Supreme Court Considers Criminal Case Concerning Frozen Funds

The Supreme Court heard arguments earlier this week in an important case discussing whether criminal defendants ought to be able to challenge a pretrial order to freeze assets that they need to mount a vigorous defense. This appears to be particulary relevant with white collar crime cases. Early reports indicate that the justices appeared divided on the matter, however the Court appears not be split along ideological lines.

The exact question before the Court is whether prosecutors should be allowed to bar defendants from using their own money to pay for sometimes pricey defense teams without there first being a hearing on the issue. The case before the Supreme Court concerns the actions of Kerri Kaley and her husband Brian. Kerri was working as a medical sales rep for a subsidiary of Johnson & Johnson back in 2005 when she was notified that she was the target of a criminal investigation. Kerri discovered that she was a target in a major federal investigation into a suspected criminal ring that peddled stolen medical equipment.

Kerri was ultimately indicted for reselling used medical equipment. Prosecutors claimed that Kerri got the products from hospitals she had sold them to, then repackaged them and sold them anew to other medical facilities. She and her husband, who was also alleged to be a participant in the scheme, had taken steps to ensure they could pay for what they knew would be an expensive criminal defense. The two took out a $500,000 home equity loan in anticipation of a possible future indictment and put the money aside in a certificate of deposit.

However, to Kerri and Brian’s chagrin, when the indictment was handed down prosecutors froze their assets, preventing them from accessing the vast majority of the money contained in the certificate of deposit account and thus hobbling their ability to mount a powerful defense. The couple was temporarily left with a total of $140,000, a figure that was then reduced further when additional money laundering charges were added to the original indictment. A judge then agreed to freeze the remaining money.

Interestingly, the couple failed to qualify for a public defender given a sizable retirement account and some money in a college savings plan. Their attorney argued that once these accounts were liquidated and penalties were subtracted, the two would only have $250,000, far less than the $500,000+ many estimated was needed to mount a vigorous defense.

The couple challenged the seizure of their assets, saying that their inability to choose the lawyers they wanted due to a lack of financial resources violated their right to counsel under the Sixth Amendment. The Kaley’s further argued that the prosecutors should have been required to argue their request for an asset seizure during a pretrial hearing, rather than simply before a grand jury.

The Supreme Court agreed to hear the case because they have never definitively ruled on the subject. The case is seen as an important one that could go on to impact numerous other high-profile white-collar criminal cases where assets were frozen by prosecutors in an attempt to cut off oxygen to the criminal’s defense.

If you or a loved has been accused of a crime, it is important to contact a criminal defense lawyer immediately. Criminal defense attorney Douglas Kans has been successfully defending the criminally accused for over 18 years. Call our office and speak to someone on our defense teamn for a free consultation about your case.

Source: Lawrence Hurley, published at Reuters.com.