Post-Indictment Forfeiture Challenges to Probable Cause Determinations Rejected by High Court in Kaley v. United States

On February 25, 2014, the United States Supreme Court held that criminal defendants are not entitled to challenge a grand jury’s probable cause determination at a post-indictment asset seizure hearing. Defendants Kerri and Brian Kaley were indicted for transporting stolen medical devices across state lines, a fact they disputed (i.e., they asked, “How can you steal what is not stolen?”). Prior to their indictment, the Kaleys applied for a $500,000 equity line of credit, which was transferred to a $500,000 certificate of deposit in order to pay for legal counsel. Shortly after their seventeen-count indictment, the Government obtained an ex parte order, pursuant to Title 21 U.S.C. §853(e) (1), prohibiting the Kaleys from “transferring any assets traceable to or involved in the alleged offense.”

The United States Supreme Court considered the Kaleys argument that criminal defendants are entitled to contest a grand jury’s prior determination of probable cause. To rule otherwise, they asserted, would violate their Fifth and Sixth Amendment rights. Previously, in Caplin & Drysdale v. United States, 491 U.S. 617, 630 (1989), the Court held that criminal defendants may not use tainted proceeds in order to fund their criminal defense. In a corollary opinion, United States v. Monsanto, 491 U.S. 600, 615 (1989), the Court recognized that the Government may seize assets before trial, subject to a probable cause hearing to determine the property’s relationship to the crime and, thus, forfeitability.

To support the seizure at a Monsanto hearing, the Government must establish that (1) there is probable cause to believe the defendant committed an offense giving rise to the forfeiture, and (2) the frozen assets are related to the alleged crime. Here the Supreme Court reviewed the following question: do criminal defendants have a constitutional right to contest the grand jury’s probable cause determination? The answer to that question was a resounding “No.”

Rejecting what the majority labeled the “do-over” approach, the Court affirmed that a criminal defendant lacks the right to challenge a grand jury’s finding of probable cause, absent extraordinary circumstances. Concerned that a separate hearing would yield inconsistent findings, the Court stressed that a criminal defendant lacks the right to review a grand jury’s finding of probable cause.

In a separate argument, defendants argued that the Mathews v. Eldridge, 424 U.S. 319 (1976), three-prong due process test should apply in the asset forfeiture setting. Again, the Court rejected this argument. The majority believed the Government’s interest far outweighed any interest of the defendants. This is notwithstanding a defendant’s possible foreclosure, decades of incarceration, and standing trial without the assistance of counsel of their own choice. Per the majority, once the grand jury makes its probable cause finding, another hearing will provide little assistance.

Accordingly, Kaley stands for the proposition that the grand jury may not be challenged on its probable cause determination. In seeking to utilize seized funds post-indictment, in order to pay for counsel of choice, a defendant may still challenge the property forfeiture, under Monsanto, by seeking a hearing on the question of the property’s relationship to the crime.

More by | Rubin Sinins Rubin Sinins , Law.com Contributor
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