Sila Luis v. US,  No. 14-419.  (United States Supreme Court March 30, 2016)

A federal statute provides that a court may freeze before trial certain assets belonging to a criminal defendant accused of violations of federal health care or banking laws. See 18 U. S. C. §1345. Those assets include: (1) property “obtained as a result of” the crime, (2) property “traceable” to the crime, and (3) other “property of equivalent value.” §1345(a)(2). In this case, the Government has obtained a court order that freezes assets belonging to the third category of property, namely, property that is untainted by the crime, and that belongs fully to the defendant. That order, the defendant says, prevents her from paying her lawyer. She claims that insofar as it does so, it violates her Sixth Amendment “right . . . to have the Assistance of Counsel for [her] defence.” We agree,

In October 2012, a federal grand jury charged the petitioner, Sila Luis, with paying kickbacks, conspiring to commit fraud, and engaging in other crimes all related to health care. See §1349; §371; 42 U. S. C. §1320a-7b(b)(2)(A). The Government claimed that Luis had fraudulently obtained close to $45 million, almost all of which she had already spent. Believing it would convict Luis of the crimes charged, and hoping to preserve the $2 million remaining in Luis’ possession for payment of restitution and other criminal penalties (often referred to as criminal forfeitures, which can include innocent—not just tainted—assets, a point of critical importance here), the Government sought a pretrial order prohibiting Luis from dissipating her assets. See 18 U. S. C. §1345(a)(2). And the District Court ultimately issued an order prohibiting her from “dissipating, or otherwise disposing of . . . assets, real or personal . . . up to the equivalent value of the proceeds of the Federal health care fraud ($45 million).”

No one doubts the fundamental character of a criminal defendant’s Sixth Amendment right to the “Assistance of Counsel.” In Gideon v. Wainwright, 372 U. S. 335 (1963), the Court explained:

“`The right to be heard would be, in many cases, of little avail if it did not comprehend the right to be heard by counsel. Even the intelligent and educated layman has small and sometimes no skill in the science of law. If charged with crime, he is incapable, generally, of determining for himself whether the indictment is good or bad. He is unfamiliar with the rules of evidence. Left without the aid of counsel he may be put on trial without a proper charge, and convicted upon incompetent evidence, or evidence irrelevant to the issue or otherwise inadmissible. He lacks both the skill and knowledge adequately to prepare his defense, even though he have a perfect one. He requires the guiding hand of counsel at every step in the proceedings against him. Without it, though he be not guilty, he faces the danger of conviction because he does not know how to establish his innocence.'” Id., at 344-345 (quoting Powell v. Alabama, 287 U. S. 45, 68-69 (1932)).

Given the necessarily close working relationship between lawyer and client, the need for confidence, and the critical importance of trust, neither is it surprising that the Court has held that the Sixth Amendment grants a defendant “a fair opportunity to secure counsel of his own choice.” Powell, supra, at 53.

The property here is untainted; i.e., it belongs to the defendant, pure and simple. In this respect it differs from a robber’s loot, a drug seller’s cocaine, a burglar’s tools, or other property associated with the planning, implementing, or concealing of a crime. The Government may well be able to freeze, perhaps to seize, assets of the latter, “tainted” kind before trial. As a matter of property law the defendant’s ownership interest is imperfect. The robber’s loot belongs to the victim, not to the defendant. See Telegraph Co. v. Davenport, 97 U. S. 369, 372 (1878) .

The distinction that we have discussed is thus an important one, not a technicality. It is the difference between what is yours and what is mine. And, 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.

As a practical matter, to accept the Government’s position could well erode the right to counsel to a considerably greater extent than we have so far indicated. To permit the Government to freeze Luis’ untainted assets would unleash a principle of constitutional law that would have no obvious stopping place.

We add that the constitutional line we have drawn should prove workable. That line distinguishes between a criminal defendant’s (1) tainted funds and (2) innocent funds needed to pay for counsel. We concede that money is fungible; and sometimes it will be difficult to say whether a particular bank account contains tainted or untainted funds. But the law has tracing rules that help courts implement the kind of distinction we require in this case.

For the reasons stated, we conclude that the defendant in this case has a Sixth Amendment right to use her own “innocent” property to pay a reasonable fee for the assistance of counsel. On the assumptions made here, the District Court’s order prevents Luis from exercising that right. We consequently vacate the judgment of the Court of Appeals and remand the case for further proceedings.

By:  White Collar Criminal Defense Attorney Michael J. Petro

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