On February 25, the Supreme Court of the United States in Kaley v. United States, 2014 WL 700097, held that an indicted defendant may not challenge a grand jury’s finding of probable cause when challenging the freezing of assets. 21 U.S.C. § 853(e) authorizes the Government to freeze assets that would be subject to forfeiture upon conviction, even if the defendant wishes to use a portion of those assets for attorney’s fees, if the freezing is “based on a finding of probable cause to believe that the property will ultimately be proved forfeitable.” United States v. Monsanto, 491 U.S. 600, 615 (1989).
Defendants Kerri Kaley and her husband were indicted for reselling stolen medical devices and laundering the proceeds. Pursuant to § 853(e), the Government obtained an order restraining her assets, and the Kaleys moved to vacate the order, requesting a hearing to determine whether the grand jury correctly determined that probable cause existed that they committed the crimes. It is important to note that the Kaleys wished to use the assets to pay for attorney’s fees. The District Court allowed the Kaleys to challenge the traceability of the assets to the offense but not the basis for the underlying indictment. The Eleventh Circuit affirmed, and the Kaleys appealed.
The Supreme Court affirmed the ruling that the Kaleys could not challenge the grand jury’s finding of probable cause at a hearing to determine whether the assets could be frozen. Of critical importance to the Court’s decision was the fact that grand jury determinations are given virtually unassailable deference, and that deference should not be yielded just because the hearing is regarding the freezing of assets when the defendants wish to use the assets to pay for a lawyer. The Court found the Kaleys’ requested hearing unworkable as a practical matter, as the same judge that could decide that there was not probable cause that the defendant committed the crime for the purpose of freezing the assets could also preside over that same defendant’s trial. In addition, the Court rejected the Kaleys’ argument pursuant to Mathews v. Eldridge, 424 U.S. 319 (1976). In Mathews the Court established that before a requested procedure must be honored, a court must weigh 1) the private interest at stake against 2) the burdens that the procedure would impose on the government, both viewed alongside 3) the risk of an erroneous deprivation of that interest without the procedure and the probable value, if any, of the additional procedural safeguard. The Court ultimately found Mathews inapplicable, but even so found that the Kaleys’ interest in retaining their own chosen counsel was essentially equally as significant as the Government’s interest in not disclosing witnesses or strategy before trial, which does not occur at a grand jury because the defense is not present there; as such, the Mathews test boiled down here to the “probable value [of] a judicial hearing in uncovering mistaken grand jury findings of probable cause”, which the Court found to be minimal. For these reasons the Court affirmed the order, and the Kaleys may not challenge at a “freezing” hearing the grand jury’s underlying finding of probable cause. Kaley does not, however, say that a defendant may not challenge the connection between the assets to be frozen and the crimes alleged.