: Liquidating your spouse's points when their assets are frozen can land you in jail
As Amanda Merrill learned recently, credit card rewards are considered assets by the Department of Justice. According to a press release from the United States Department of Justice in the District of Maryland, she pleaded guilty to the federal charge of conspiracy to remove property to prevent seizure, obstruct justice, and disobey court orders after trying to use American Express Membership Rewards points earned on her husband's business card.
Amanda's husband, Kevin Merrill, was indicted on Sept. 11, 2018 on federal charges of conspiracy to commit wire fraud, identity theft, money laundering conspiracy and money laundering in connection with a $394 million Ponzi scheme. The Sept. 11, 2018 indictment included forfeiture of $39 million, six real estate properties, 25 cars, a boat, an interest in an aircraft, an insurance policy and jewelry. But, the Securities and Exchange Commission also brought civil enforcement action against Kevin Merrill two days later on Sept. 13, 2018 in which they issued a temporary restraining order freezing assets and directed anyone who currently held affect assets to disclose these items.
So, where do the points come in? Amanda Merrill was specifically warned against attempting to hide or move assets. Yet, starting on Oct. 3, 2018, she redeemed American Express Membership Rewards points from her husband's business credit card, for which she wasn't an authorized user, for 127 gift cards to businesses including Target, Home Depot, Nordstrom, Sephora and Starbucks.
The Department of Justice says the gift cards she obtained using his Amex points were worth $26,075. Since you usually only get 0.7 cents of value per Amex point when redeeming toward gift cards, this means she likely redeemed around 3,725,000 Membership Rewards points. TPG's latest valuations peg the value of these points at $74,500, which is enough to plan some amazing trips -- assuming your points aren't earned through illegal means.
Amanda Merrill will be sentenced on Jan. 22, 2020 and the government will likely recommend that she serve 12 months on electronic home monitoring with work release and restitution since she has two young children.
U.S. Attorney Robert K. Hur had the following to say about the case:
This prosecution demonstrates our commitment to the integrity of the judicial process. When the district court enters an order in a case, we expect the affected persons to abide by the order, not conspire to remove and hide assets...We will prosecute those, like Amanda Merrill, who hide assets which are subject to seizure, who obstruct justice, and who attempt to keep ill-gotten gains for their own benefit rather than restoring them to the victims of fraud.
It's unclear how the government would have used Merrill's American Express Membership Rewards points to help victims of fraud. But, if you're looking for how to use your (legally obtained) Membership Rewards points, here are some ideas:
- Best ways to use Amex Membership Rewards points
- How to redeem Amex Membership Rewards points for hotels
- Best ways to redeem Amex points on Oneworld airlines, SkyTeam airlines and Star Alliance airlines