The Supreme Court yesterday heard arguments in the case of Kaley v. United States, a case concerning pretrial restraint of assets that prevented the Defendants from hiring counsel of their choice. I previously discussed the issues in the case here and here.
As a quick recap, the Kaleys were under federal investigation. They denied they had done anything wrong, so they went looking for a great federal criminal defense lawyer. As we know, specialists are expensive, and lengthy white collar federal criminal cases chew up lots of time, energy, and money. The Kaleys therefore borrowed $500,000, and stuck it into the bank to fund the fight for their lives. The feds got an indictment, but also wanted to “forfeit” all of the Kaleys’ assets, including the half-million sitting in the bank. Prosecutors got an order from the judge freezing the money in the bank, and this happened right after the indictment was issued, meaning the Kaleys do not have access to these funds to defend themselves at trial. The issue before the Supreme Court is whether they at least have a right to a hearing before the trial in order to challenge the freezing of the assets, or whether the mere fact that a grand jury issued an indictment based on probable cause is sufficient to justify holding their money.
The justices started off with hard questions for the very capable lawyer representing Mr. and Mrs. Kaley. They noted that a grand jury’s finding of probable cause has long been sacrosanct, and pointed out that an indictment results in a presumption that certain defendants should be detained without bail pending trial. A few questions from the justices noted that the Kaleys’ position would lead to an anomaly: even thought a grand jury found probable cause for the indictment, what is the judge supposed to do at a pretrial hearing on the restraint of assets if the judge concludes there was NOT probable cause? Justice Ginsburg wondered what the trial judge is supposed to do in that situation.
There were additional questions directed to the Kaleys’ attorney. Justice Alito looked at the additional work caused by and possible damage from a pretrial hearing. For example, Alito wanted to know if Defendants could subpoena witnesses or require the government to disclose the names of its witnesses at such a proposed pretrial hearing. Justice Kagan noted that the courts that allow such hearings over the past 25 years have just about always ruled for the government, so she wondered, “what are we going through all this rigamorole for?”
It did not get any easier when the lawyer for the government stepped up to the podium. The Chief Justice quickly suggested that this case might be different because it went to a Defendant’s ability to hire counsel of his or her choosing to keep him or her out of jail. Justice Breyer seemed sympathetic with this point, noting that the Kaleys’ case is “pretty complicated” and that they can’t fight the charges “without a good lawyer.” Justice Scalia wondered why, when the government is freezing the assets that a defendant needs to hire his counsel of choice, courts can’t require more than probable cause.
A few members of the Court appeared unconvinced by the government’s claim that the costs of the additional hearing to the government dwarfed the benefits to the defendant. When talking about the fact that most such hearings appear to go in favor of the prosecution, the Chief Justice pointed out that “it may be that the government believes it isn’t worth it to go through” with the hearing in some cases. When the government lawyer asserted that the government needed to freeze the assets so that they can be used to pay restitution, the Chief Justice responded that “there are no victims in this case.” Justice Anthony Kennedy looked to the fact that courts already hold pretrial detention hearings, where the weight of the evidence is used in part to determine whether or not the Defendant can be released on bail. Kennedy suggested that if judges are already making those determinations in the detention context, why can’t they do them with regard to asset freezes?
Again, this is an important decision we will continue to follow.