Kaley v. United States and Criminal Defendants’ Right to a Pretrial Hearing to
Challenge the Bases for Government Forfeitures and Fund Their Defenses
By Mark E. Schamel and Jackson R. Price
Mark E. Schamel (MSchamel@wcsr.com) focuses
his practice on white collar criminal defense and
government investigations and is based in the
Washington, DC office. Mark has represented clients
in high-profile cases, both in Washington, D.C., and
in federal and state courthouses across the country.
hearing, the Kaleys moved to vacate the protective order on the
basis that the Fifth and Sixth Amendments entitled them to a
pretrial, adversarial hearing to challenge the government’s legal
theory and evidentiary support for the underlying charges that
purported justified the restraint.
Jackson R. Price (JaPrice@wcsr.com) concentrates
his practice on civil litigation involving consumer
financial services, commercial contracts, easement
and property disputes, business and personal torts,
employment disputes, technological disputes, and
trademark protection and enforcement. He practices
in Womble Carlyle’s Charlotte office.
The U.S. Supreme Court previously rejected “any notion of a
constitutional right to use the proceeds of crime to finance an
expensive defense,” Caplin & Drysdale v. United States, 491 U.S.
617, 630 (1989). However, it expressly left open the question of
whether defendants have a Fifth Amendment right to a pretrial
hearing to determine whether some or all of the seized assets
may properly be used to fund their criminal defense. United
States v. Monsanto, 491 U.S. 600, 615, n.10 (1989). Most of the
circuit courts have since sought to answer this question.
On October 23, the United States Supreme Court took up the
pressing question of pre-conviction forfeiture. Does the United
States, in an ex parte showing of probable cause, have the right
to take every possible resource for the payment of attorneys’
fees? As part of the ongoing battle to permit defendants to hire
counsel and defend a case, the Court has to determine what the
rules of engagement will be. Will ex parte decisions hold sway
until the trial is over and it is too late for defendants to utilize
the “best defense money can buy” or will defendants have the
opportunity to a meaningful pre-trial determination? Will a
probable cause determination by the same Grand Jury that
indicts a ham sandwich keep defendants from being able to
defend themselves or will courts have to force the government
to present more before depriving defendants of their resources?
In January 2005, the FDA began investigating Kerri Kaley
and her husband, for stealing and selling prescription medical
devices (PMDS) to a company involved in the “black” or “gray”
market. In anticipation of a prolonged legal battle, the Kaleys
purchased a certificate of deposit with a $500,000 equity line
of credit on their home to pay their estimated legal fees.
When the Kaleys were indicted two years later in the Southern
District of Florida, the Government seized more than $2.2
million of their assets, including the certificate of deposit.
The court then issued an ex parte protective order pursuant
to 21 U.S.C. § 853, and restrained all of the seized assets until
trial. This protective order rendered the Kaleys incapable of
funding their defense. Because § 853 does not provide for a
Virtually every circuit court has found that the Due Process
Clause entitles criminal defendants to some form of a pretrial
hearing to determine whether it is likely that the restrained
assets will be subject to forfeiture. Most circuits have held that
defendants are entitled to challenge the factual foundation
supporting the grand jury’s probable cause determinations.
See United States v. E-Gold, Ltd., 521 F.3d 411 (D.C. Cir. 2008);
United States v. Holy Land Foundation of Relief and Dev., 493
F.3d 469 (5th Cir. 2007); States v. Farmer, 274 F.3d 800 (4th
Cir. 2001); United States v. Michelle’s Lounge, 39 F.3d 684 (7th
Cir. 1994); United States v. Monsanto, 924 F.2d 1186 (2d Cir.
1991); United States v. Roth, 912 F.2d 1131 (9th Cir. 1990). In
contrast, the Sixth, Tenth and Eleventh Circuits have held that
the scope of such a pre-trial hearing is limited to challenging
the traceability of the seized assets to the allegedly criminal
conduct identified in the indictment. United States v. Kaley, 677
F.3d 1316 (11th Cir. 2009); United States v. Jamieson, 427 F.3d
394 (6th Cir. 2005); United States v. Jones, 160 F.3d 641 (10th
Cir. 1998). Last week, the Supreme Court heard oral arguments
in an appeal from the Eleventh Circuit in United States v. Kaley
and will soon resolve this circuit split.
The Eleventh Circuit is unique in that it reached its decision
based on a different test than the rest of the circuits. Every other
circuit has determined the scope of the pre-trial hearing to
which defendants are entitled by weighing the Mathews factors
and balancing: (1) the defendants’ private interests that would
be affected; (2) the risk of an erroneous deprivation of those
interests and the probable value of any additional safeguards;
and (3) the government’s interests. Mathews v. Eldridge, 424
U.S. 319, 334-35 (1976). In contrast, the Eleventh Circuit
has applied the Bissell or Barker factors. These factors, derived
from the Supreme Court’s decision in Barker v. Wingo, 407 U.S.
514 (1972), focus on: (1) the length of the delay before the
defendants received their post-restraint hearing; (2) the reason
for the delay; (3) the defendants’ assertion of the right to such
a hearing pretrial; and (4) the prejudice the defendants suffered
due to the delay weighted against the strength of the United
States’ interest in the subject property. United States v. Bissell,
866 F.2d 1343 (11th Cir. 1989). Kaley is prime for reversal by
the Supreme Court based solely on the test that the Eleventh
Circuit has applied.
The Barker factors were created to measure whether a
defendant’s Sixth Amendment right to a speedy trial had been
violated, not whether a defendant’s right to due process entitles
him to a pretrial hearing. Barker, 407 U.S. at 519. This latter
issue is the precise context in which the Mathews factors were
developed. See Mathews, 424 U.S. at 321. While the Supreme
Court has applied the Barker test in the criminal forfeiture
context, it has only done so in cases where defendants have
sought dismissal of the charges against them, not where the
defendants have asked for some interim relief pending a final
adjudication. See United States v. $8,850 in U.S. Currency, 461
U.S. 555 (1983); United States v. Von Neumann, 474 U.S. 242
(1986). Supreme Court precedent has consistently shown that
the due process analysis changes depending on the nature of the
relief sought. The Barker factors are appropriate only where the
defendant seeks dismissal of the government’s case. In contrast,
the Mathews framework is proper where the issue before the
court is entirely procedural.
The Barker Court itself recognized that the right to a speedy
trial “is necessarily relative” and is “consistent with delays and
depends upon circumstances,” which explains why those factors
– focusing on the length of the delay, the reason for the delay,
and any prejudice – are relativistic. Barker, 407 U.S. at 522.
The Barker factors focus on the fairness of a delay. See $8,850,
461 U.S. at 565. The Supreme Court, however, has recognized
that the right to counsel “has never been derived from the Sixth
Amendment’s purpose of ensuring a fair trial.” United States v.
Gonzalez-Lopez, 548 U.S. 140, 148 (2006). Instead, the right to
counsel is a concrete right that is deprived in its entirety when
a defendant is “erroneously prevented from being represented
by the lawyer he wants.” Id. Depriving defendants of lawfullyobtained assets necessary to fund their defense denies those
defendants their right to counsel and entitles them to due process
pursuant to the Fifth Amendment. For this reason, the Mathews
test, which simply balances defendants’ interests and the risk
of an erroneous deprivation of rights against governmental
interests in preserving assets to satisfy any resulting forfeiture, is
better suited for assessing a defendants’ Fifth Amendment right
to a pre-trial hearing to challenge the ongoing restraint of his
assets in violation of his Sixth Amendment right to counsel. See,
e.g., Farmer, 274 F.3d at 804-05.
Even the Eleventh Circuit, in a prior iteration of Kaley, seemed
to recognize the improvidence of applying the Bissell/Barker
factors in this context, stating that had the court applied the
Mathews test, the Kaleys would have been entitled to a pretrial
hearing on the merits of the protective order, but indicating
that the court was “duty bound to apply [its] case precedent”
and examine the facts under the framework outlined in Bissell.
United States v. Kaley, 579 F.3d 1246, 1260 (11th Cir. 2009).
It is likely that the Supreme Court will reverse Kaley. The real
question is whether the Court will punt the case back to the
district court to apply the Mathews factors or whether the Court
will define the scope of the pre-trial hearing to which criminal
defendants are entitled.
Practitioners know that the Court will never truly level the
playing field and that even Warren Buffet cannot finance a
defense on par with the resources that the government can bring
to bear. However, the hope here is that the Court will recognize
the Constitutional implications of giving the government the
power to charge and tie a defendant’s hands behind their back at
the same time and take real steps to reform the process.
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