The Supreme Court Just Made it Easier for the Government to Seize Defendants’ Assets before Trial

Writing for a six-justice majority in Kaley v. United States, thus concluded Justice Elena Kagan that a criminal defendant indicted by a grand jury has essentially no right to challenge the forfeiture of her assets, even if the defendant needs those very assets to pay lawyers to defend her at trial. In an odd ideological lineup, the dissenters were Chief Justice John Roberts and the more liberal Justices Stephen Breyer and Sonia Sotomayor.

The Kaleys’ saga began more than nine years ago when Kelli, a medical device salesperson, learned that she was under investigation by federal authorities for stealing devices from hospitals. Kelli admits she took some devices and later sold them with Brian’s help, but she says the devices she took were unwanted, outdated models that the hospitals were glad to be rid of—in effect, that she couldn’t steal something that was given to her. (It’s not a crazy argument. In fact, it worked for a co-defendant, who was quickly acquitted by a jury after the government failed to find even a single hospital that claimed ownership of the allegedly stolen goods.)

With charges looming, the Kaleys sought an estimate from their lawyers of how much mounting a defense would cost. The answer: $500,000. (That figure may seem high, but sadly the government agreed it was reasonable.) The Kaleys took out a home equity loan and used the $500,000 to purchase a certificate of deposit, which they planned to spend on lawyers.

hen came the grand jury indictment and with it a nasty surprise: an order freezing essentially all their assets, including the CD that was meant to pay their legal bills. The only assets exempt from the order—Kelli’s retirement account and their children’s college funds—weren’t enough to cover the $500,000 estimate. And if the Kaleys liquidated those funds, they’d have owed $183,500 in tax penalties. The bottom line: They could no longer pay for their lawyer of choice even though, as the government agreed, that’s what the Sixth Amendment right to counsel protects. The reason the Kaleys are in this mess has its origins in the 1970s, when Congress started passing a series of forfeiture laws as part of the war on drugs. The logic is simple: Crime should not pay. . . .

In November 2013, the Federalist Society’s produced a post-argument SCOTUScase with Scott Bullock, a senior attorney at the Institute for Justice in Washington, D.C. You can listen to it here.