On March 18, 2013, the United State Supreme Court granted certiorari in Kaley v. United States. Docket No. 12-464. The case represents a complicated but narrow legal issue regarding the scope of a defendant’s right to challenge an order seizing property that the government claims is subject to forfeiture when the defendant asserts that the property is necessary to pay legal fees. Typically, these seizure orders come during an ex-parte hearing where the government needs to show property is subject to forfeiture based on probable cause. Those assets are then frozen until the conclusion of an underlying criminal proceeding. The Federal Circuits permit defendants to challenge the traceability of those assets in post-indictment, pretrial Jones-Farmerhearings. The Circuits are split, though, as to whether a defendant may challenge the evidentiary support and legal theory of the underlying charges or only the traceability of the property the government claims is subject to forfeiture.
Forfeiture law is designed to combat the profit motive created by illegal activity by “[confiscating] property used in violation of the law, and to require disgorgement of the fruits of illegal conduct.”[1] When the government chooses to pursue forfeiture against a suspect, there are three methods available – criminal, civil, and administrative. Criminal forfeiture is a form of punishment that attaches following the conviction of a criminal offense. The relevant procedures controlling criminal forfeiture, enacted in 1984, states “any property constituting, or derived from, any proceeds the person obtained, directly or indirectly, as a result of” specified offenses are subject to forfeiture.[2] The federal courts under the Relation Back Doctrine have determined that the property becomes vested in the government upon the commission of an act giving rise to forfeiture.[3] Thus, property subject to forfeiture may be frozen by court order to prevent the dissipation of assets before conviction.[4]
Civil forfeiture is an in rem proceeding against the “proceeds” and items that “facilitate” criminal activity.[5] The government must show by a preponderance of the evidence that the property is proceeds of criminal activity. This permits the government to pursue two causes of action for the same underlying offense – criminally against the person and civilly against the property – and can seize property pursuant to a grand jury’s probable cause determination. It provides a valuable and necessary resource in complex cases where the human perpetrator is unknown, fled, or otherwise not within the jurisdiction of the United States. This is an acute problem in prosecuting large criminal enterprises for crimes such as money laundering, bulk cash smuggling, and counterfeit good cases. In situations where property has been wrongly seized, a claimant may present the affirmative defense of being an innocent owner or a bona fide purchaser for value.[6]
The forfeiture statute in question does not provide a right to a hearing following an indictment. However, the legislative history indicated that Congress intended to permit a court to hold a hearing to decide whether the court should “modify the order or vacate an order that was clearly improper (e.g., where information presented at the hearing shows that the property restrained was not among the property named in the indictment).”[7] The Senate Report, though, contemplated a limited hearing wherein the court was not entitled to review challenges to the validity of the indictment itself.[8] The parameters of that post-indictment, pretrial hearing is the question the Supreme Court is set to resolve in Kaley.
The majority view, colloquially known as Jones-Farmerhearing, provides a defendant a post-indictment, pretrial hearing with the opportunity to present evidence that the property subject to seizure is not traceable to criminal activity.[9] Procedurally, this precludes the defendant from attacking the basis for the underlying indictment. The government, in its petition for certiorari, argued that to permit otherwise would undermine the grand jury system that presumes an indictment is facially valid for calling a trial, which may not be attacked.[10] In the forfeiture context, nothing more is necessary and is less intrusive when the same standard is applied to seize a person pending trial. Also, the ability to attack the merits creates a “mini-trial” between the grand jury’s probable cause determination and the trial itself. Effectively, the defendant gets two bites at the apple in an attempt to defeat the charges against him or her. Finally, such a “mini-trial” would prejudice the government’s interest in the case by requiring premature disclosure of the government’s case and trial strategy that may jeopardizes the identity of testifying witnesses, victims, and confidential informants.
The minority view permits a defendant to present evidence undermining the underlying indictment.[11] This position reasons that assets subject to a seizure represent a deprivation of property subject to the Fifth Amendment limitation. By nature of the consequence of possibly restraining all of a person’s assets, a person is effectively denied the opportunity to exercise their Sixth Amendment conditional right to counsel of their choice. While a person has no right to use assets that are forfeitable, the nature and position of the proceedings requires that pursuant to the Fifth and Sixth Amendments, an adversarial hearing permitting review of the probable cause determination provides procedural safeguards of substantial value that outweigh the government’s interests.[12]
The Kaley case has the potential to create new due process standards for Jones-Farmer hearings. The government’s position that seizure of assets is necessary pending the outcome of a case is reasonable, especially given the availability of federal public defenders to assure a person will receive effective assistance of counsel. However, assets that are subject to a seizure order require only a showing of probable cause, which in an ex-parte hearing permits the government to show evidence that would normally be highly prejudicial at trial while casting a wide net. The right to manage one’s own defense with all available resources becomes subjugated or rendered impossible. These two positions are very far apart and represent a gray area for the Supreme Court to build in new protections. This may include permitting defendants to use evidence that would seemingly attack the probable cause determination but not actually allow the court to use those arguments for throwing out an indictment. Instead, the grand jury’s determination remains valid pending trial but the permissible scope of evidence to confront the traceability issue expands. Under such a rule, the government preserves its position to protect the grand jury’s determination while creating additional procedural protections for the defendant.
Joe Hernandez
Executive Editor, Criminal Law Brief
Let us know what your thoughts are before the Supreme Court makes its decision and be sure to check back with the Criminal Law Brief Blog for the Supreme Court's decision in Kaley v. United States.
Image by John L Marino [Public domain or Public domain], via Wikimedia Commons.
[1] United States v. Ursery, 518 U.S. 267, 284 (1996).
[2] See 21 U.S.C. § 853(a)(1).
[3] U.S. v. A Parcel of Land, Blgds., Appurtenances and Imprivements, Known as 92 Buena Vista Ave., Rumson, N.J., 507 U.S. 111 (1993); See U.S. v. $84,740.00 Currency, 981 F.2d 1110 (9th Cir. 1992).
[4] See 21 U.S.C. § 853(e)(1).
[5] See generally 18 U.S.C. § 981.
[6] See 21 U.S.C §§ 853(n)(6)(A)-(B).
[7] S. Rep. No. 225, 98th Cong., 1st Sess. 203 (1983) (hereinafter “Senate Report”).
[8] Id.at 201-03.
[9] U.S. v. Jones, 160 F.3d 641 (10th Cir. 1998); U.S. v. Farmer, 274 F.3d 800 (4th Cir. 2001).
[10] See Costello v. United States, 350 U.S. 359, 362-63 (1956) (holding that an indictment by an unbiased grand jury is valid and sufficient for calling a trial of the charge and “the Fifth Amendment requires nothing more.”).
[11] See US v. Monsanto, 924 F.2d 1186 (2nd Cir. 1991); United States v. E-Gold, Ltd., 521 F.3d 411 (D.C.C. 2008).
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