B-218524 April 1, 1986

B-218524 April 1, 1986

Federal judge questions our decisions on the use of bonus points accumulated through frequent flyer programs. The judge questions our holding that a bonus ticket earned through both personal and official travel is the property of the Government and argues that the "taking" of personal bonus points is unconstitutional. Our decisions hold that a bonus ticket earned for both personal and official travel is the property of the Government. Discount Coupons, 63 Comp.Gen. 229 (1984). Our decisions are supported by the principle of a constructive trust where the Government has an election of remedies to seek damages or to claim the enhanced property (the bonus ticket).

The Honorable L. Ralph Mecham Director Administrative Office of the United States Courts

Dear Mr. Mecham:

This is in response to a letter from your office dated April 11, 1985, concerning the use of bonus points accumulated through airline promotional programs.

Your letter states that a United States district judge has questioned our decisions concerning the use of bonus points earned by federal employees through promotional programs while the employees are on official travel. The judge suggests that federal employees be permitted to account for those bonus points which were attributable to official travel and to reimburse the Government on a pro rata basis when the employee uses a ticket which was earned through both official and personal travel. The judge questions our decisions holding that a ticket earned through both personal and official travel is the property of the Government, and the judge believes that a "taking" of the bonus points accumulated during personal travel without compensation is unconstitutional.

As you have noted, we have held that bonus tickets which are partially or wholly earned through official travel are the property of the Government and must be turned over to an appropriate official of the Government. Discount Coupons, 63 Comp.Gen. 229 (1984). In that decision we pointed out that federal employees must account for any gift, gratuity, or benefit received from private sources incident to the performance of their official duties and that any payments tendered to federal employees are viewed as having been received on behalf of the Government. Discount Coupons, cited above; and John B. Currier, 59 Comp.Gen. 95 (1979).Furthermore, we held that such bonus goods may not be retained by the employee; this rule prevents double reimbursement to the employee from the-Government and a private source and avoids a conflict of interest. Discount coupons, cited above.

In a related case, we held that an agency may not return promotional benefits to the employee even if the agency determined that the Government would be unable to use those benefits. Defense Logistics Agency, B-210717.2, February 24, 1984. We stated in that decision that the promotional benefits received by an employee while on official travel were the property of the Government and must be disposed of in accordance with regulations issued by the General Services Administration (GSA). See 41 C.F.R. Sec. 101-25.103-2 (1984).

Furthermore, we held in another decision that an employee may not use the bonus ticket for personal travel and reimburse the Government for that portion of the ticket earned as a result of official travel. Abraham Frydman, B-212559, February 24, 1984. We again stated that the promotional materials which accrue as a result of official travel are the property of the Government, and we cautioned that employees who wish to keep bonus gifts or incentives must make certain that all mileage or trips are paid from personal funds. Frydman, cited above. Therefore, based on this prior decision, we would object to the judge's proposal to reimburse the Government on a pro rata basis for the value of a bonus ticket earned through both personal and official travel.

Finally, in a decision where an employee improperly used a bonus ticket for personal travel, we held that since the violation took place prior to issuance of the GSA regulations or our decisions, we would allow the employee to reduce his liability for repayment based on the percentage of travel paid by personal funds. John D. McLaurin, 63 Comp.Gen. 233(1984). However, we also held in McLaurin that any future use of promotional gifts would result in liability for the full value of the bonus or gift, citing Discount Coupons, cited above. See also Henriette D. Avram, B-2168221 March 18, 1985.

Your letter states that the judge argues that bonus points which are accumulated during personal travel belong to the recipient and the "taking" of such property, without compensation, violates the "compensation" provision of the Fifth Amendment. However, we believe that the taking problem arises only in considering what restitution the Government may claim after a violation occurs when an employee accumulates personal and official travel credits and converts them to a bonus ticket used for personal travel.

Our decisions are supported by the principle that if an employee improperly uses official travel credits by converting the mileage or bonus points into a ticket for personal travel, the ticket becomes subject to a constructive trust in favor of the Government. See generally, 76 Am. Jur. 2d, Trusts, Secs.248-249 (1964). Under a constructive trust, the Government has an election of remedies either to seek damages for misuse of the travel credits earned during official travel or to-claim the enhanced property (the bonus ticket). See Am. Jur. 2d, Trusts, Sec. 253 (1964); and United States v. Drumm, 329 F. 2d. 1091st Cir. 1964); citing United States v. Carter, 217 U.S. 286 (1910).

To summarize, in our opinion the aggregation of personal and official mileage by a Government employee is improper because it involves the use of public employment for private gain. Since the redeemed ticket is a benefit derived from this improper transaction, the Government may elect to claim the ticket in restitution for the damages suffered through wrongful conversions of the official travel credits. To avoid this result, we again emphasize that an employee who wishes to preserve his rights in mileage points earned with personal funds must not aggregate that mileage with mileage points earned on official business.

We trust that this is responsive to your inquiry.

Sincerely yours,

Harry R. Van Cleve General Counsel