Supreme Court Authorizes Pre-Trial Asset Freeze Without Hearing

 The Supreme Court recently issued an important decision regarding the ability of a criminal defendant to access his or her own assets for use in a criminal defense case. That decision, Kaley v. U.S., spells bad news for those defendants eager to access their own funds to pay for what can turn into an expensive defense.

The case concerned the actions of the Kaleys, a couple which stood accused of running a black market medical sales scheme. Prosecutors argued the Kaleys sold medical devices to hospitals in Florida and would later steal those devices and resell them to others at an immense personal profit.

The Kaleys soon became aware that they were under investigation by federal authorities and took out a home equity loan on their home, ultimately stashing $500,000 away in a certificate of deposit to pay what they knew would be a pricey legal tab. They also immediately hired an attorney to work on their defense.

However, when prosecutors brought the case before a federal grand jury, they not only secured an indictment against the Kaleys, but also received approval to freeze their assets. Prosecutors are able to do this on the grounds that the funds represented proceeds of their illegal endeavors. Prosecutors argued that the money should not continue to be used by the Kaleys now to pay for their lawyers.

The Kaleys objected to the freeze of their assets, arguing that their right to counsel had been deprived, as they would need that money to pay for a competent defense. They also claimed that though the money was related to the conduct at issue in the case, prosecutors had never put forward enough evidence to prove that the Kaleys’ actions themselves were criminal, something only a judge could decide.

The Court voted 6-3 to find that the grand jury’s initial decision determining that there was probable cause was sufficient and that there was not a need for a separate pretrial hearing before a judge to authorize the seizure of assets. The majority opinion, authored by Justice Kagan, said that to allow a hearing on the issue of probable cause would undermine the grand jury’s role in the justice system.

However, Justices Roberts, Breyer and Sotomayor disagreed vehemently and noted that criminal defendants should never be financially crippled with a pretrial financial freeze without first being given the chance to dispute the government’s case. In grand jury proceedings, prosecutors have the ability to present only the government’s side, something that hampers the ability of defendants who might need the money necessary to pay for a vigorous criminal defense.

Source: “Destitute Before Proven Guilty: Supreme Court OKs Asset Seizure In White-Collar Cases That Bars Defendants' Ability to Retain Counsel,” by Robert Anello, published at Forbes.com.