The Washington Post

Justices weigh whether government can freeze assets without hearing on indictment

There’s really no better place to argue the need for a good lawyer than the Supreme Court.

But what Kerri and Brian Kaley found there Wednesday is that good lawyers often disagree.

The justices seemed quite split on the case that the Kaleys, charged with selling stolen medical devices, brought them. The couple were arguing that the government should not be able to freeze their assets — including the $500,000 they had put aside for their criminal defense — without a hearing to challenge the indictment itself.

Some courts around the country allow such hearings, although the charges are rarely proved meritless. But the Supreme Court has not set rules for whether there must be such hearings and what tests should be applied.

The government may ask courts to freeze assets that it says are “traceable” to the defendants’ alleged wrongdoing, and most commonly do so in drug or organized crime cases. Even when courts allow defendants to challenge their indictments to free the money for their defense, Justice Elena Kagan noted, judges don’t find the indictments so lacking in merit to make a difference.

“Probable cause, it’s a pretty low bar,” she said. “So what, are we going through all this rigmarole for the prospect of, you know, coming out the same way in the end?”

But Justice Sonia Sotomayor said the Kaleys’ case may be the “one in a million” in which it would make a difference.

Kerri Kaley was a sales representative for a medical device company in New York in 2005, and contends that she was legally allowed to resell items the hospitals no longer wanted. For two years, she and her husband and others were the subject of a grand jury investigation, and they retained counsel to fight the charges. They put aside $500,000 to pay the lawyers in the event they were indicted.

That happened in 2007, and the government moved to freeze the couple’s assets, including the money set aside for legal fees. While their fight has gone on, two other sales representatives have pleaded guilty, but a third defendant was acquitted by a jury.

Howard Srebnick, the Kaleys’ attorney, said a grand jury indictment “is enough to make my client go to trial.” But he said the court should not rule “that the government can beggar a defendant into submission” by withholding assets to allow them the counsel of their choice.

But Justice Antonin Scalia was skeptical of Srebnick’s arguments, as were Justices Ruth Bader Ginsburg and Samuel A. Alito Jr. Requiring a judge to look beyond the indictment, Ginsburg said, would create 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” it.

But Chief Justice John G. Roberts Jr. and Justice Stephen G. Breyer indicated that the right to hire the lawyer a defendant wants is an important one, and Roberts worried about the “overweening power of the government.”

“It’s not that property is more valuable than liberty or anything like that,” Roberts said. “It’s that the property can be used to hire a lawyer who can keep him out of jail for the next 30 years.”

The case is Kaley v. United States.

Robert Barnes has been a Washington Post reporter and editor since 1987. He has covered the Supreme Court since November 2006.


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