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Pretrial Asset Freeze Without Hearing Backed by Top Court

Supreme Court Building
The U.S. high court in 1989 upheld pre-trial seizure orders of assets that would be subject to forfeiture upon conviction. Photographer: Andrew Harrer/Bloomberg

Criminal defendants whose assets are frozen before trial aren’t entitled to a hearing at which they can challenge a grand jury’s finding that they probably committed a crime, a divided U.S. Supreme Court ruled.

Voting 6-3, the justices ruled against Kerri and Brian Kaley, a Florida couple indicted on charges they stole medical devices to sell them for a profit. The government got a court order freezing the Kaleys’ assets, including $500,000 they planned to use for their legal defense. Kerri is a former sales representative for a Johnson & Johnson unit.

Asset forfeiture has become an increasingly important tool for federal prosecutors in recent years. The Justice Department collected $1.1 billion in 2011, up from $500 million in 2003, according to the Government Accountability Office.

The high court in 1989 upheld pretrial orders to freeze assets that would be subject to forfeiture upon conviction. The latest case tested whether defendants subject to asset-freezing are entitled to a hearing to contest the grand jury’s findings.

“A defendant has no right to judicial review of a grand jury’s determination of probable cause to think a defendant committed a crime,” Justice Elena Kagan wrote for the majority.

The case didn’t address whether defendants facing a pretrial freeze can argue that there wasn’t a connection between the disputed assets and the alleged crime. Lower courts have said defendants are entitled to a hearing on that issue.

Roberts Dissent

The case divided the court along unusual lines. Kagan was joined in the majority by Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas, Ruth Bader Ginsburg and Samuel Alito.

Chief Justice John Roberts and Justices Stephen Breyer and Sonia Sotomayor dissented. Roberts said the asset freeze might prevent the Kaleys from hiring the lawyers of their choice. The Kaleys say they didn’t commit a crime by selling outmoded and surplus devices to a Florida company.

“Few things could do more to undermine the criminal justice system’s integrity than to allow the government to initiate a prosecution and then, at its option, disarm its presumptively innocent opponent by depriving him of his counsel of choice -- without even an opportunity to be heard,” Roberts wrote.

Kagan pointed to the longstanding practice of letting grand jury proceedings be one-sided affairs, with prosecutors making their case without defendant involvement. She said grand juries determine only whether adequate grounds exist to proceed to trial.

“The probable cause determination, by its nature, is hard to undermine, and still harder to reverse,” she wrote. “So the likelihood that a judge holding an evidentiary hearing will repudiate the grand jury’s decision strikes us, once more, as too slight to support a constitutional requirement.”

The ruling cleared up lower court disagreement on the issue. In the Kaleys’ case, an Atlanta-based federal appeals court had sided with the government.

The case is Kaley v. United States, 12-464.

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