The Supreme Court heard oral argument recently in a case that has significant potential implications for defendants facing a pre-trial seizure of their assets, which they argue are needed to retain counsel to handle their defense.
In Kaley v. United States, No. 12-464, a married couple was charged with offenses relating to an alleged medical device scheme, and the district court granted a pretrial restraining order precluding the couple from disposing of certain assets, including their home. The couple sought a pretrial hearing to challenge the seizure, arguing that their property rights in their home are an interest that outweighs the government’s interest in a potential forfeiture if the criminal case is successful, and that they needed the money to hire counsel of their of choice. The district court denied the couple the ability to argue at a post-restraint hearing that the lack of probable cause in support of the indictment is a basis to overturn the seizure.
The government argues that the couple is seeking a remedy that goes beyond their mere property rights in the seized assets. Because the grand jury’s probable cause determination is not challengeable until trial, and because the grand jury process is deeply rooted in the traditions of our justice system, the pretrial seizure does not violate the standards of due process. The government also argues that it would be unreasonable to allow a defendant who is released on bond pending trial to challenge the grand jury’s probable cause determination in order to retain property, but to deny other defendants who are detained pending trial not to challenge the grand jury’s determination to protect their freedom.
Defending complex white collar cases can be, and often is, expensive. Many would not feel concern over pretrial seizure of assets if a defendant was using assets that were acquired with the proceeds of an alleged fraud scheme to fund his defense. On the other hand, many feel that pretrial seizure of substitute assets that are not traceable to the alleged scheme, simply to maximize potential recovery by the government only if the case is successful, is overly aggressive. What is clear is that the outcome of this case will be critical to the ability of some defendants to retain counsel of their choice. And, it certainly puts another round of focus on the scope of the government’s asset forfeiture program.