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Forfeiture and Paying Defense Lawyers

The U.S. Supreme Court today took up a criminal case involving forfeiture and the money that well-heeled defendants need to pay their retained counsel.  The case is Kaley v. United States, No. 12-464.  It is an important issue in white-collar crime cases, although it rarely comes up in the violent crime cases that we mostly discuss on this blog.  The question presented is:

Whether, when a post-indictment, ex parte restraining order freezes assets needed by a criminal defendant to retain counsel of choice, the Fifth and Sixth Amendments require a pre-trial, adversarial hearing at which the defendant may challenge the evidentiary support and legal theory of the underlying charges.
From the Eleventh Circuit opinion in Kaley:

In this interlocutory criminal appeal, Kerri L. Kaley and Brian P. Kaley challenge a district court's order denying their motion to vacate a pretrial protective order restraining their assets. This is the second time the case has come before us. In United States v. Kaley, 579 F.3d 1246 (11th Cir. 2009) ("Kaley I"), we reversed the district court's prior order which had concluded that the Kaleys were not entitled to a pretrial evidentiary hearing on their motion to vacate the protective order, and we remanded for further proceedings. On round two, the district court determined that the Kaleys were entitled to a pretrial, post-restraint hearing, but that the only question to be addressed at the hearing was whether the restrained assets were traceable to or involved in the conduct charged in the indictment. At the hearing, the Kaleys did not present any evidence regarding traceability, and the district court declined to set aside the protective order.

The Kaleys once again appeal, arguing that, in addition to traceability, they should have been allowed to challenge the factual foundation supporting the grand jury's probable cause determinations (the very validity of the underlying indictment) at a pretrial, post-restraint hearing. Because, as we see it, the defendants are not entitled to try the entire case twice, once before trial and then again before a judge and jury, we affirm the district court's order denying the Kaleys' motion to vacate the protective order.

In Kaley I, we summarized the basic facts and procedural history of the case in this way:

In January 2005, Kerri Kaley, then a sales representative with Ethicon Endo-Surgery, was informed she was the target of a grand jury investigation in the Southern District of Florida. Kaley was suspected of stealing prescription medical devices ("PMDs") from hospitals and then selling them on the black market. Kaley retained . . . counsel in the investigation. Kaley's husband, Brian Kaley, who was also under investigation . . . retained a separate attorney . . . . Together, the two attorneys informed the Kaleys that their legal fees to take the case through trial would be approximately $500,000. To obtain funds to pay those fees, the Kaleys applied for and obtained a home equity line of credit of $500,000 on their residence and used the proceeds to buy a certificate of deposit ("CD").

On February 6, 2007, the grand jury returned a seven-count indictment against the Kaleys.[FN1] Count One charged a conspiracy to transport PMDs in interstate commerce while knowing them to have been stolen, in violation of 18 U.S.C. § 371. Counts Two through Six charged five substantive [18 U.S.C.] § 2314 offenses, and Count Seven charged obstruction of justice, in violation of 18 U.S.C. § 1512(b)(3). The indictment also sought criminal forfeiture of all property traceable to the § 2314 offenses, including the CD . . . .
FN1: The indictment was also returned against Jennifer Gruenstrass, whose case has since been severed from the Kaleys'.

On February 7, 2007, the Government moved the district court ex parte for a protective order restraining the Kaleys from transferring or otherwise disposing of the property listed in the forfeiture count, and a magistrate judge, concluding that the indictment established  probable cause that the property was "traceable to" the Kaleys' commission of the § 2314 offenses, granted the motion the same day. . . .

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