Criminal forfeiture statutes allow the government to seize assets derived from criminal activity to compensate victims and fund law enforcement. To prevent criminals from disposing of assets before conviction, courts may freeze potentially forfeitable assets prior to trial based on a grand jury’s finding of probable cause that the defendant committed a crime to which the targeted assets can be traced.1 When assets set aside to hire a lawyer are frozen, however, this regime implicates the Sixth Amendment’s right to counsel of choice.2 Last Term, in Kaley v. United States,3 the Supreme Court held that defendants have no constitutional right to challenge a grand jury’s finding of probable cause of guilt for the purpose of defeating a pretrial asset freeze, even if this freeze results in an inability to hire one’s attorney of choice.4 Although this decision will likely prove harmful to defendants, it was also the Court’s best available option. While allowing asset freezes without hearings diminishes the credibility of the criminal justice system, undermining the grand jury’s probable cause determination would have diminished it even more. Only Congress can appropriately balance the interests at stake and recalibrate criminal forfeiture and asset freezes without causing substantial further harm.
Kerri Kaley, a sales representative offering prescription medical devices to medical facilities, sometimes received surplus devices from these facilities when newer models became available.5 Together with other sales representatives and her husband, Brian Kaley, she sold such surplus equipment to a Florida company.6 In January 2005, the Kaleys learned that they were being investigated for a conspiracy to transport these allegedly stolen devices across state lines.7 The Kaleys sought counsel and, to pay legal fees, set aside a certificate of deposit purchased with a $500,000 home equity loan.8 On February 6, 2007, a grand jury indicted the Kaleys on seven counts, and, pursuant to 18 U.S.C. § 981(a)(1)(C), the indictment sought criminal forfeiture of all property traceable to the indicted offenses, including the certificate of deposit.9 The magistrate judge denied the Kaleys’ request for a pretrial, post-restraint evidentiary hearing.10
The district court affirmed these rulings, but on appeal the Eleventh Circuit found that the district court had misapplied circuit precedent regarding pretrial hearings.11 On remand, the district court granted a hearing but restricted its scope to whether the restrained assets were involved in the offenses charged in the indictment, an issue the Kaleys did not contest.12 The Kaleys instead argued that the protective order should be vacated because the indictment was unsupported by the underlying facts.13 On October 24, 2010, the district court denied the Kaleys’ motion to vacate the protective order and the Kaleys appealed, arguing that the asset freeze denied them their right to retain their counsel of choice.14
The Eleventh Circuit affirmed, agreeing with the district court that pretrial hearings challenging asset restraints are limited to the issue of the asset’s traceability to the charged crime.15 Writing for the panel, Judge Marcus16 noted that Congress had clearly not provided for a hearing to challenge a restraining order post-indictment.17 Although circuit precedent provided a due process balancing test under which such a hearing was sometimes required, the court observed that “the hearing’s exact nature and contours” had not been defined.18 In deciding that the hearing did not include the right to challenge the grand jury’s finding of probable cause regarding guilt, the court appealed to the legislative history of 21 U.S.C. § 853 and to Supreme Court precedent as clearly establishing that courts should not “look behind” indictments19 or challenge them in ways that would “effectively . . . [constitute] preliminary trials on the merits.”20 Doing so would not only impugn the grand jury’s independence, which underlies the criminal justice system generally,21 but also would force the government to choose between revealing its case, making only a limited evidentiary showing, or forgoing forfeiture altogether.22 In light of these problems, and reassured by the procedural protections that defendants already possess,23 the court held that due process does not entitle defendants to challenge the evidentiary support for the underlying charges to defeat a pretrial asset freeze.24
The Supreme Court affirmed. Writing for the Court, Justice Kagan25 described the question in the case as “whether criminal defendants are constitutionally entitled at [a pretrial hearing to challenge an asset freeze] to contest a grand jury’s prior determination of probable cause to believe they committed the crimes charged.”26 The Court framed the issue as determined by precedent set in Caplin & Drysdale, Chartered v. United States27 and United States v. Monsanto.28 In Caplin, the Court found that funds for legal fees were not exempted from criminal forfeiture by the Fifth and Sixth Amendments because “[a] defendant has no Sixth Amendment right to spend another person’s money.”29 In Monsanto, decided on the same day, the Court confirmed that this commitment to ensuring that crime does not pay applies even before conviction: freezing a defendant’s assets under § 853 is constitutional so long as it is “based on a finding of probable cause to believe that the assets are forfeitable.”30
With these principles established, the question in Kaley was “about who should have the last word as to probable cause.”31 To answer this question, Justice Kagan pointed to history: uniformly throughout the Court’s precedent, the grand jury’s finding of probable cause has been held inviolable.32 The Court also noted that the grand jury’s finding is sufficient to warrant arrest without a further hearing and concluded that the grand jury should be as inviolable with regard to property restraints as it is with regard to liberty restraints.33 The Court recoiled from the institutional incoherence that would ensue if a judge should find a lack of probable cause to freeze assets and later “preside[] over a trial premised on [the] presence” of probable cause.34 Moreover, because it violates ethical standards to knowingly prosecute charges without probable cause,35 such a finding may well defeat the prosecution entirely, functionally overruling the grand jury’s determination that prosecution is appropriate.36
Having established the precedential and practical reasons for its decision, the Court addressed the Kaleys’ argument that the balancing test of Mathews v. Eldridge37 militated in favor of a hearing.38 Although it did not clarify whether Mathews would apply to federal criminal forfeiture at all, the Court found that even if Mathews did apply, its balancing test would come out against the Kaleys.39 Regarding the governmental interest prong, the Court observed that holding a “pre-trial mini-trial” would “consume significant prosecutorial time and resources.”40 On the other hand, concerning the private interests at stake, the Court acknowledged the “vital” nature of the Kaleys’ interest in retaining their counsel of choice.41 Finally, the Court concluded that the remaining Mathews prong, which assesses the risk of erroneous deprivation and the probable value of the procedural safeguard in question, cut against the Kaleys.42 As established in Monsanto, the asset freeze is erroneous “only when the grand jury should never have issued the indictment.”43 Because probable cause is such a low burden, an indictment is “hard to undermine, and still harder to reverse.”44 Therefore, pretrial evidentiary hearings are too unlikely to correct an erroneous asset freeze to be constitutionally required.45
Chief Justice Roberts dissented,46 opening with a paean to the right to counsel, calling it “the most precious right a defendant has, because it is his attorney who will fight for the other rights the defendant enjoys.”47 Although this right has limitations,48 those limitations are not normally “imposed at the unreviewable discretion of a prosecutor — the party who wants the defendant to lose at trial.”49 The dissent noted that defendants are entitled to challenge the traceability of assets despite the grand jury’s finding;50 just as the majority objected to treating probable cause differently as it affects the indictment and the freezing of assets, the dissent argued that there is no reason to treat probable cause differently within the issue of asset freezes.51 The dissent further argued that such a hearing would not duplicate a trial since the government may choose to present only some of its evidence at the hearing52 Finally, in some other pretrial collateral matters, courts permit defendants to challenge the strength of the underlying case.53
The dissent also disputed the majority’s application of the Mathews test. The dissent first argued that the Kaleys’ interest was critical: not only did they stand to lose their property, but if their inability to retain their chosen counsel caused them to lose at trial, they faced substantial prison terms as well.54 Addressing the governmental interest prong, the dissent denied that allowing pretrial probable cause challenges would endanger the prosecution’s case, especially since such hearings to challenge traceability already require the government to reveal some aspects of its case.55 Looking to the Second Circuit’s experience with pretrial probable cause challenges, the dissent noted that such hearings are rarely held, belying the majority’s specter of strategic gamesmanship by defendants.56 Finally, the dissent objected to the majority’s conclusion that a pretrial hearing would be a waste of time, appealing to “[c]ommon sense” to establish that one-sided proceedings will lead to mistakes more often than adversarial ones will.57 The dissent thus concluded that the government’s interest was slight, that the Kaleys’ interest was substantial, and that the requested hearings would significantly mitigate a substantial constitutional deprivation.
Kaley has closed the door that the Court’s prior decisions in Caplin and Monsanto left open: in their efforts to defeat an asset restraint, defendants may no longer challenge a grand jury’s finding of probable cause of guilt, as they could in some circuits before Kaley.58 While Kaley did not venture far past the Court’s prior decisions, the opinion may cause harm by reducing the perceived legitimacy of the criminal justice system and eliminating a check on prosecutorial discretion. However, granting hearings in cases like Kaley would itself undermine the criminal justice system by delegitimizing the grand jury’s probable cause finding even as it undergirds indictments. The Court was stuck between a rock and a hard place. Congress, not the courts, is the proper institution to balance the competing interests and threats to criminal process legitimacy.
Kaley did not go far beyond Caplin and Monsanto, but that does not mean that it will do no harm. First, although these prior cases established that pretrial asset freezes were allowed even when the funds would go toward retaining counsel — holdings that together diminished defendants’ right to their counsel of choice59 — they also explicitly left open the question of whether defendants had a right to challenge the asset freeze.60 As noted in Kaley, some circuit courts decided to allow such hearings.61 Even if the asset freeze survives the pretrial hearing, the defendant’s ability to appear in an adversarial setting and challenge the freeze makes clear that justice rather than fiat has determined the outcome.62
Moreover, the costs of denying a hearing may be more than theoretical. If the premises of the majority’s opinion are valid, the absence of probable cause hearings is most likely to change the outcome in borderline cases where such hearings are most necessary. If probable cause is in fact a very low bar that almost no defendants could defend against,63 then judges would not frequently find opportunity to rule contrary to the grand jury.64 Thus, probable cause hearings would only make a difference when the presence of probable cause is neither certain nor ludicrous. Being on the borderline, these are also cases where access to one’s chosen counsel may be most likely to make a difference in the trial’s outcome.65 By foreclosing probable cause hearings, and thus potentially depriving defendants of their chosen counsel, Kaley is most likely to change outcomes only in those cases where the fairness of the trial will be most necessary.66
However, even though Kaley does harm, it was the best option open to the Court. Permitting a pretrial, post-restraint hearing would necessarily call into question the grand jury’s finding of probable cause that the accused committed the crime. This consequence cannot be gainsaid; it would be the sole purpose of such hearings. Given this context, the Court’s choice to follow Congress’s clear endorsement of pretrial asset restraint without a hearing makes sense, even if it does potentially burden some criminal defendants. The Court was forced to choose between two threats to the legitimacy of the criminal justice system, one narrowly restricted to the criminal forfeiture context and one broadly implicating all indictments.
The grand jury, which is constitutionally guaranteed as a check on unfettered prosecution,67 is a legitimizing institution even in spite of widespread criticisms that it does not sufficiently protect defendants.68 Consider how tarnished the criminal justice system would appear if the grand jury were eliminated altogether, leaving the prosecutor with the bare, unsupervised power to indict any individual on any offense.69 Even if grand juries do not sufficiently limit prosecutorial discretion,70 it is important to note that Kaley did not implicate the grand jury’s practices; thus, strengthening protections for defendants was not before the Court, only the respect to be given its determination was.71 Regardless of the challenge’s outcome, providing a hearing to challenge the grand jury’s determinations communicates that the grand jury cannot be trusted to determine probable cause accurately.72 And this effect is not limited to cases of asset freezes: the same probable cause finding underlies the indictment itself.73 However narrowly the right to such a hearing is granted, its implication that the grand jury cannot be trusted spreads like oil on water. Although the Court is limited to deciding the cases before it,74 and thus obliged to deliver justice to the individual parties thereto, it must also be cognizant of a decision’s effects on the judicial system and society as a whole.75
The Court is constrained by precedent and, while it may overturn legislation as unconstitutional, it is not well-positioned institutionally to develop a policy from scratch that will adequately accommodate both systemic and individual needs. Given the choice between approving what may constructively amount to a denial of chosen counsel and allowing challenges to the probable cause determinations that permeate the criminal justice system, the Court elected to take the path that limited the scope of the damage. Congress, though, has latitude to reassess the costs and benefits of criminal forfeiture and asset restraints and to craft new policy without regard for its previous decisions. Even if pretrial asset restraints preventing defendants from affording their counsel of choice are not Sixth Amendment violations, such restraints still burden this constitutional right. To the extent that they are justified by practical or policy justifications, these restraints must be allowed. But just because a practice is constitutional does not mean that it is per se advisable as a policy matter in all cases.76 Rather than allow criminal forfeiture to grow unchecked,77 Congress should revisit the topic to ensure that criminal forfeiture and asset freezes strike a balance between defendants’ rights and the needs of law enforcement.
The best way to do so would be to retract criminal forfeiture to cover only the serious crimes it was designed to address. One primary goal of expanding criminal forfeiture was to starve major conspiracies like drug trafficking operations and organized crime of their ill-gotten gains.78 By preventing profits from being reinvested into the conspiracy, forfeiture would starve the beast.79 However, as more and more “tough on crime” statutes have proliferated, criminal forfeiture may be as likely to impact the low-level drug possessor, or the unsophisticated seller of unwanted medical devices,80 as it is to strike at the heart of criminal networks.81 When a statutory regime extends beyond its useful effects, Congress should reevaluate society’s needs and revise accordingly.82
Reducing the number of crimes that trigger forfeiture would limit the legitimacy costs of asset freezes while preserving the grand jury’s credibility. All parties agree that there is a significant cost to defendants under the current regime.83 Defendants subject to asset freezes may be constructively denied their chosen counsel, tainting the fairness of the entire trial.84 Although allowing hearings as the Kaleys requested would result in disproportionate damage to the legitimacy of the criminal justice system, Congress would do well to ensure that criminal forfeiture and asset freezes are only available when their benefits outweigh their costs, as in major criminal enterprise prosecutions.
Only Congress can fundamentally change the nature of the criminal forfeiture regime without significant harmful effects. The Kaley Court had few options, none good, and chose the least destructive. By recalibrating the criminal forfeiture statutes to minimize burdens on constitutional rights, though, Congress can reenshrine criminal forfeiture as a reasonable tool for public policy. Congress has the power to develop a system that serves justice without eviscerating defendants’ rights. Now it is Congress’s responsibility to do so.