Supreme Court, White-Collar Crime

The Supreme Court Holds You Don’t Get To Hire A Lawyer If The Government Thinks Your Money Came From A Crime

The biggest business issue confronting the white-collar criminal practitioner is getting paid. It’s trickier in the white-collar world than in other practice areas for a few reasons.

First, normally you’re representing an individual. People normally have less money than companies.

Second, many people who commit crimes to get money do it because they don’t have money to begin with. That includes money to pay you.

Third, if a potential client made money through whatever conduct landed them in a criminal case, the Supreme Court just held that now it’s easier for the government to take that money away from them so they can’t pay you.

As the Chief Justice summarized what the Court did, in dissent,

We have held… that the Government may effectively remove a defendant’s primary weapon of defense — the attorney he selects and trusts — by freezing assets he needs to pay his lawyer. That ruling is not at issue. But today the Court goes further, holding that a defendant may be hobbled in this way without an oppor­tunity to challenge the Government’s decision to freeze those needed assets.


Here’s the background:

The government can seek to have someone accused of a federal crime forfeit any money they made from the alleged crime. The government just has to show that there’s probable cause to think the person committed a crime and that the money came from that crime.

And the government can get that forfeiture order before there’s a trial finding a person guilty.

And, on Tuesday, in Kaley v. United States, the Supreme Court held that you don’t get to have a hearing to challenge whether the government has probable cause to think you committed a crime if you’ve already been indicted.

The Court’s reasoning, an opinion by Justice Kagan, is that since a grand jury already decided there’s probable cause to think you committed a crime, you don’t get to challenge the grand jury’s finding.

Stop for a second and think about that. The determination that there’s probable cause that you committed a crime is the basis for the government taking away your property — in Kaley the property was worth half a million dollars.

And that property they’re taking away is costing you the ability to hire the lawyer of your choosing. Without that money you’re likely stuck with court appointed counsel (which, in the federal system at least, can be quite good — particularly if you’re lucky enough to get a federal public defender. Still, you’d probably rather hire your own counsel if you can).

And you have no ability to present evidence to the grand jury, cross-examine witnesses who testify before the grand jury, or argue to the grand jury about why what they’ve heard does support the conclusion that you’ve been involved in a crime.

It is, of course, foundational that due process requires notice and an opportunity to be heard. And you have a right to due process whenever the government takes your property away.

So why, then, is it ok for the government to take your property away from you in a pretrial forfeiture when you haven’t had an opportunity to be heard before the grand jury?

The Court says it’s because due process here wouldn’t be useful:

 [A]s we have held before, an adversarial process is far less useful to the threshold finding of probable cause, which determines only whether adequate grounds exist to proceed to trial and reach that question.

The Court goes on to say that defendants never really win these hearings in the circuits have have allowed them — so having a hearing is really not all that valuable.

There’s a lot in this opinion. What does it do to due process, as we’ve grown to love from Matthews v. Eldridge? What does it do to the Sixth Amendment? Why does Elena Kagan love grand juries so much? Will we ever again see a dissenting opinion written by Chief Justice Roberts and joined by Justices Breyer and Sotomayor?

The Chief Justice thinks this means bad things for democracy.

The issues presented here implicate some of the most fundamental precepts underlying the American criminal justice system. A person accused by the United States of committing a crime is presumed innocent until proven guilty beyond a reasonable doubt. But he faces a foe of powerful might and vast resources, intent on seeing him behind bars. That individual has the right to choose the advocate he believes will most ably defend his liberty at trial.

But let’s focus on what this means for the white-collar defense practitioner.

First, as the Chief Justice recognized,

An individual facing serious criminal charges brought by the United States has little but the Constitution and his attorney standing between him and prison. He might readily give all he owns to defend himself.

Though now that’s harder to do. Now, if the government wants to hobble someone with assets in his or her ability to put on a defense, the government merely needs to seek pre-trial forfeiture. If a person has the ability to pay for a defense, they’ll only be able to use those funds if there’s no evidence at all to show that that money came from the allegedly unlawful activity.

Now, if someone wants retained counsel in a federal case, they need to have someone else pay the bill, have funds independent of whatever the offense conduct is about, or rely on appointed counsel.

As the Chief Justice concludes,

Federal prosecutors, when they rise in court, represent the people of the United States. But so do defense lawyers— one at a time.

It’s just now harder for those lawyers to get paid.

(hidden for your protection)

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