Supreme Court Rules that Government Cannot Freeze Assets Unrelated to Alleged Criminal Activity if It Prevents Defendant from Retaining Defense Counsel

Public Domain Pictures [CC0 1.0 (http://creativecommons.org/publicdomain/zero/1.0/)]The Sixth Amendment states that the government may not deny a person representation by counsel in a criminal proceeding. The U.S. Supreme Court recently issued a decision in a case brought by someone who could afford an attorney but was unable to access funds to pay legal fees because the government had frozen their assets before trial. Luis v. United States, 578 U.S. ___ (2016). Prosecutors even admitted that the funds in question were not tied to any alleged criminal activity. The court held that this violated the Sixth Amendment right to counsel.

Federal criminal law allows the government to obtain an injunction freezing a defendant’s assets in cases involving alleged health care or banking offenses. 18 U.S.C. § 1345(a)(2). An injunction issued under this section is not necessarily limited to assets that prosecutors can demonstrate are derived from, or otherwise connected to, an alleged offense. A defendant may also be enjoined from using “property of equivalent value” to any assets allegedly linked to an offense. Id. at § 1345(a)(2)(B)(i).

Prosecutors must file a separate civil action in order to obtain an injunction under § 1345. This type of proceeding bears some similarities to civil forfeiture under federal law. 18 U.S.C. § 981. Both types of cases involve civil claims aimed at assets, but the goal of a forfeiture proceeding is for the government to take title to property involved in a criminal offense. An injunction under § 1345 prevents a defendant from disposing of assets that might be needed as evidence in a prosecution, or to satisfy a future judgment against a defendant. Unfortunately, this type of injunction can potentially prevent a defendant—who has not been convicted of a crime—from accessing any funds at all.

The defendant in Luis was indicted for alleged Medicare fraud in 2012. Prosecutors obtained a § 1345 injunction freezing her rather considerable assets. This reportedly included up to $2 million in “untainted” funds, meaning that they had no connection to the alleged fraud. Luis, slip op. at 2. The government agreed with the defendant’s contention that the injunction prevented her from accessing funds to pay for her own legal defense.

The district court rejected the defendant’s argument that the injunction violated her right to counsel, holding that the Sixth Amendment does not protect a “right to use untainted, substitute assets to hire counsel.” 966 F.Supp.2d 1321, 1334 (SD Fla. 2013). The appellate court affirmed this ruling. 564 Fed.Appx. 493 (11th Cir. 2014).

The Supreme Court reversed the lower courts in a 5-3 ruling. Justice Breyer, writing a plurality opinion for himself and three other justices, found that the right to counsel in the Sixth Amendment superseded the government’s interest in preserving the funds in question for a possible future forfeiture action. In a dissenting opinion, Justice Kagan wrote that an earlier decision addressing the freezing of assets needed to pay legal fees, U.S. v. Monsanto, 491 U.S. 600 (1989), should still apply.

These blog posts are meant to be illustrative only. Unless expressly stated to the contrary herein, these matters are not the result of any legal work of Michael J. Brown, but are used to communicate a particular point of view. Michael J. Brown does not claim credit for any legal work done by any lawyer or law firm either generally or specifically, with respect to the matters contained in this blog.

For more than 20 years, federal crimes attorney Michael J. Brown has fought for the rights of people facing state and federal criminal charges in west Texas. To schedule a confidential consultation to see how our years of experience can help you and your defense, contact us today online or at (432) 687-5157.

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Photo credit: Public Domain Pictures [CC0 1.0].