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Supreme Court considering case of when a court can freeze defendant assets

Supreme Court considering case of when a court can freeze defendant assets

Geoffrey Talmon
January 22, 2014
January 22, 2014

On Oct. 16, 2013, the Supreme Court of the United States heard oral argument in Kaley v. United States.  The Kaley case focuses on the issue of whether a district court may grant an ex parte (decided by a judge without all parties present) restraining order that freezes the assets that a party needs in order to hire an attorney to defend them.

Kerri Kaley was a sales rep for a medical devices company. She claims that hospital employees would sometimes ask her to dispose of overstock and outdated equipment. Mrs. Kaley and some of her colleagues subsequently sold the equipment to a dealer in Miami.

After investigation by the Food and Drug Administration, however, the federal government indicted Mrs. Kaley and her husband, accusing them of stealing and re-selling prescription medical devices.

Following the indictment, and as authorized by federal law, the Kaleys’ assets were frozen, ostensibly in anticipation of those assets being forfeited in the event of a conviction. The Kaleys contend that their assets were to be used to pay for their legal defense, and that such a restriction is a violation of their Fifth Amendment and Sixth Amendment rights.

The Fifth Amendment states, in part, that, “No person shall be … deprived of life, liberty, or property, without due process of law … ”

The Sixth Amendment states, in part, “In all criminal prosecutions, the accused shall enjoy the right … to have the assistance of counsel for his defense.”

The Kaleys claim that, taken together, these two provisions mean that the government cannot freeze their assets prior to their criminal trial without a thorough hearing regarding the freeze if such a freeze would deprive them of the ability to hire the counsel of their choice.

In case you were not aware, seized assets in federal cases are used to help fund the Department of Justice.

One of the most intriguing aspects of the Kaleys’ case is that no victims have been identified in their alleged crime. Indeed, the government argued that the frozen funds might be needed to pay restitution (repayment to victims), to which Justice Roberts replied that it is argued that “there are no victims” in the Kaley case.  A decision is expected by this summer.

Speaking of victimless crimes, the Idaho Freedom Foundation and the ACLU are collaborating to sponsor a joint luncheon for legislators on Wednesday, Jan. 22, to discuss the need to reform the Idaho criminal justice system and how it deals with offenses that are generally referred to as victimless crimes. The lunch will feature Marc Levin, from the Center for Effective Justice at the Texas Public Policy Foundation.  

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