Court says criminal defendants should be allowed to pay lawyers with 'untainted' funds
But a recent U.S. Supreme Court decision says that criminal defendants whose assets face seizure should be allowed to pay for their own lawyers with money not associated with their alleged crimes.
The court ruled 5-3 in Luis v. United States that a freeze of a defendant’s “untainted” assets—legitimate funds not connected to the crime—violates the defendant’s Sixth Amendment right to retain the counsel of her choice before trial.
The March 30 decision suggests “just one more way that the rich really are different, even when they are charged with a crime,” David Siegel, a professor and co-director of the Center for Law and Social Responsibility at the New England School of Law, wrote in his blog.
“It’s an important decision for a cohort of cases involving criminal defendants who are retaining their own counsel and have significant assets of their own,” Siegel adds in an interview. “But the vast majority of criminal defendants are not getting to choose their own counsel. The court seems troublingly sanguine about that situation.”
The case, which involves alleged Medicare fraud, originated in Florida, where Sila Luis and two others operated home health care agencies enrolled as Medicare providers. They claimed to provide physical therapy and serve diabetic patients needing insulin injections, court papers say.
Luis and her co-owners were indicted by a federal grand jury in 2012 on charges of conspiracy to commit health care fraud, conspiracy to pay Medicare kickbacks, and payment of kickbacks to nurses accused of falsifying blood sugar readings, patient visit logs and treatment notes. Federal prosecutors contend that Luis’ companies fraudulently obtained about $45 million under the scheme, with Luis paying herself some $4.5 million. Much of the money, the government charges, was used for the kickbacks and by Luis on real estate, luxury goods, automobiles and travel.
When Luis was indicted, the government filed a civil action seeking to restrain her assets before trial. She had $2 million, which the government hoped to preserve for restitution. A federal district court issued a temporary restraining order barring Luis from spending or disposing of assets from more than 30 bank accounts and 10 properties she owns or controls.
Luis moved to release money—which both she and the government agreed was untainted—to pay her defense attorney. (She had yet to be arraigned as the question about asset forfeiture moved to the Supreme Court.)
The district court held that “there is no Sixth Amendment right to use untainted, substitute assets to hire counsel.” The 11th U.S. Circuit Court of Appeals at Atlanta affirmed, holding that Luis’ Sixth Amendment challenge was foreclosed by United States v. Monsanto and Caplin & Drysdale v. United States, two 1989 Supreme Court rulings concluding that defendants had no constitutional right to use “forfeitable” assets to pay their lawyers.
In the Supreme Court’s decision favoring Luis, Justice Stephen G. Breyer wrote for a plurality of four members of the court. He said that under Caplin & Drysdale and Monsanto, the government may be able to freeze before trial “tainted” assets such as a robber’s loot, contraband or property otherwise associated with a crime. But in this case, the government seeks to restrict Luis’ untainted property without any showing of a governmental interest in that property.
“The distinction … is the difference between what is yours and what is mine,” Breyer wrote. Luis needs some portion of her untainted funds to pay for the lawyer of her choice, he said. “In our view, insofar as innocent (i.e., untainted) funds are needed to obtain counsel of choice, we believe that the Sixth Amendment prohibits the court order that the government seeks,” Breyer added.
How are defendants whose innocent assets are frozen in cases like these supposed to pay for a lawyer, Breyer wondered, particularly if they lack “tainted assets” because they are innocent? Such suddenly indigent defendants “would fall back upon publicly paid counsel, including overworked and underpaid public defenders,” he said.
Breyer’s opinion was joined by Chief Justice John G. Roberts Jr. and Justices Ruth Bader Ginsburg and Sonia Sotomayor.
Justice Clarence Thomas provided the fifth vote concurring in the judgment for Luis and in a separate opinion suggested the right to counsel was absolute, and not subject to the balancing of interests undertaken by Breyer.
Justice Anthony M. Kennedy wrote the main dissent, joined by Justice Samuel A. Alito Jr. “The true winners today are sophisticated criminals who know how to make criminal proceeds look untainted,” Kennedy said. They do so every day, he noted, by using cashier’s checks, money orders, prepaid debit cards and other methods, as well as by opening bank accounts in other people’s names and through shell companies.
“Money, after all, is fungible,” Kennedy added. “There is no difference between a defendant who has preserved his or her own assets by spending stolen money and a defendant who has spent his or her own assets and preserved stolen cash instead.”
Justice Elena Kagan issued her own dissent, saying she found the Monsanto decision troubling because it permits the government to freeze assets a defendant needs to hire an attorney based on nothing more than probable cause that the property will ultimately prove forfeitable.
The multiple opinions gave legal experts plenty to chew on.
“The immediate upshot is that the government will be more cautious about what it seizes,” says Courtney J. Linn, a partner in the Sacramento, California, office of Orrick, Herrington & Sutcliffe who wrote an amicus brief on Luis’ side for the National Association of Criminal Defense Lawyers. That brief argued the government’s interest in forfeiture doesn’t outweigh the defendant’s right to spend her own money on the counsel of her choice.
The American Bar Association also filed a brief on Luis’ side, arguing that the Fifth and Sixth amendments “preclude an expansion of the government’s use of pretrial restraint orders to freeze a defendant’s lawfully obtained, untainted assets that are needed to retain and pay counsel of choice.”
If such untainted assets were seized, a defendant’s counsel of choice would have to agree to take the case on a pro bono or contingent basis, and that harms the formation of the attorney-client relationship, the ABA said.
Lisa Soronen, executive director of the State and Local Legal Center, helped write an amicus brief for state and local government groups. She says the decision may also have implications for state asset-forfeiture laws used to combat much more common crimes such as drug dealing. “I look at it as a complete loss,” Soronen says of the decision.
Stefan D. Cassella, a former head of the asset forfeiture and money laundering section for the U.S. attorney’s office in Maryland, said the decision was a disappointment to law enforcement and advocates of victims’ rights.
“Criminals can move money much more quickly than law enforcement can get it back,” says Cassella, the author of a treatise on asset forfeiture cited in briefs from both sides. “This is a loss for victims in the pretrial stage, and we don’t know how bad the loss is going to be going forward.”
On the issue of the effectiveness of counsel, New England Law’s Siegel says he’s troubled by the “solicitude” the high court shows for wealthy defendants getting counsel of their choice when indigent defendants don’t even have a guarantee of representation when they first appear before a judge. He’s also bothered by the suggestion that a defendant such as Luis would be disadvantaged by representation by a public defender. “That’s what the vast majority of indigent defendants face,” he says.
Breyer said that accepting the government’s view on asset forfeiture would increase the workload of public defenders, and that could “render less effective the basic right the Sixth Amendment seeks to protect.”
Kennedy said neither Luis nor Breyer suggested that the defendant would receive inadequate representation if she could not use her own funds.
“Given the large volume of defendants in the criminal justice system who rely on public representation,” Kennedy said, “it would be troubling to suggest that a defendant who might be represented by a public defender will receive inadequate representation.”
This article originally appeared in the June 2016 issue of the ABA Journal with this headline: “Asset Protection: Court says criminal defendants should be allowed to pay lawyers with ‘untainted’ funds.”
CorrectionPrint and initial online versions of “Asset Protection,” June, about the Supreme Court ruling in Luis v. United States, should have reported that the 11th U.S. Circuit Court of Appeals at Atlanta affirmed the district court’s ruling against Sila Luis.
The ABA Journal regrets the error.