When a former Johnson & Johnson pharmaceutical sales
representative and her husband found out in 2005 that a federal
grand jury was investigating them for reselling prescription
medical devices, they did a smart thing and hired lawyers. Kerri
and Brian Kaley were informed that it would cost $500,000 to
defend them through trial, so they took out a home equity line
of credit on their house and purchased a certificate of deposit
with the proceeds. They later added about $63,000 from other
sources to the CD.
The Kaleys were indicted in 2007 for transporting stolen
medical devices and money laundering. Prosecutors claimed that
their house and the rest of their money were the spoils of their
crime and moved to freeze their assets. The Kaleys challenged
the seizure, arguing that it violated their Sixth Amendment
right to counsel of their choice. The trial judge, U.S. District
Judge Kenneth Marra of West Palm Beach, Florida, freed up the
$63,000, but twice found that the government was justified in
restraining the Kaleys' assets. On the Kaleys' first trip to the
11th Circuit Court of Appeals, they won an interlocutory ruling
that essentially directed Marra to grant them an evidentiary
hearing on the seizure. But Marra subsequently found that the
only issue before him was whether the frozen assets were
traceable to the crime alleged in the indictment - not whether
the grand jury improperly found probable cause for the
indictment in the first place. A three-judge 11th Circuit panel
later upheld the trial court's determination.
On Monday, the U.S. Supreme Court granted the Kaleys' request to review the 11th Circuit holding that defendants whose
assets have been frozen aren't entitled to an evidentiary
hearing on the strength of the indictment against them. That
question has split the federal appellate courts, as even the
Justice Department conceded in its brief in response to the cert
petition. The 2nd, 9th and District of Columbia Circuits have
all held that defendants must be permitted to argue that the
government had no probable cause to justify asset forfeiture.
The 10th and 11th Circuits have ruled otherwise. The Justice
Department joined the Kaleys in calling on the Supreme Court to
resolve the split, although the department argued that the 10th
and 11th Circuits have ruled correctly; the Kaleys and their
counsel at Black, Srebnick, Komspan & Stumpf obviously contend
that appeals courts on the other side of the divide got it
right.
The Kaley case is procedurally complicated, since their
probable cause argument is predicated on the acquittal of a
co-defendant whose assets were not seized, but the principles at
stake are not. The Supreme Court has held in Caplin & Drysdale
v. United States and United States v. Monsanto that attorneys'
fees are not exempt from forfeiture - but in both of those cases
defendants had already been determined to be guilty. Here, by
contrast, the Kaleys have not been adjudicated and have insisted
for eight years that the medical devices they resold were not
stolen but given to them by hospitals. Do they and other
criminal defendants have the pretrial right to convince courts
that the seizure of their assets was improper? Otherwise, they
argue, they're being deprived of their Fifth and Sixth Amendment
rights. As the National Association of Criminal Defense
Attorneys put the matter in an amicus brief in support of the
Kaleys' cert petition, "Because this issue implicates a
structural right critical to the nation's adversarial system of
criminal justice, this court should clarify that a grand jury's
probable cause determination does not relieve the government of
any of its usual burden, when it seeks to restrain or seize
property, of showing at a prompt, adversarial hearing that it
has good cause to do so."
In a way, of course, the Kaleys are lucky, at least in the
universe of people facing federal criminal charges. The NACDL
amicus brief notes that few defendants enjoy the "uncommon level
of advocacy" that the Kaleys' private attorneys have displayed
through the long and complex history of this case. (I called
lead defense counsel Howard Srebnick, partly because I was
wondering if the firm is now representing the Kaleys without
pay, but I didn't hear back.) Exceedingly few defendants
burdened with what the NACDL calls "the millstone of a pretrial
restraint on assets" make it to the Supreme Court.
For that matter, exceedingly few criminal defendants at all
attract the attention of the court. It's probably an accident of
timing that the court granted cert in the Kaley case on the 50th
anniversary of its landmark ruling in Gideon v. Wainwright that
all criminal defendants are entitled to counsel even if they
can't afford to pay. That right is increasingly endangered,
according to a National Law Journal examination of three
jurisdictions struggling to provide counsel for indigent
defendants. Here's hoping that the justices use the opportunity
of the Kaley case to reaffirm that whether you can pay or not,
you have the right to a lawyer who will stand up and say you're
not guilty.
(Reporting by Alison Frankel)
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