Yes. The terms of use are quite clear in that regard.
Besides not traveling with your friend, which would then allow him to upgrade as your traveling companion, you could be seen as endeavoring to preclude others from their own rightful upgrade opportunity.
The AC agent had the right to confiscate and void the certs without Security. Choosing to confront your friend with Security leads me to believe that there was more to this story, but to hear the other side of things, we would have to hear the agents version.