Today is Monday so it is time for us to take a look at another case before the US Supreme Court. The last couple weeks we looked at cases involving the 5th and 6th amendments so this week we have a case that deals with both the fifth and sixth amendments and involves the extent to which the government is limited in action against criminal defendants with regard to asset seizure.
The case was argued before the Court on October 16th
The case began in January 2005 when Kerri Kaley, a sales representative for a New York-based medical device company learned she was under investigation by a grand jury in Miami. She was suspected of stealing prescription medical devices from hospitals and then selling them on the black market.
Kerri and her husband Brian (who was also under investigation by the grand jury) obtained an attorney to assist them in what turned out to be nearly 2 years worth of investigation.
The representation was expensive as the attorneys were required to review documents, interview witnesses, research issues, and confer with prosecutors. In order to pay their legal bills the Kaleys took out a home equity line of credit on their house and placed the funds in a certificate of deposit
In 2007 the Miami grand jury returned a series of indictments as well as a series of forfeiture orders based on the theory that the money they had was tainted. The asset forfeiture orders were obtained in an ex parte hearing and as a result their attorney was not able to make any arguments on their behalf.
The Kaleys challenged these orders arguing they were entitled to a pretrial adversarial hearing at which they could contest charges rather than an ex parte hearing at which they had no representation at all. To do otherwise would violate their Fifth Amendment rights to due process.
They further argued that since the seized money was necessary to pay for their attorney that in effect they were being denied their Sixth amendment right to assistance of counsel.
The judge in the case denied their motion and based on amended complaint expanded the protective order to include the CD and the home as well as any other assets of the defendants.
Petitioners appealed and the District Court affirmed so they appealed to the 11th circuit Court of Appeals which remanded ordering the District Court determine whether a pretrial hearing was required
On the remand the District Court did find the petitioners were entitled to a pretrial post restraint hearing but that they were only entitled to contest the traceability of the assets contained in the protective order and that they could not challenge the underlying indictment itself at the pretrial hearing.
In other words they could argue that a specific asset had been obtained with funds that were not connected to the alleged illegal activities but they could not argue whether there was enough evidence about the underlying charges.
At the hearing the court did release some funds that it agreed were not traceable to the charges but refused to release any other funds or hear any evidence from the defendants as to whether they were guilty of the charges or whether there was sufficient probable cause to presume guilt and allow for asset forfeiture.
The 11th circuit court upheld this decision and the case was subsequently appealed to the United States Supreme Court.
This is to me another very interesting case balancing the needs of the public in the form of public prosecutors to seek out and punish potential criminals against the individual rights guaranteed in the Bill of Rights
In making its decision the 11th circuit seems to be out of sync with most of the other circuit courts.
For the most part the circuit courts have followed the logic adopted in Matthews v. Eldridge (1976) 424 US 319 while the 11th circuit has tended to follow the logic adopted in Barker v. Wingo (1972) 407 US 514.
In Matthews the Supreme Court established a balancing test to determine if a given deprivation is consistent with due process. The test consists of three factors
1. The private interest that will be affected
2. The risk of an erroneous deprivation
3. The governments interest in such deprivation
The 11th circuit however applies a different test which it adopted from the Barker case.
In the case of United States v Bissell (1989) 866 F.2nd 1343 the 11th circuit adopted a four-part test which is as follows
1. The length of the delay between seizure and adjudication
2. The reason for the delay
3. Whether the defendant has asserted their right
4. The prejudice to the defendant
In applying this test to the Kaleys the prosecution argued that there was not sufficient prejudice to the defendant because they had other sources to pay their legal fees. In addition the prosecution argued that the defendants could hire a less expensive attorney and that the law did not require them to have funds to hire any attorney merely that they had the funds to hire some attorney.
However the defendants countered that these sources primarily college funds and other similar assets could not be accessed without significant penalties and thus to force the defendants to access these funds as opposed to other funds was significantly prejudicial.
The defendants further argued that given the seriousness of the charges and the complexity of the case they would need to hire an attorney with significant expertise and that such expertise would obviously cost more money and thus it was reasonable for them to expand a higher amount on their attorneys fees
It is not appear that the court has directly addressed this particular conflict between the jurisdictions or these specific kinds of questions.
Looking at the 6th issue the government argues that in the case of United States v. Monsanto (1989) 491 US 600 that the court held a pretrial order freezing assets even where such assets were to be used for attorney is valid and does not violate the Constitution (indirectly examining the 6th amendment issue)
However even the government concedes that the Monsanto ruling did not examine whether hearing was required under the due process clause to establish probable cause or what would be necessary to make such a hearing adequate under the Constitution.
In Monsanto the court ruled for the government based on other theories and therefore did not address directly the due process question which is presented here.
The government argues however that the probable cause finding by the grand jury is sufficient to warrant seizure of the assets since failing to seize the assets could potentially allow a defendant to hide or otherwise dispose of the assets before trial and thus would defeat one of the objectives of the law that is to deprive a criminal of the proceeds of their crime
The defense makes several arguments in response
To begin with it is worth remembering that the Fifth Amendment not only protects against deprivation of property without due process but also deprivation of liberty. If you effectively deny the defendant their ability to obtain a solid defense in the form of a well trained attorney you could be depriving them of liberty right
Furthermore since the sixth amendment does guarantee with the right to counsel it is certainly a very compelling individual interest that needs to be protected.
The defense also is making an argument that the Matthews standard should be applied rather than the Bissell standard. Since virtually all of the circuits other than the 11th agree on this point that is a rather strong argument in favor of the court applying the Matthews standard
The defense further argues that the Matthews test would require an adversarial hearing at which the defendant can challenge the indictment.
Looking at one prong of the Matthews test the possibility of error defense counsel argues that forfeiture hearings frequently are in error and an ex parte hearing is hardly going to correct that since there’s nobody to argue the other side.
Further there is certainly going to be a significant deprivation of a private interest since the defendants will see their assets frozen in their ability to hire counsel (and potentially their sixth amendment rights threatened) should the motion be granted.
Although the defendants concede that there are circumstances under which assets can be seized even where such seizure would threaten the ability to hire counsel of choice they nonetheless argue that the sixth amendment interest at least requires there be a contested hearing
Finally the defendants make the point that there is no compelling interest on the part of the government to avoid such a hearing. If the government has a strong case to prove their motion will be granted.
They dismiss arguments by the government that prosecutors have an interest in protecting witnesses and their strategies from early exposure by pointing out there are procedures which can be used to protect such interests from harm.
In looking at the case it does seem to me that the defendants have a pretty compelling argument. Certainly the government does have an interest in protecting potential witnesses as well as preventing criminal defendants from of sounding with ill-gotten gains.
Indeed while this particular case deals with medical devices obviously we cannot help but consider applications in organized crime and drug dealing cases. But even there are certainly would be no problem with applying the Matthews test, indeed virtually all the other circuits have
If there is a significant risk of the defendant absconding with assets then under certain special circumstances the court could allow a temporary freeze on assets pending the hearing at which point the defendants would have the right to challenge both the underlying indictment and the traceability of assets.
This would seem to satisfy the interests of both sides although in most cases I would think simply having a contested hearing is sufficient
As I said above the case was argued before the Justices in October and the discussion did little to give a clear view of where the Court is headed.
Several Justices did seem sympathetic to the argument that any possible burden to the government relating to a more expansive pre trial hearing would be outweighed by the benefit to the defendant in protecting their Constitutional rights. But it was not clear if this would make up a majority or not.
In addition both liberal and conservative Justices raised questions about the potential conflict of logic raised by the case. The grand jury finding of probable cause is very deeply embedded in the courts and thus is something the Court is reluctant to tamper with. In addition some wondered that since the hearing would require the judge in the case to find no probable cause for the trial, how could the trial then proceed ?
Justice Ginsburg was also concerned that if released the assets could be spent on something other than the defendant’s defense case.
Justice Kagan also raised questions about the topic when the defendant’s attorney pointed out that hearings like those proposed in this case have been held in other circuits over the past 25 years. Pointing out that virtually all of these hearings went in favor of the government Kagan wondered what the real point of requiring them in all circuits would be.
At the same time the Justices also seriously questioned whether it would be that much of a burden for these hearings to take place given the potential benefit to an innocent defendant.
My guess is that the court will come down to some sort of narrow compromise where they indicate that such hearings must take place but they will give the judge int he case a great deal of discretion to make sure no abuses occur.