Supreme Court Preview: Show Me My Money—Kaley V. United States And The Battle Over Asset Freezes

Posted On Tuesday, October 1, 2013

As we wrote back in March, the Supreme Court this term will take a critical step in defining the rights of criminal defendants whose assets have been frozen pending trial, leaving them unable to hire an attorney.  Here are the basic facts of Kaley v. United States, a case with important implications for white-collar criminal defendants:

Argument Date: October 16, 2013

What Happened?: 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 got an order freezing the funds in the CD as assets traceable to the crime.  The defendants challenged the freeze order but lost.

Question Presented: When a post-indictment, ex parte restraining order freezes assets needed by a criminal defendant to retain counsel of choice, do the Fifth and Sixth Amendments require a pretrial, adversarial hearing at which the defendant may challenge the evidentiary support and legal theory of the underlying charges?

In English, Please: When a defendant gets charged with a crime, the government sometimes freezes accounts or other assets that can be traced back to the offense.  If the defendant needs the money to pay for the lawyer of his choice, he can request a hearing challenging the freeze.  But appeals courts are divided over whether the defendant can raise arguments only about whether the money can be traced back to the crime, or whether he can attack the government’s case against him, too. 

Court Below/Winner: Eleventh Circuit/Government

What the Defendants Are Saying:  “The rule thus applied by the Eleventh Circuit allows a grand jury’s ex parte and untested finding of ‘probable cause’ to financially handicap a criminal defendant’s ability to mount a defense to the charges that threaten the defendant’s liberty.  That harsh result cannot be correct.”

What the Government Is Saying: “[A]n adversary evidentiary hearing on the merits of the government’s case threatens premature disclosure of the government’s witnesses and evidence, which can jeopardize the safety of witnesses and the integrity of the fact-finding process at trial.”

Why It Matters: The right to counsel is the central right a criminal defendant possesses.  The Court’s decision could have a major impact on whether and to what extent defendants will be able to exercise that right.  Particularly in complex white-collar matters, defendants unable to access frozen funds may not be able to hire the attorneys best able to represent them.