Criminal Forfeiture is Taking the “Just” out of Justice: Kaley v. United States

Author: Cameron Downer, Associate Member, University of Cincinnati Law Review

On February 25, 2014, the United States Supreme Court in Kaley v. United States held that defendants are not constitutionally entitled to a pre-trial hearing to challenge a grand jury’s probable cause determination that they committed a crime. This decision means a grand jury determination is an appropriate trigger to allow forfeiture of the defendant’s property under 21 U.S.C. §853(e).[1] Justice Kagan, in her majority opinion, reasoned that since a grand jury indictment may lead to the pre-trial restraining of persons, it similarly has the power to deprive a person of his assets. Therefore, the grand jury may deprive someone of both liberty and property, even if that property is used to pay for the person’s attorney.

Although the Supreme Court hopes to prevent pitting judges against grand juries, the majority’s opinion in Kaley opens the door for prosecutorial abuse. Pre-trial forfeiture can now be used as a weapon by the prosecution to deprive a defendant of his counsel, without challenge. Considering a grand jury indictment is a mere “rubber stamp” in the perspective of the prosecution, the prosecution now has unfettered discretion to deprive a defendant of counsel, thus unfairly increasing the chances of successful prosecution.[2]

Background on Forfeiture

In the United States, criminal forfeiture had been prohibited since 1790, but was reintroduced in 1970 with the passage of the Organized Crime Control Act and the Comprehensive Drug Abuse Prevention and Control Act.[3] Although the forfeiture provisions were originally meant to apply to “racketeering activity,” the provisions “have been used expansively and creatively against an ever growing category of people and businesses many of which bear no obvious relationship to organized crime.”[4] In addition, Congress amended the forfeiture laws to allow law enforcement agencies to retain and use the proceeds from forfeiture, instead of requiring them to be deposited in the Treasury’s General Fund.[5]

Forfeiture has become an essential element to Nixon’s “War on Drugs” and general law enforcement budgets.[6] Correlating with the “war,” Congress expanded the list of forfeitable property in addition to the types of criminals subject to forfeiture. Previously, the government was only authorized to seize and forfeit drugs, drug manufacturing and storage equipment, and conveyances used to transport drugs.[7] Now, forfeiture law includes proceeds traceable to drug transactions and real property. Further, law enforcement can seize a “substitute asset,” allowing property of equal value to be forfeited in place of forfeitable assets that are no longer available.[8] Cash, bank accounts, jewelry, cars, boats, airplanes, businesses, houses, and land are all fair game.[9]

An obvious conflict of interest arises when allowing law enforcement to directly benefit from the forfeiture of assets. By allowing local law enforcement agencies to make up for budgetary shortfalls through asset forfeiture, police are incentivized to target assets rather than crime. As a consequence, up to 80 percent of criminal forfeitures are unaccompanied by criminal prosecution.[10] This “incentive constitutes a compelling invitation to police departments to stray from legitimate law enforcement goals in order to maximize funding for their operations.”[11] In the Federal Court system, the Department of Justice receives a 20% share of assets forfeited, creating a conflict with the prosecutor. The prosecutor can effectively pad the pockets of the Justice Department by focusing on asset forfeiture.

The Facts in Kaley v. United States

In Kaley, the majority opinion deliberately skips over the facts of the case[12]; however, the facts help demonstrate the unfairness of allowing a prosecutor to strike a defendant’s hired counsel. The defendant, Kerri Kaley, worked for a Johnson & Johnson subsidiary selling prescription medical devices. Kaley, and some of the other sales representatives, would occasionally receive an outdated or surplus device from staff members when the device was no longer needed. Kaley sold the devices to a Florida company and divided the proceeds amongst the sales representatives.[13]

Kaley learned in 2005 that a federal grand jury was investigating her and her husband for conspiracy to sell stolen medical devices. As a result, the Kaleys retained counsel who started to prepare a defense. Further, the Kaleys purchased a $500,000 certificate of deposit that was set aside to pay for their attorneys at trial. After working with their attorney for 2 years, the grand jury returned a 7 count indictment that listed the $500,000 certificate of deposit as subject to forfeiture because the money contained “proceeds” from selling the devices. During this time, another sales representative went to trial for the same conspiracy and was acquitted by a jury in less than 3 hours.

The Kaleys then conducted a telephone conference with the judge and prosecutor about the lawfulness of restraining their assets. During the conference, the prosecutor admitted that he only traced $140,000 dollars to the Kaleys. Two days after the conference, the prosecutor obtained a superseding indictment with a count of money laundering; the money laundering statute had an even broader forfeiture provision that allowed the government to restrain more assets. The indictment sought more than $2 million dollars, the certificate of deposit, and the Kaleys’ home. The government sought an order to freeze those assets.[14]

The Kaleys then moved for a hearing to establish that there was no probable cause for the forfeiture of the $500,000 they set aside to pay for their attorney. The United States Supreme Court just held that they are not entitled to that hearing.[15]

A Grand Jury Indictment is an Insufficient Basis for Forfeiture

The Court’s holding in Kaley is problematic because the probable cause determination of the grand jury is an insufficient basis to freeze a defendant’s assets for forfeiture. As all attorneys have heard, a grand jury would indict a ham sandwich and only serves as a rubber stamp for the prosecution.[16] Justice Douglas recognized this flaw and stated that, “[i]t is, indeed, common knowledge that the grand jury, having been conceived as a bulwark between the citizen and the Government, is now a tool of the Executive.”[17] Statistics have shown that Justice Douglas was right. In 1984, grand jury indictments had an astounding 99.6% rate of success. Further, in some of the .4% of cases where an indictment was not returned, the prosecutor agreed a true bill should not be returned.[18] This high “rubber stamp” rate and lack of meaningful review is partially the reason why 8 percent of federal criminal cases are dismissed.[19]

Because it is undisputed that grand juries are not good indicators of guilt, courts should not give much weight to their findings. Therefore, the effects of a grand jury indictment on defendants should be minimal enough to not completely disrupt a potentially innocent person’s life prior to trial. Thus, to uphold due process, the government should be precluded from freezing a defendant’s assets without providing the defendant an opportunity to challenge the grand jury’s findings. Contrary to the majority opinion, the Kaleys should not have to forgo the two years of knowledge that their attorney has accumulated in preparation for trial because the government’s actions prevent them from paying attorney fees.

The Prosecution Will Use the Kaley Decision as a Weapon

The Kaley decision essentially allows the prosecution to disqualify an accused’s counsel of choice without so much as a hearing. As Justice Roberts noted in his dissent, “few things could do more to undermine the criminal justice system’s integrity than to allow the government . . ., at its option, [to] disarm its presumptively innocent opponent by depriving him of his counsel of choice – without even an opportunity to be heard.”[20] The potential for prosecutorial abuse here is great. Not only can a prosecutor eliminate a top notch adversary, but can also make the decision to seek a restraint on assets if he does not like the other attorney.[21]

This decision is also bad for criminal defense attorneys who are now less likely to get paid due to the prosecutor’s ability to freeze a defendant’s assets without challenge. More high-profile white collar defendants will have to be represented by institutional or court appointed attorneys who have less time due to an abundance of clients and heavy case loads.[22] This disparity between the best private attorneys and the average public defender will likely change the outcomes of future cases.

Conclusion

The Supreme Court in Kaley has further tipped the scales of justice further in favor of the prosecution by allowing a prosecutor to eliminate his adversarial opponent. Forfeiture law has become more liberal and the government has different tools to freeze a person’s assets. Further, the government and law enforcement have financial incentives to seek forfeiture of a defendant’s assets with the profit going back to the government. The grand jury is not a sufficient safeguard against to overzealous prosecutors and will not effectively screen out frivolous forfeiture claims. More defendants, like the Kaleys, will be irreparably harmed by having their paid counsel stripped from them when they need it most.

 

[1] Kaley v. United States, 134 S. Ct. 1090, 1094 (2014).

[2] Lawrence S. Goldman, Kaley Opinion, Based on Legal Fiction, is Harmful to Defendants and Lawyers, White Collar Crime Prof Blog, March 5, 2014, http://lawprofessors.typepad.com/whitecollarcrime_blog/2014/03/kaley-opinion-based-on-legal-fiction-is-harmful-to-defendants-and-lawyers.html.

[3] Todd Barnet & Ivan Fox, Trampling on the Sixth Amendment: The Continued Threat of Attorney Fee Forfeiture, 22 Ohio N.U.L. Rev. 1, 4 (1995).

[4] Id. at 7-8.

[5] Eric Blumenson & Eva Nilsen, Policing for Profit: The Drug War’s Hidden Economic Agenda, 65 U. Chi. L. Rev. 35, 50 (1998).

[6] Id. at 40.

[7] Id. at 44.

[8] Id. at 45.

[9] Id.

[10] Id.

[11] Id. at 56.

[12] It is clear that the majority skipped over the facts of the case because they are detrimental to the majority’s opinion. Justice Roberts noted in his dissent how the majority failed to discuss the facts of this case and argued that they are important because “[t]hey highlight the significance to a defendant of being able to hire his counsel of choice, and the potential for unfairness inherent in giving the prosecutor the discretion to take that right away.” Kaley v. United States, 134 S. Ct. 1090, 1105 (2014)(Roberts dissenting).

[13] Id. at 1105-1106.

[14] Id.

[15] Id. at 1094.

[16] Andrew D. Leipold, Why Grand Juries do not (and cannot) Protect the Accused, 80 Cornell L. Rev. 260, 263 (1995).

[17] United States v. Mara, 410 U.S. 19, 23 (1973)(Douglas, J., dissenting).

[18] Leipold, supra note 16 at 274-75.

[19] See Robert L. Weinberg, Letter to the Editor: What Is The Percentage of Federal Criminal Defendants Who Are Not Convicted? Why Are So Many Cases Dismissed?, The Champion (April, 2012), available at http://www.nacdl.org/Champion.aspx?id=27977 (1 in 12 federal criminal cases end in a dismissal).

[20] Kaley, at 1110.

[21] Goldman, supra note 2.

[22] Id.

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