Luis v. United States

2016-03-30

Headline: Pretrial freezes of untainted assets are barred, limiting prosecutors’ ability to lock up defendants’ funds and making it easier for accused people to use their own money to hire lawyers.

Holding: A pretrial freeze of a defendant’s untainted assets violates the Sixth Amendment because it prevents using lawfully owned money to hire chosen counsel, so such broad freezes are unconstitutional.

Real World Impact:

Prevents prosecutors from freezing untainted funds before trial.
Makes it easier for accused people to use personal funds to hire lawyers.
Complicates government efforts to preserve money for victim restitution.

Topics: right to counsel, asset freezes, health care fraud, forfeiture and restitution

Summary

Background

A woman accused of a large health-care fraud scheme and the federal Government disputed whether officials could freeze her money before trial. The Government used 18 U.S.C. §1345 to seek a court order freezing up to $45 million in assets it said were related to the alleged scheme and showed transfers to family, shell companies, cash withdrawals, and spending on luxury items.

Reasoning

The central question was whether freezing a defendant’s untainted assets before conviction prevents the defendant from hiring the lawyer they want and therefore violates the Sixth Amendment right to counsel. The controlling opinion reversed the lower court’s freeze, holding that a defendant must be able to use lawfully owned money to hire chosen counsel. Justice Thomas agreed the freeze was unconstitutional and grounded that rule in the Amendment’s text and in historical common-law practice, which protected untainted property from pretrial restraint. The dissent argued earlier decisions allow pretrial restraints when there is probable cause to believe assets will be forfeitable and emphasized the Government’s interest in preserving funds for victim recovery.

Real world impact

After this ruling, courts must be careful before freezing a defendant’s untainted funds, and prosecutors will need clearer proof or different tools to preserve assets for restitution. Defendants will have greater ability to pay for private lawyers with their own noncrime-derived money, while victims and prosecutors may face harder tracing and preservation challenges. The decision sets up further fights about how to separate “tainted” from “untainted” money.

Dissents or concurrances

Justice Kennedy (joined by Justice Alito) would have upheld the freeze under prior cases (Caplin and Monsanto), and Justice Kagan would affirm, saying Monsanto controls; Justice Thomas concurred in the judgment but on textual and historical grounds.