Supreme Court To Consider Post-Indictment, Probable Cause Challenges To Forfeiture

The Supreme Court has granted certiorari to consider whether defendants are entitled to a hearing to challenge the probable cause underlying the Government's theory of prosecution that supports any post-indictment, pre-trial restraining order that freezes assets the defendant needs to retain counsel. The Supreme Court left unresolved the issue of whether due process required such a hearing in Caplin & Drysdale v. United States, 491 U.S. 617 (1989). And the Circuits have split on the issue. Now in Kaley v. United States, the Supreme Court has agreed to consider whether such a hearing is required under the Fifth and Sixth Amendments.

In Kaley, the United States Court of Appeals for the Eleventh Circuit found that the defendants were entitled to a post-indictment, pre-trial hearing to challenge whether assets seized were traceable to the conduct charged in the indictment. But the defendants conceded that the assets were traceable. Rather, the defendants argued that the Government's theory of prosecution was legally and factually invalid (defendants noted that a co-defendant was acquitted of the same charges under the same theory of prosecution). The Eleventh Circuit, joining the majority of Circuits, rejected that argument and held that defendants were not entitled to such a hearing.

In the minority, the Second Circuit and the D.C. Circuit permit defendants who are not able to retain counsel without the benefit of restrained funds to challenge a grand jury's probable cause determination both in regard to culpability and traceability. For those Courts, Section 853 (the pertinent forfeiture statute) must permit such a hearing if it is to avoid conflict with the Fifth and Sixth Amendments. Those Courts also emphasize the procedural posture of a pretrial restraining orderthat the Government has the option of whether to seek pretrial restraint of assets, not that the pretrial restraint of assets flows naturally from an indictment. In that light, the Government may decide whether it will expose itself to a pre-trial, probable...