State Asset Forfeiture Statutes May Require Revision Following SCOTUS Ruling

Does your state criminal forfeiture statute allow the freezing of substitute assets? If so, it must now be rewritten to allow criminal defendants to use such assets to pay for an attorney of their choice.

In a 6-2 decision the Supreme Court ruled that the Sixth Amendment right to counsel includes allowing a criminal defendant to use untainted substitute assets to hire an attorney, rather than freezing them for forfeiture to the government after conviction.

The State and Local Legal Center (SLLC) filed an amicus brief arguing for the opposite result in Luis v. United States. State and local governments—police departments in particular—receive criminal asset forfeitures. Any many state forfeiture statutes allow freezing of substitute assets.

Sila Luis was charges with fraudulently obtaining nearly $45 million in Medicare funds. Luis claims that she has a Sixth Amendment right to use the untainted portion of the $2 million in assets remaining in her possession to hire an attorney of her choice. A federal statute allows substitute assets to be frozen in cases of federal health care fraud. 

The Supreme Court ruled in favor of Luis in a plurality opinion written by Justice Breyer. The Court distinguished two previous cases where the Court held that a post-conviction defendant (Caplin & Drysdale v. United States (1989)) and pre-trial defendant (United States v. Monsanto (1989)) could not use tainted assets to pay an attorney. “The distinction between [tainted and untainted assets] is…an important one, not a technicality. It is the difference between what is yours and what is mine.”

The Court then applied a balancing test weighing the defendant’s “fundamental” right to assistance of counsel with the government’s interest in punishment through criminal forfeiture and victims’ interest in restitution. The balance favored the interest of the accused because the interests in criminal forfeiture and restitution aren’t constitutionally protected. “Rather, despite their importance, compared to the right to counsel of choice, these interests would seem to lie somewhat further from the heart of a fair, effective criminal justice system.”

Justice Kennedy’s dissenting opinion articulates many of the concerns raised in the SLLC amicus brief. Specifically, he points out that the ruling rewards Luis’ decision to spend her own money rather than the money she is accused of stealing. And in Justice Kennedy’s words:  “[t]he true winners today are sophisticated criminals who know how to make criminal proceeds look untainted.”

Justice Kennedy also notes that Court’s decision will frustrate states’ administration of their forfeiture schemes. “Where a defendant has put stolen money beyond a State’s reach, a State should not be precluded from freezing the assets the defendant has in hand. The obstacle that now stands in the States’ way is not found in the Constitution. It is of the Court’s making.”

Mary MassaronPlunkett Cooney, wrote the SLLC brief, which was joined by the National Conference of State Legislatures, the Council of State Governments, the National Association of Counties, the National League of Cities, the United States Conference of Mayors, the International City/County Management Association, and the International Municipal Lawyers Association.