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SCOTUS Issues Appalling Decision on Asset Forfeiture

The Supreme Court on Thursday handed down an absolutely appalling, though not surprising, decision that makes it even easier for the government to seize your assets on the grounds that they were gained through the commission of a crime before ever convicting you of that alleged crime. The case is Kaley v United States.

In a 6-3 ruling written by Justice Kagan, the court ruled that the government can seize someone’s assets after they are indicted by a grand jury but before they actually go to trial and that there is no need to allow them to challenge that forfeiture.

The grand jury s indictment in this case charges a scheme to steal prescription medical devices and resell them for profit. The indictment accused petitioner Kerri Kaley, a sales representative for a subsidiary of Johnson & Johnson, and petitioner Brian Kaley, her husband, with transporting stolen medical devices across state lines and laundering the proceeds of that activity. The Kaleys have contested those allegations throughout this litigation, arguing that the medical devices at issue were unwanted, excess hospital inventory, which they could lawfully take and market to others.

Immediately after obtaining the indictment, the Government sought a restraining order under § 853(e)(1) to prevent the Kaleys from transferring any assets traceable to or involved in the alleged offenses. Included among those assets is a $500,000 certificate of deposit that the Kaleys intended to use for legal fees. The District Court entered the requested order. Later, in response to the Kaleys’ motion to vacate the asset restraint, the court denied a request for an evidentiary hearing and confirmed the order, except as to $63,000 that it found (based on the parties’ written submissions) was not connected to the alleged offenses.

On interlocutory appeal, the Eleventh Circuit reversed and remanded for further consideration of whether some kind of evidentiary hearing was warranted. The District Court then concluded that it should hold a hearing, but only as to “whether the restrained assets are traceable to or involved in the alleged criminal conduct.” The Kaleys informed the court that they no longer disputed that issue; they wished to show only that the “case against them is `baseless.'” Accordingly, the District Court affirmed the restraining order, and the Kaleys took another appeal. The Eleventh Circuit this time affirmed, holding that the Kaleys were not entitled at a hearing on the asset freeze “to challenge the factual foundation supporting the grand jury’s probable cause determination[]” — that is, “the very validity of the underlying indictment.”

We granted certiorari in light of the Circuit split on the question presented, 568 U. S. ___ (2013), and we now affirm the Eleventh Circuit.

Justice Kagan was joined by Justices Scalia, Kennedy, Thomas, Ginsburg and Alito. Chief Justice Roberts and Justices Sotomayor and Breyer dissented. Kagan’s written opinion is little more than a long ode to the wonders of the grand jury, but grand juries can only hand down indictments, not convictions. It is an absolutely crystal clear violation of the Bill of Rights to seize assets on the grounds that they were gained through a criminal act without first convicting the defendant of having carried out that criminal act. Due process is dying of a thousand SCOTUS-inflicted cuts. You can read the full ruling here.

Comments

  1. says

    Not surprised by Scalia, Thomas and Alito – they tend to be on the wrong side in bad decisions. Pleasantly surprised by Roberts. Quite disappointed by Ginsberg. Maybe it IS time she retired…

  2. colnago80 says

    Kagan’s written opinion is little more than a long ode to the wonders of the grand jury, but grand juries can only hand down indictments, not convictions.

    Apparently, ole Elena is unaware fo the rap on grand juries that a grand jury will indite a ham sandwich if asked to by a prosecutor.

  3. StevoR : Free West Papua, free Tibet, let the Chagossians return! says

    Bloody hell.

    Confiscating assets of crime after a conviction is fair enough.

    But doing so whilst someone is still presumed innocent?

    What if out turns they’re aqquitted and released or charges are withdrawn I wonder?

    Can’t believe the court would make this decision.

  4. says

    Crystal clear or not, the Supreme Court is the final arbiter of what is and what is not constitutional. Eventually, though, the Court does see reason.

    * Pace v. Alabama upheld state antimiscegenation laws in 1883 and was not overturned until Loving v. Virginia in 1968.

    * Plessy v. Ferguson in 1896 upheld the so-called Jim Crow laws, which mandated racial segregation. These laws were in force until Brown v. Board of Education in 1954.

    * Olmstead v. United States in 1929 held that wiretaps of telephone calls obtained without judicial approval did not violate the 4th or 5th Amendments. This was overturned in 1967 by Katz v. United States.

    * Wolf v. Colorado in 1949 said that states were not bound by the 4th Amendment and thus did not have to exclude illegally seized evidence; this was overturned by Mapp v. Ohio in 1961.

    * Bowers v. Hardwick upheld a state’s right to criminalize “sodomy” or other “crime against nature” regardless of how the state defined such acts. This was overturned in 2003 by Lawrence v. Texas.

    We can only hope that, eventually, the Court will review its judgment on this matter.

  5. Ryan Jean says

    I must be missing something here, because I was under the impression that *freezing* assets during trial is a whole different matter than *forfeiting* them.

    “…the Government sought a restraining order under § 853(e)(1) to prevent the Kaleys from transferring any assets traceable to or involved in the alleged offenses.”
    “…in response to the Kaleys’ motion to vacate the asset restraint…”
    “…whether the restrained assets are traceable to or involved in the alleged criminal conduct.”
    “…the District Court affirmed the restraining order…”
    “…a hearing on the asset freeze…”

    Throughout, this seems like a restraining order to prevent the defendants from getting rid of stuff implicated in the case, not seizing and taking ownership outright.

    “Included among those assets is a $500,000 certificate of deposit that the Kaleys intended to use for legal fees.”

    Aha! There’s the real issue…

  6. says

    @StevoR #3 – The practice of seizing property upon indictment has been around since the late 80s. The practice has been that, if found innocent, the accused can petition for a return of assets. Unfortunately, by this time, things like cars, boats, home and land have been sold and the person may — after spending usually tens of thousands of dollars — be given a check for the amount the property sold for at auction. Because government auctions typically sell property at pennies on the dollar, the check typically will not cover the legal fees to get it.

    It is really a screwed up system, and I am ashamed for this country that the Supreme Court decided to support it.

  7. John Pieret says

    As Ryan Jean notes, this is miles better than the confiscation laws that allow seizure of money on the mere suspicion that it is involved in illegal activity. There were extensive legal proceedings at which the targets were represented by counsel and had the right to present evidence on their behalf. The process may still be wrong (I haven’t studied the decision), much less the decision in this particular case, but at least there is a colorable semblence of due process involved.

  8. Artor says

    Is the State seizing the assets, or just freezing them? I can understand freezing potentially illegal gains until their legality can be determined. I am put in mind of another case a few years ago, out of Texas.
    There was a rural municipality on the interstate that was financing itself by having the local police stop travelers with out-of-state plates, and shake them down for cash, jewelry, etc. or face arrest for trumped-up infractions. The town wanted to use the cash they had stolen from motorists in it’s defense against the charges of…stealing cash from motorists. The court said no in that case, which is clearly the right action in that case. How does this differ?

  9. jnorris says

    It is really a screwed up system, and I am ashamed for this country that the Supreme Court decided to support it.

    I’m with Gregory in Seattle, this ruling is disgusting.

  10. Michael Heath says

    If I had to bet one of these justices joined the majority but not the other, Kagan and Sotomayor, I would have went for Sotomayor. That’s due to her tenure as a prosecutor. J. Sotomayor continues to surprise and impress, rising above the biases of her old job to meet the challenges of the new.

  11. felidae says

    Seizure laws, intended large criminal enterprises, are being used by cops for extrajudicial punishment for minor offenses like soliciting prostitution or buying small amounts of drugs like I’ve seen on the show “Cops” lately, notably one where a teenage was caught buying a dime bag of weed using his mother’s car, which was seized. even if the case is tossed, it is the burden of the arrestee to recover their property

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