Dressed for Failure – What AOC’s Ethics Violation Can Teach You

Last month, the bipartisan House Ethics Committee wrapped up a long-running investigation into to Representative Alexandria Ocasio-Cortez’s appearance at the Met Gala in September, 2021, concluding that she did not pay enough for a custom-made dress she rented for the event – thereby making it a prohibited gift.

“While the committee did not find that Representative Ocasio-Cortez’s violations were knowing and willful, she nonetheless received impermissible gifts and must bear responsibility,” the 31-page report said. The Committee ordered Ocasio-Cortez to make additional payments, but did not reprove or otherwise censure her.

These missteps took place even though Ocasio-Cortez had engaged a partner at a well-known political law firm to guide her on how to properly accept the invitation, including personally paying for goods and services connected to attending. That a member of Congress and an established lawyer could try to abide by relevant rules but still fall short shows just how difficult ethics-related compliance can be, and reveals important lessons to risk and business leaders.

The investigation is often worse than its outcome

In its final report, the Committee found that Ocasio-Cortez’s free attendance at the Met Gala was allowed, but concluded that she impermissibly accepted gifts and provided inadequate oversight of her staff in its handling of her attendance. No formal sanction was issued, and the Committee merely sought an additional payment of about $3,000 to reflect the fair market value of the gifts. The underpayment was based on a misunderstanding about how much it cost to make the dress that Ocasio-Cortez wore to the event.

But the investigation itself was a considerably more taxing affair, starting with a preliminary inquiry by the Office of Congressional Conduct (then called the Office of Congressional Ethics) in early 2022, and extending into this report in 2025. Along the way, there were multiple witness interviews, document productions totaling more than 12,000 pages, and shifting inquiries and conclusions. Near the conclusion of the investigation, the Congresswoman’s counsel complained that her extensive cooperation with the Ethics Committee only seemed to have “increased the scrutiny” she received. As an example of this, the lawyer cited what appears to be a frame-by-frame review of social media posts about Ocasio-Cortez’s outfit at the gala, which led to a line of inquiries about the costs of a paper flower pinned to her dress. (It turned out to be about $35, which the Committee asked Ocasio-Cortez to also reimburse.)

Understandably, Ocasio-Cortez’s counsel argued that “the Committee appears to have spent significant staff time both rechecking OCE’s work, and searching for additional things that the Congresswoman would need to pay for” (emphasis original).

Similarly, in Foreign Corrupt Practices Act investigations, investigations can drag on and branch out, at substantial cost to companies. This has been a point of criticism for many years to little avail – despite repeated assurances from regulators that they will speed up their reviews. It is also why practitioners should craft their advice not just on landing on the right side of the law, but also on how to avoid an investigation in the first place.

The goalposts will appear to move

Similarly, it’s not uncommon for regulators to shift tactics during these reviews, as was the case for Ocasio-Cortez. When the (then) Office of Congressional Ethics published its findings in June of 2022, it concluded that there may have been a gift rule violation based on Ocasio-Cortez’s delay in paying for the dress and other expenses, but did not dispute its rental valuation. It also explicitly agreed that it was permissible for her partner to attend the gala as a spouse despite not being legally married.

But after referring the case to the Ethics Commission for further review, the latter not only took issue with the cost of the dress, but also contradicted the OCE and concluded that Ocasio-Cortez’s partner should not have been treated as a spouse who is thereby eligible for free attendance. Weirdly, the Ethics Commission then changed their position on spouses and guests just three months later, and announced that “any kind of guest” was eligible – but not retroactively to Ocasio-Cortez.

While seemingly unfair or illogical, this approach is not unusual during anticorruption reviews – as practitioners learn early in law school, reasonable minds can vary when it comes to interpreting rules.

Setting the control parameters

This is perhaps most apparent when it came to determining the rental value of the dress. There is no simple way to gauge the rental value of a bespoke dress, especially since designers of Met Gala dresses usually provide them to celebrities for free. Nevertheless, Ocasio-Cortez’s lawyers used market data and other public information to estimate that value, and the Ethics Committee ultimately endorsed that approach. But a key portion of that approach depends on the actual cost of making that dress, and there appeared to be little planning for how that cost would be calculated.

The truth is that there is considerable room for interpretation when it comes to determining the cost of a creative product. For instance, should time spent browsing websites for preliminary lookbook ideas count towards the cost of the final dress? How about a trip to a fabric store where several samples were looked at, in the context of multiple projects? What about general marketing and other overhead costs?

To get a sense of just how malleable the accounting can be, consider the movie business, where studios are notorious for finding extra “costs” for a production. When an actor’s pay is based on a percentage of net profits, even blockbusters like Forrest Gump and Return of the Jedi are somehow financial flops.

In concluding that the dress actually cost about $6,300 to make, the Ethics Committee relied on a document compiled by the dress designer’s accountant. While that document was purportedly made soon after the gala, it was unknown to Ocasio-Cortez, her lawyers, and even the designer’s own lawyers (who were also tasked with figuring out how much money the representative owed in connection with the apparel) until years later.

It’s not clear whether these figures are without controversy. Given that she faced no formal finding of wrongdoing, Ocasio-Cortez may have chosen not to challenge those numbers out of a practical desire to move on.

The need for oversight and recordkeeping

To state the obvious, lawyers are experts in the law, and not fashion industry accounting.

Hindsight suggests that Ocasio-Cortez’s lawyers should have come to a clearer understanding with the designer and her accountant as to how the cost of the dress would be calculated. Perhaps even more importantly, staff working for Ocasio-Cortez should have been made more aware of such arrangements, and effectively briefed on the importance of following them.

Instead, the investigations revealed that there were some back-and-forth exchanges between the Congresswoman’s staff and a publicist for the designer as to how to set the rental value of the dress. These exchanges did not appear to track the methodology that Ocasio-Cortez’s lawyer had devised to determine that rental figure. Coupled with delayed payments and the staffer’s dropped communications with vendors, this may have painted an adverse environment for the Ethics Committee’s reviewers.

Practitioners should be aware that it is often not enough to simply give risk advice – they need to help design and execute strategies for making sure that the advice gets followed, including a paper trail to document the actions. Often, this means understanding an industry or a transaction well enough to know where execution might fail, and designing proper controls to address this risk.

Forced marriages and conflicting interests carry additional danger

While Ocasio-Cortez wanted to keep the cost of the dress low, her designer had a competing incentive to showcase her skills and creativity as prominently as possible. Since the value of the publicity would far outweigh the cost of any labor or materials, the Ethics Committee concluded that the Congresswoman should have known her designer might disregard instructions about cost management:

“Given the inherent value gained from the exposure of a sitting congresswoman wearing their designs to the Met Gala,” the report said, “it is not surprising that [the designer] did not seek the congresswoman’s ‘authorization’ for the gift they provided.”

The simple way to manage this conflict would have been to use an off-the-rack dress or to pick a different designer, but the organizer of the tightly-controlled Met Gala essentially dictates which designer will dress which attendee.

For companies dealing with local set-asides or mandated partners, this scenario is a familiar one, as are the needed control elements – i.e., to communicate, document, and (at times) rein in.

Wrong public impressions

The Committee seemed determined to include gratuitous zingers that mischaracterized the analysis that Ocasio-Cortez’s team applied. Notably, the reported chided that “the comparison of a one-of a kind, custom-made designer gown to those sold commercially and rented to numerous individuals on Rent the Runway is simply inapposite.”

While this gives the impression that Ocasio-Cortez’s staff underpaid because they equated Rent the Runway prices with the rental value of the bespoke dress, the reality is more complex. Instead, data points (including prices from Rent the Runway) were used to create a formula that converted retail sale prices to one-time rental prices. This is analogous to suggesting her team used rental prices for a Kia or Honda to borrow a Ferrari when, in reality, those prices were used to calculate a ratio between rental value and sale value. Applying that ratio to a more expensive item means higher rental prices. (Further, the difference in sale prices may not have even been that stark – media reports at the time suggested that at least some dresses – including those worn by Emma Watson and Gisele Bundchen – had retail prices similar to those on Rent the Runway.)

This formula apparently passed muster, as the Committee used it to determine the fair market value of the dress rental. Nevertheless, even the New York Times couldn’t resist the quip, ending its article about the investigation by quoting the Committee in saying “Representative Ocasio-Cortez’s attempt to apply a retail rental cost to a handmade couture gown was unrealistic.”

To curry public opinion in their favor, regulators often include salient details in describing or executing their enforcement actions, be they salacious, extravagant, or simply bizarre. Inevitably this will mean that companies subject to enforcement actions will feel that some facts are exaggerated or taken out of context, and will impact reputational risk accordingly.

What could have been done instead?

In the end, representative Ocasio-Cortez may be wishing that she had never attended the event, not just from the exhausted tone in her attorney’s letters, but also because it was poorly received by many progressives. When risky but potentially lucrative opportunities arise, organizations should not only ask whether they have properly considered the risks, but also whether they have properly measured the benefits. Ocasio-Cortez and her team could have taken some of the additional control steps mentioned above, but they may have been served even better by simply declining the invitation.

Dave Lee

FCPA Compliance Consultant