On August 27, 2006, two Republican state lawmakers filed an ethics complaint against Menendez, alleging he broke conflict-of-interest rules when he rented property out to a nonprofit agency that receives federal funds. Menendez helped the organization win designation as a Federally Qualified Health Center in 1998.
That designation allowed the agency to receive additional federal grants. Menendez allies noted that the organization in question, the North Hudson Community Action Corp., which provides social services and health care to the poor and was founded in 1960, had received federal funding for years before Menendez was in Congress, and receives its funding based on mathematical formulas. Menendez maintains that he rented the property out below market-value because "he was supportive of its work". The total rent collected over nine years was over $300,000.
In September 2006, just a few weeks before the 2006 senate elections, the office of the US District Attorney, Republican Chris Christie, began investigating the rental deal with NHCAC,
subpoenaing records from them. Some Democrats criticized the investigation, particularly the timing of the investigation and news leaks, as being politically motivated.
An effort to recall Senator Menendez was launched in early 2010 by a group of New Jersey citizens. Although Article 1, Paragraph 2(b) of the New Jersey Constitution expressly authorizes such a recall, state officials fought the effort in court.
On March 16, 2010, a State Appeals court ruled that the recall petition could go forward. Menendez said he was surprised that a group claiming to be true to the Constitution is trying now, in his words, "to undermine it". Menendez appealed the ruling. Legal experts have debated the constitutionality of a state recall of a federal officeholder. On November 18, 2010, the New Jersey Supreme Court found that the New Jersey provision violated the U.S. Constitution.
In 2010, The Wall Street Journal reported that Menendez had written to Federal Reserve Chairman Ben Bernanke, asking him to approve an acquisition that would rescue from the prospect of receivership a New Jersey bank, First Bank Americano, operated by Menendez contributors. It was discovered that "eight of 15 directors, including the bank’s chairman and vice-chairman, have been contributors to Menendez or his political action committee."
Former federal bank regulator William K. Black called the letter "grotesquely inappropriate" and said that "the letter crossed an unofficial line by asking regulators to approve an application instead of simply asking that it be given consideration." An aide to the senator said that his decision to write the letter was not influenced by political contributions. A highly critical report by the Federal Deposit Insurance Corporation found that the institution had engaged in unsafe or unsound banking practices, including operating without adequate supervision by its board of directors, an excessive level of delinquent or bad loans, inadequate earnings and insufficient coverage of its assets.
On December 12, 2012 it was reported that the Senator's office had an unpaid intern volunteering who had let his visitor visa expire and who was a registered sex offender. Immigration and Customs Enforcement had been aware of the man as early as October 2012 but according to the Associated Press, the U.S. Department of Homeland Security (DHS)
instructed federal agents not to arrest the man until after Election Day. Menendez denied knowing about the allegation of the directive to delay the arrest and only recently learned of the arrest. According to two federal officials who spoke on condition of anonymity because they were not authorized to discuss the case, the intern was arrested in front of his home in New Jersey on December 6, 2012.
It was reported on March 14, 2013, that a federal grand jury in Miami is investigating Menendez regarding his role in advocating for the business interests of ophthalmologist Salomon Melgen. Menendez's efforts to push U.S. government officials to enforce a lucrative port security contract would benefit one of his major donors, Dr. Salomon E. Melgen, as well as Pedro Pablo Permuy, a former national security adviser and senior legislative aide to Mr. Menendez.
In 2012, Melgen's business had donated over $700,000 to Majority PAC, a political action committee supporting Democratic candidates; the PAC spent more than $582,000 on Menendez's behalf.