(Alleged) Crime Doesn’t Pay (Lawyers)

Let’s say you are a sales representative marketing medical supplies for a well-known corporation. Now imagine that the government begins an investigation of whether some of the medical devices you’ve sold were stolen. The assistant United States attorney takes the case to a federal grand jury, which hears only the witnesses the prosecutor calls, and obtains an indictment. Luckily for you, you are one of those defendants who can afford to retain counsel of your choice because of the money you have made in business. Right? Wrong.

In Kaley v. United States,[1]  the United States Supreme Court again turned back an attempt by federal criminal defendants to argue that they had a right to use their earnings to retain counsel of their choice to defend them in a criminal case.

The defendants in Kaley were in fact sales representatives for a subsidiary of Johnson and Johnson. The indictment accused them of transporting stolen medical devices across state lines. The defendants contested the allegations and sought to show that the devices were unwanted excess hospital inventory that they lawfully marketed to others.

After indictment, the government obtained a restraining order under 18 U.S.C., Section 853(e)(1) to prevent the defendants from transferring any assets traceable to the alleged offenses. The Kaleys sought relief from the order. They wanted to be able to use one of the restrained certificates of deposit to pay legal fees.[2]

Under federal forfeiture statutes, defendants’ assets can be restrained before trial on a showing of probable cause that the defendants committed certain offenses and that the property is connected to the offenses.[3]

Surely, then, there is a way to contest the probable cause finding that can render a defendant unable to hire counsel. The Supreme Court says no.

First, the Court reviewed its prior holdings that a defendant has no right under the Fifth and Sixth Amendments to pay an attorney with forfeitable funds.[4]

The question, then, in Kaley, was whether the defendant whose property has been restrained has a right to a hearing to contest the grand jury’s probable cause finding. The Court says that there are two questions: (1) whether there was probable cause for the offense and (2) whether there is the requisite link between the alleged offense and the property. The Kaleys wanted a hearing to show that there was not even probable cause to believe they committed an offense. They conceded that the restrained assets came from the transactions in question.

The Court said that generally the lower courts have allowed hearings for the defendant to challenge the property nexus but have been divided over whether a defendant can challenge probable cause that he or she committed an offense.[5]

The Court’s trust for the grand jury provided the basis for holding that a defendant has no right to challenge probable cause. The Kaley majority concluded that an indictment conclusively determines the existence of probable cause.[6] If an indictment is sufficient to incarcerate someone pre-trial, it must be “good enough” to restrain property.[7] The majority opinion also reasons that the integrity of the system could be affected if potentially contradictory findings as to probable cause were allowed.[8]

Although Kaley caused controversy when it was released, what difference does this ruling make? If you just look at the past cases in which courts have allowed probable cause challenges, it seems that Kaley might not change the result in many cases. One of the amicus briefs listed the reported cases in which defendants had been able to challenge probable cause findings. According to the Court, every one of the challenges failed.[9] There are serious practical implications to the ruling, however. First, a strong challenge to probable cause could change the course of a case. An adversary proceeding could make the government reassess its proof or result in a favorable agreement. Defendants definitely lose a chance to preview the government’s case. Because the right to discovery in criminal cases is so limited, a probable cause hearing could provide a defendant with a much stronger working knowledge of the case. In fact, one of the main arguments against allowing a probable cause hearing is that defense counsel tried to use it as a discovery vehicle.[10]

So, the Supreme Court says that a defendant has a right to a hearing to challenge the link between the property and the crime (but not probable cause). Although the Court makes it sound as though there is always a right to challenge the link between the property and the alleged crime, it is not so easy on a practical level. In the Sixth Circuit a defendant does not get an evidentiary hearing unless “the defendant can (1) ‘demonstrate to the Court’s satisfaction that she has no assets’ and (2) ‘make a prima facie showing of a bona fide reason to believe the grand jury erred in determining that the restrained assets constitute or are derived, directly or indirectly, from gross proceeds traceable to the commission of the offense.’”[11] Therefore, if the government seeks and obtains pre-trial restraint of assets, very seldom will a defendant be able to obtain relief. What that means as a practical matter is that the Court will have to fund the defense.[12]

The Kaley decision was subjected to harsh criticism from the organized defense bar and also from Chief Justice Roberts:

An individual facing serious criminal charges brought by the United States has little but the Constitution and his attorney standing between him and prison. He might readily give all he owns to defend himself.

We have held, however, that the Government may effectively remove a defendant’s primary weapon of defense — the attorney he selects and trusts — by freezing assets he needs to pay his lawyer. That ruling is not at issue. But today the Court goes further, holding that a defendant may be hobbled in this way without an opportunity to challenge the Government’s decision to freeze those needed assets.[13]

The claim that a defendant has no way to challenge the decision is an overstatement. A defendant, assuming he can meet the threshold requirement of showing no other way to hire counsel, can still challenge whether the restrained property is connected to the alleged criminal activity. The strong feelings about this issue stem not just from what is essentially a procedural issue in Kaley but the policy that has been created by Congress and approved by the Court that allows pre-trial restraint of assets upon a grand jury’s finding of probable cause. Whatever your feelings about pre-trial restraint, it is important to know that the government does have the authority and if defending a case the standards for developing a challenge.

Notes

  1. Kaley v. United States, 134 S.Ct. 1090 (Feb. 25, 2014).
  2. Kaley v. United States, 134 S. Ct. 1090, 1095, 188 L. Ed. 2d 46 (2014).
  3. I do not mean to suggest that pre-trial restraint happens routinely. In the district where I generally practice, pre-trial restraint is rare, although other districts employ it more often.
  4. Caplin & Drysdale, Chartered v. United States, 491 U.S. 617 (1989); United States v. Monsanto, 491 U.S. 600 (1989).
  5. Kaley, 134 S. Ct. at 1095.
  6. Kaley, 134 S. Ct. at 1097.
  7. Kaley, 134 S. Ct. at 1098.
  8. Kaley, 134 S. Ct. at 1099.
  9. Kaley, 134 S. Ct. at 1104.
  10. Kaley, 134 S. Ct. at 1101.
  11. United States v. Jamieson, 427 F.3d 394, 406 (6th Cir. 2005), quoting United States v. Jones, 160 F.3d 641, 646-47 (10th Cir.1998); United States v. St. George, 241 F. Supp. 2d 875, 878 (E.D. Tenn. 2003)(extensive analysis of the required showings).
  12. See United States v. Jamieson, 427 F.3d 394, 408 (6th Cir. 2005)(finding no error where defendant’s assets were restrained and district court appointed Criminal Justice Act counsel and authorized $100,000 in expenses).
  13. Kaley v. United States, 134 S. Ct. 1090, 1105, 188 L. Ed. 2d 46 (2014)(Roberts, C.J., dissenting).

Wade Davies WADE DAVIES is the managing partner at Ritchie, Dillard, Davies & Johnson PC in Knoxville and president of the Knoxville Bar Association. He is a 1993 graduate of the University of Tennessee College of Law. The majority of his practice has always been devoted to criminal defense. Davies is a member of the Tennessee Bar Journal Editorial Board.