By Sam Hananel
Associated Press
WASHINGTON (AP) — The Supreme Court struggled this week over whether the government can freeze the financial assets of people accused of crimes if the money is not directly tied to criminal activity and is needed to pay a defense lawyer.
Several of the justices appeared sympathetic to a Miami woman accused of $45 million in Medicare fraud who claims federal prosecutors violated her constitutional rights when they put a hold on her assets that included money unrelated to the charges.
At issue is whether the forfeiture deprives Sila Luis of the right to hire an attorney of her choice with “untainted” money.
But the court seemed equally troubled that a defendant might simply spend the money tied to the crime and leave the government with nothing to recover if there is a conviction.
The justices asked tough questions of both sides, and it was difficult to predict how they would rule.
Asset forfeiture has long been used as a legal tactic that lets law enforcement officials seize property involved in a crime — particularly related to organized crime and drug deals. The Supreme Court has previously upheld the government’s ability to put a hold on property and money connected to illegal conduct.
Justice Stephen Breyer said he was concerned about extending that principle to let the government essentially take money away from a defendant before any finding of guilt.
“I’ve never heard of such a principle,” Breyer said.
Justice Department lawyer Michael Dreeben told the justices that the Sixth Amendment right to a lawyer doesn’t override the government’s interest in holding onto money that can be recovered if there is a guilty verdict.
“Dollars are fungible,” Dreeben said. “They will flow into an account. They will flow out into other accounts. It’s difficult to trace them.”
Justice Elena Kagan said that argument “leaves you with a situation in which more and more and more we’re depriving people of the ability to hire counsel of choice in complicated cases.”
Both Chief Justice John Roberts and Justice Anthony Kennedy seemed concerned that the government’s position could apply to any case from assault and battery to spousal abuse, even if it means people in those cases couldn’t afford lawyers.
“This could apply to every crime on the books,” Roberts said.
The government charged Luis in 2012 with paying kickbacks for patient referrals and billing Medicare for unnecessary services. While her companies received $45 million from Medicare over a six-year period, FBI officials said only a fraction of the money could be located.
Prosecutors alleged that she used most of the money on foreign trips and to purchase several properties, expensive cars and jewelry. Some of the funds were transferred to holdings in Mexico and used to pay kickbacks, the government said.
A federal district court allowed prosecutors to freeze up to $40.5 million of Luis’ assets under a law that lets the government freeze assets on 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.
Arguing for Luis, attorney Howard Srebnick said federal officials have no right to control money “untainted” by a crime before a defendant is convicted.
But Roberts said the argument didn’t make sense. He wondered about a case where a defendant gets $10 million from drug activity, but already has $5 million that was earned legitimately.
“You can’t say, you know, oh, I spent the drug money, you can’t touch the $5 million,” Roberts said, adding the statute seems to allow for a reasonable substitute of the tainted assets.
A decision is expected by the end of June.
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