Academic journal article Harvard Law Review

Sixth Amendment - Right to Counsel - Pretrial Asset Freeze Challenges

Academic journal article Harvard Law Review

Sixth Amendment - Right to Counsel - Pretrial Asset Freeze Challenges

Article excerpt

Criminal forfeiture statutes allow the government to seize assets derived from criminal activity to compensate victims and fund law enforcement. To prevent criminals from disposing of assets before conviction, courts may freeze potentially forfeitable assets prior to trial based on a grand jury's finding of probable cause that the defendant committed a crime to which the targeted assets can be traced. (1) When assets set aside to hire a lawyer are frozen, however, this regime implicates the Sixth Amendment's right to counsel of choice. (2) Last Term, in Kaley v. United States, (3) the Supreme Court held that defendants have no constitutional right to challenge a grand jury's finding of probable cause of guilt for the purpose of defeating a pretrial asset freeze, even if this freeze results in an inability to hire one's attorney of choice. (4) Although this decision will likely prove harmful to defendants, it was also the Court's best available option. While allowing asset freezes without hearings diminishes the credibility of the criminal justice system, undermining the grand jury's probable cause determination would have diminished it even more. Only Congress can appropriately balance the interests at stake and recalibrate criminal forfeiture and asset freezes without causing substantial further harm.

Kerri Kaley, a sales representative offering prescription medical devices to medical facilities, sometimes received surplus devices from these facilities when newer models became available. (5) Together with other sales representatives and her husband, Brian Kaley, she sold such surplus equipment to a Florida company. (6) In January 2005, the Kaleys learned that they were being investigated for a conspiracy to transport these allegedly stolen devices across state lines. (7) The Kaleys sought counsel and, to pay legal fees, set aside a certificate of deposit purchased with a $500,000 home equity loan. (8) On February 6, 2007, a grand jury indicted the Kaleys on seven counts, and, pursuant to 18 U.S.C. [section] 981(a)(1)(C), the indictment sought criminal forfeiture of all property traceable to the indicted offenses, including the certificate of deposit. (9) The magistrate judge denied the Kaleys' request for a pretrial, post-restraint evidentiary hearing. (10)

The district court affirmed these rulings, but on appeal the Eleventh Circuit found that the district court had misapplied circuit precedent regarding pretrial hearings. (11) On remand, the district court granted a hearing but restricted its scope to whether the restrained assets were involved in the offenses charged in the indictment, an issue the Kaleys did not contest. (12) The Kaleys instead argued that the protective order should be vacated because the indictment was unsupported by the underlying facts. (13) On October 24, 2010, the district court denied the Kaleys' motion to vacate the protective order and the Kaleys appealed, arguing that the asset freeze denied them their right to retain their counsel of choice. (14)

The Eleventh Circuit affirmed, agreeing with the district court that pretrial hearings challenging asset restraints are limited to the issue of the asset's traceability to the charged crime. (15) Writing for the panel, Judge Marcus (16) noted that Congress had clearly not provided for a hearing to challenge a restraining order post-indictment. (17) Although circuit precedent provided a due process balancing test under which such a hearing was sometimes required, the court observed that "the hearing's exact nature and contours" had not been defined. (18) In deciding that the hearing did not include the right to challenge the grand jury's finding of probable cause regarding guilt, the court appealed to the legislative history of 21 U.S.C. [section] 853 and to Supreme Court precedent as clearly establishing that courts should not "look behind" indictments (19) or challenge them in ways that would "effectively ... [constitute] preliminary trials on the merits. …

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