Supreme Court: Government Cannot Restrain Untainted Assets

Since the Supreme Court handed down its decisions in U.S. v. Monsanto, 491 U.S. 600 (1989) and Caplin & Drysdale, Chartered v U.S., 491 U.S. 617 (1989) is has been well established that a defendant’s Sixth Amendment right to counsel does not prevent the Government from obtaining orders precluding dissipation of forfeitable assets or those that maybe forfeitable by hiring an attorney. Caplin & Drysdale reached that conclusion on a record where the defendant had been convicted and the assets were subject to forfeiture. Monsanto broadened the rule by reaching the same conclusion in a case involving a pre-trial restraint of assets for which there was probable cause to believe that post conviction they may be forfeit.

In Luis v. U.S., No. 14-419 (S.Ct. March 30, 2016) the Court imposed a significant limitation on its two prior decisions which may well be of import each time the Government seeks to freeze assets. There the Court held that a “pretrial restraint of legitimate, untainted assets needed to retain counsel of choice violates the Sixth Amendment.”

Defendant Silva Luis was charged with paying kickbacks, conspiring to commit fraud and engaging in other crimes related to healthcare. The government claimed that Ms. Luis had fraudulently obtained about $45 million, most of which she dissipated. Prior to trial the Government sought and obtained an order precluding the defendant from dissipating her assets despite a claim that she needed them to regain counsel. The parties agreed that the defendant’s property was not related to the fraud. The district court granted the government’s request for an order directing the preservation of the assets. The eleventh circuit affirmed.

The plurality opinion ,written by Justice Bryer, and joined by the Chief Justice and Justices Ginsberg and Sotomayor, begins and end with the Sixth Amendment right to counsel, the fact that the assets involved were not tainted and the Government had no claim over them absent a conviction and forfeiture order.

Justice Bryer’s opinion begin by noting that “[n]o one doubts the fundamental character of a criminal defendant’s Sixth Amendment right to the Assistance of Counsel.” That right grants the criminal defendant a fair opportunity to secure the counsel of his or her choice. The right is not without limits, not the least of which is the ability of the person to pay counsel. The difference between this action and Caplin & Drysdale and Monsanto is the nature of the assets at issue. The property at issue here is not the product of a crime, contraband or otherwise tainted.

In Caplin & Drysdale the question centered on a post-conviction forfeiture that took the funds a convicted person wanted to use to pay an attorney. The statute involved provided that the United States has the right to proceeds obtained from a crime because title vestes in the Government at the time of the commission of the crime. Monsanto expanded, holing that a pretrial restraining order preventing a defendant prior to conviction from using assets to retain counsel that were traceable to the crime was appropriate.

These principles do not apply to this case where it is undisputed that the property is not tainted. Justice Bryer rejected what he called a broader reading of these two cases by Justice Kennedy in dissent. Under that reading “those cases stand for the proposition that property—whether tainted or untainted—is subject to pretrial restraint, so long as the property might someday be subject to forfeiture. But this reading asks too much of our precedents” since neither discusses the restraint of untainted assets. He thus distinguished the cases.

Justice Thomas concurred in the result. In a separate opinion he approached the question solely based on the text of the Sixth Amendment. Thus Justice Thomas concluded that the “Sixth Amendment provides important limits on the Government’s power to freeze a criminal defendant’s forfeitable assets before trial. And, constitutional rights necessarily protect the prerequisites for their exercise. The right . . . [to the assistance of counsel] thus implies the right to use lawfully owned property to pay for an attorney.”

Justice Kennedy, joined by Justice Alito, dissented. That dissent, as noted by Justice Bryer, focused largely on the Court’s prior decisions in Caplin & Drysdale and Monsanto: “The plurality reaches its conclusion by weighing a defendant’s Sixth Amendment right to counsel of choice against the Government’s interest in preventing the dissipation of assets forfeitable upon conviction. In so doing, it . . . sweeps aside the decisions in . . .” Caplin & Drysdale and Monsanto.

Justice Kagan also dissented but took a different approach. She noted her agreement with the decision in Caplin & Drysdale but not with Monsanto. Here, however, Petitioner had not questioned the latter. Since the validity of that decision was not raised Justice Kagan noted that the question was not before the Court.

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