Constitutional Rights and Pretrial Restraint of Forfeitable Assets

Last week, the Supreme Court heard arguments in Kaley v. United States, a somewhat complicated but deeply consequential case on the scope of pretrial criminal defendants’ Fifth and Sixth Amendment rights. Specifically, in 2005 petitioners Kerri and Brian Kaley each retained attorneys upon learning they were targets over a federal grand jury investigation. When the grand jury indicted the Kaleys two years later on federal offenses relating to a scheme to profit off stolen medical devices, the district court entered a pretrial restraining order that prohibited them from selling or transferring assets which they claim were necessary to retain their counsel of choice.

In United States v. Monsanto, the Court upheld the restraint of an indicted defendant’s assets needed to pay for counsel of choice against a Fifth and Sixth Amendment challenge. However, the Monsanto Court expressly did not address the issue of whether the Fifth Amendment’s Due Process Clause required an adversarial hearing before the Court can impose the pretrial restraining order. Kaley is thus designed to address the subsequent division in the circuits over this question, specifically asking whether the Fifth and Sixth Amendments require a pretrial, adversarial hearing at which the defendant may challenge the evidentiary support and legal theory underlying the charges when a post-indictment, ex parte restraining order freezes assets needed by a criminal defendant to retain his counsel of choice.

Although the authorizing statute does not require it, the relevant Senate report contemplates – and district courts have entertained – pretrial hearings to determine whether there was a sufficient nexus between the assets in question and the underlying criminal offense. In this case, for example, the district court could have considered “whether the restrained assets are traceable to or involved in the alleged criminal conduct.” However, by challenging the probable cause of the underlying criminal conduct alone, the Kaleys sought only to challenge “the validity of the indictment itself,” which the district court refused to do. Section 853 of Title 21 of the United States Code, which authorizes such a pretrial order, is designed “to confiscate property used in violation of the law, and to require disgorgement of the fruits of illegal conduct.” So long as the grand jury finds probable cause that the assets are traceable to the underlying criminal conduct in question, the pre-trial restraint of assets is permissible. Pretrial hearings have not addressed the merits of the underlying indictment itself, though, since grand juries occupy that role exclusively and the Senate report explicitly forbids it.

The government contends the proper due process test derives from Medina v. California: that a rule of criminal procedure – such as a pretrial restraint of forfeitable assets upon determination of probable cause by a grand jury – does not violate due process unless it offends a principle of justice so deeply rooted so as to be ranked as fundamental. Alternatively, petitioners advocate an application of the interest-balancing test for procedural due process set forth in Mathews v. Eldridge. Even if the Court utilized Mathews and not Medina (a choice I would support for separate reasons which defy brief summary), the government’s position that petitioners are not constitutionally entitled to a post-indictment, pre-trial hearing to challenge the merits of the underlying indictment ought to prevail. In considering whether the Due Process Clause required an evidentiary hearing before social security benefits could be terminated, the Mathews Court set forth a three factor test that considers the private and governmental interests at stake; the risk of erroneous deprivation through existing procedures; and the probable value of any additional procedural safeguards.

The first factor in this instance is indeterminate. On the defendant’s side of the scale, the Sixth Amendment right to counsel of choice is significant, particularly considering the relationship between the ability to provide for adequate counsel and the outcome of the ensuing criminal prosecution. However, a pretrial restraint of forfeitable assets does not necessarily infringe on that right, to the extent that it does not prevent a defendant from using non-forfeitable assets to retain any attorney of his or her choosing. The legitimacy of the government’s asserted interests too, though, is less than certain. First, the government contends that a pretrial evidentiary hearing would threaten premature disclosure of the government’s witnesses and evidence, serving as a preliminary trial in which defendants can ascertain the government’s prosecutorial strategy. This could in turn incentivize the government to abandon the pursuit of pretrial asset restraints altogether, which further would “result in the dissipation of assets Congress intended to be available for criminal punishment and restitution to victims.” At oral argument, however, Justice Breyer was quick to note that a paucity of forfeited assets ever go to victims, as in this case, in which the Chief Justice observed there were none.

The second and third questions are where the government ought to prevail. Indeed, in this case the nature of existing procedural protections – foremost but not alone among which is the grand jury process – both diminishes the risk of erroneous deprivation and renders low the value-added of any additional or substitute process. With regard to the former, the conviction rate of criminal defendants indicted by a federal grand jury has been over ninety percent for more than a decade. In this sense, the grand jury is an accurate, albeit imperfect and conditional, barometer of ultimate guilt or innocence that rarely deprives defendants of their liberty or property erroneously. Even supposing this were the case, however, would not preclude defendants from seeking already existing remedies. Beyond the grand jury process – whose standard of probable cause the Fifth Amendment enshrines as sufficient to uphold post-indictment, pre-trial restrictions on liberty and property and whose impartial legitimacy has been a hallmark of the criminal justice system – the restraint of the Kaleys’ forfeitable assets was subject to judicial approval and modification. This is to say nothing of their ability to either challenge the nexus between the restrained assets and underlying criminal offenses or contest the merits of the charges substantively during a probable cause hearing and subsequent criminal trial.

There remains the question of whether these circumstances in particular – the restraint of assets that defendants allege are necessary to their ensuing defense – justify a departure from the traditional conclusiveness of grand jury judgments. After all, as the government’s brief emphasizes, a grand jury indictment bears significant consequences for a defendant’s liberty and property interests beyond mere restraint of forfeitable assets. Most substantial, of course, is the ability of the government to hold the individual in jail. But the implications for defendants’ liberty and property are far more permeating in the event of a grand jury indictment, leading to restrictions on their Second Amendment rights, for instance, and a deleterious impact on their employment prospects and other property interests. To confer greater procedural protections on pretrial asset forfeitures would thus prejudice the right to retain counsel of choice (with assets that are presumptively traceable to criminal conduct, no less) over other constitutionally protected rights that are also deprived upon indictment. As a result, petitioners should fail under the Mathews test because the risk of erroneous deprivation by a grand jury is low and the sufficiency of existing procedures dilutes the marginal value of additional procedural protections.

About the Author

Dan Duhaime is a senior concentrating in Political Science (American Politics) and History (Modern North America). A de jure native of Mansfield, MA and de facto product of Providence, he is currently writing an honors thesis on the legal-strategic sustainability of the 2001 Authorization for Use of Military Force. He appreciates a good footnote, his dog Maddie, and the economics of NFL roster construction.