When the government freezes the money that an indicted criminal defendant needs to hire a lawyer, he or she should be able to challenge that indictment during a pretrial hearing, a Miami attorney argued to the U.S. Supreme Court on Wednesday.
“I ask that this Court not rule that the government can beggar a defendant into submission,” urged Howard Srebnick of Miami’s Black, Srebnick, Kornspan & Stumpf. “I ask this Court not to rule that the government can impoverish someone without giving them a chance to be heard through their counsel of choice.”
The criminal defense bar’s frustration with the government’s power to obtain a court order freezing assets following a grand jury indictment spilled over in briefs and arguments before the justices in Kaley v. U.S.
Kerri and Brian Kaley are asking the justices whether the Fifth and Sixth Amendments require a post-indictment hearing during which a criminal defendant may challenge the evidence supporting the grand jury’s decision.
At the end of an hour of spirited arguments by one of the government’s top lawyers—deputy solicitor general Michael Dreeben—and Srebnick, the high court appeared divided, and not in the usual ideological way.
Chief Justice John Roberts Jr. and justices Sonia Sotomayor and Stephen Breyer appeared concerned about what Roberts called the government’s “overweening power” in the grand jury process and the right of a criminal defendant to retain counsel of choice. And justices Ruth Bader Ginsburg, Samuel Alito and Antonin Scalia questioned whether a pretrial hearing that challenged the underlying grand jury decision would undermine the grand jury process, become a fishing expedition by the defense and place judges in untenable positions.
Wednesday’s arguments stemmed from what Roberts called “a complicated case.”
In January 2005, the Kaleys found they were targets of a federal grand jury investigation in the Southern District of Florida. Kerri Kaley was a sales representative for a subsidiary of Johnson & Johnson. Her husband owned a construction business. The government claimed that the Kaleys and other Johnson & Johnson sales representatives were taking used prescription medical devices from hospitals that had purchased them from Johnson & Johnson and were reselling them on the gray market.
The Kaleys retained counsel to represent them during what became a two-year investigation. When settlement talks failed, they applied for a $500,000 line of credit on their home to pay their lawyers for a trial. They used the line of credit to purchase a certificate of deposit. In 2007, they deposited an additional $63,000 into the CD from other income earned.
In February 2007, the Kaleys, along with another sales representative, were indicted for conspiring to traffic in stolen prescription medical devices and money laundering. The indictment included a forfeiture count and the government obtained an ex parte order that froze only the Kaleys’ assets, including their home and the CD.
The U.S. Court of Appeals for the 11th Circuit eventually held that the federal forfeiture statute authorizes a court to restrain property subject to criminal forfeiture without a hearing following an indictment. However, it decided, based on Supreme Court and 11th Circuit case law, that due process requires a hearing when the frozen assets prevent a defendant from hiring counsel of choice. During that hearing, the appellate court added, the Kaleys could not challenge the evidence supporting the underlying indictment against them. Instead, the only question would be whether the assets were traceable or involved in the alleged crime.
During Wednesday’s arguments, Justice Sotomayor told Srebnick that the government’s strongest argument against the pretrial hearing he was seeking was “that the grand jury finding of probable cause is sacrosanct, and a hearing like the one that you are proposing would call the validity of that finding into question.”
Following up on that statement, Justice Ginsburg said, “There is the anomaly that the grand jury has said there is probable cause, this defendant can be prosecuted, and then you would have the judge make a determination that there isn’t probable cause to believe. You are asking a judge who has determined there is no probable cause to preside at a trial because the grand jury has found that there is probable cause.”
But Srebnick told both justices that courts in at least five circuits have been holding the hearings that he proposes for 25 years. During those hearings, he said, there is a presentation by both sides, similar to pretrial detention hearings and suppression of evidence hearings.
“This would not be a discovery exercise,” he insisted. “This would not be an effort to simply learn identity of witnesses. Indeed, the government could and does rely upon hearsay witnesses, case agents, to summarize the case.”
Arguing for the government, Dreeben emphasized that for more than 200 years, “the rule in this court and in all lower courts has been that the grand jury’s determination of probable cause is conclusive for purposes of the criminal case. And that rule has been extended not only to bringing the defendant to trial, but also depriving the defendant of liberty, imposing occupational restrictions on the defendant, imposing firearms restrictions on the defendant.”
Roberts pushed back, saying, “But none of that goes to his ability to hire his counsel of choice. I mean, that seems to me to make this case quite different. It’s not that property is more valuable than liberty or anything like that. It’s that the property can be used to hire a lawyer who can keep him out of jail for the next 30 years. So the parallels don’t strike me as useful.”
Roberts and Sotomayor took issue with Dreeben’s argument that allowing the pretrial examination of evidence supporting the grand jury’s finding of probable cause seeks to contradict the grand jury’s decision.
“In balancing the government’s desire for restraint [of the assets] and the fundamental right to hire a lawyer of choice, it’s not strong enough in this situation with what I’ve been presented to continue restraining the money,” said Sotomayor. “I don’t see it as a legal determination that there is no probable cause.”
Roberts and Breyer also challenged Dreeben’s claims that permitting these hearings would put government witnesses at risk of having their identities revealed in serious organized crime and drug cases. Dreeben was unable to give firm statistics or any evidence of that occurring in the circuits where the hearings have been held.
Supporting the Kayleys in the high court are a number of criminal defense organizations as well libertarian groups, including the Institute for Justice and Gun Owners Foundation.
Contact Marcia Coyle at firstname.lastname@example.org.