Justices: Government can't freeze assets unrelated to crimes

AP News
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Posted: Mar 30, 2016 11:11 AM

WASHINGTON (AP) — The government cannot freeze the financial assets of people accused of crimes if the money has no connection to criminal activity and is needed to pay legal defense costs, the Supreme Court ruled Wednesday.

Five justices agreed that federal prosecutors violated the constitutional rights of a Miami woman accused of Medicare fraud when they put a hold on more than $40 million in assets, including money unrelated to the criminal charges.

Sila Luis argued that the forfeiture prevented her from hiring the defense lawyer of her choice with "untainted" money.

Writing for four members of the court, Justice Stephen Breyer said the Sixth Amendment guarantees a fundamental right of defendants to be represented by a lawyer they can afford to hire.

"The government would undermine the value of that right by taking from Luis the ability to use the funds she needs to pay for her chosen attorney," Breyer said.

The government long has used asset forfeiture laws to seize property involved in a crime. Such seizures often are used in cases involving organized crime and drug deals. The Supreme Court previously has upheld the government's ability to put a hold on property and money connected to illegal conduct.

Luis was charged in 2012 with billing Medicare for unnecessary services and paying kickbacks to people who referred patients. Prosecutors said the schemes netted her companies about $45 million from Medicare over a six-year period, but officials could locate just a fraction of the money.

Some of the funds were transferred to holdings in Mexico, prosecutors alleged, while other money was used to buy properties, expensive cars and jewelry.

A federal district court allowed prosecutors to freeze up to $40.5 million of Luis' assets under a law that lets the government put a hold on assets or property linked to alleged violations of banking or health care laws. It also lets the government freeze property "of an equivalent value." The ruling was upheld by a federal appeals court.

Breyer said that "until conviction, the untainted property at issue belongs to the defendant, pure and simple." His opinion was joined by Chief Justice John Roberts and Justices Ruth Bader Ginsburg and Sonia Sotomayor.

Justice Clarence Thomas wrote separately to say that he would side with Luis by relying on a strict textual reading of the Sixth Amendment rather than Breyer's "balancing approach."

Writing in dissent, Justice Anthony Kennedy said the court's "unprecedented holding rewards criminals who hurry to spend, conceal or launder stolen property by assuring them that they may use their own funds to pay for an attorney after they have dissipated the proceeds of their crime."

Kennedy's dissent was joined by Justice Samuel Alito. Justice Elena Kagan wrote her own dissent, saying that Luis has no right to use her assets to pay for a lawyer because the government has established probable cause that it eventually will recover the money.