High Court To Examine Right To Hearing On Asset Freeze

Posted On Wednesday, March 20, 2013

The Supreme Court agreed this week to review a case that will determine whether a criminal defendant whose assets have been frozen has the right to attack the charges against him at a pretrial hearing if he needs the funds to pay for counsel.

Both the government and the defendants in Kaley v. United States had asked the Court to grant certiorari to resolve a circuit split on the question.  The case likely will be argued next term, which begins in October.

The Court granted cert on the 50th anniversary of its landmark decision in Gideon v. Wainwright, which established the right to counsel for indigent defendants.

The defendants in Kaley are accused of stealing prescription medical devices from hospitals and selling them on the black market.  While they were under investigation, they took out a $500,000 home equity loan and used it to buy a CD to pay for their legal bills.

The government obtained an order freezing the funds in the CD as assets traceable to the alleged crime.  At a hearing challenging the asset freeze, the defendants tried to attack the government’s case against them.  But the district court ruled that the only issue it had to decide was whether the funds were traceable to the crime, not whether the government’s case had any merit.

The Eleventh Circuit affirmed, ruling that “a defendant may not challenge the evidentiary support for the underlying charge at a hearing to determine the propriety of a post-indictment pretrial restraining order.”  The court aligned itself with the Sixth, Seventh and Tenth Circuits on the issue.  The Second and D.C. Circuits previously reached the opposite conclusion.

Now it will be up to the Supreme Court to decide whether the right to due process under the Fifth Amendment and the right to counsel under the Sixth Amendment require the sort of full-fledged hearing on the merits that the Kaley defendants seek.