Federal prosecutors can legally grab, with a judge’s nod, the assets of criminal defendants before trial.
In South Florida, the land of dope dealers and con artists, it happens routinely.
On Wednesday, a Miami criminal defense attorney will have the rare opportunity to argue before the U.S. Supreme Court that the tactic — long a powerful tool for prosecutors — violates the constitutional rights of defendants.
Why? With their assets frozen until a trial’s outcome, they’re effectively being stripped of the ability to hire the defense lawyer of their choice.
That will be the thrust of Howard Srebnick’s argument Wednesday morning, when he appears for the first time before the nine Supreme Court justices. Their ultimate opinion, in a South Florida white-collar criminal case, could potentially affect countless federal prosecutions nationwide.
Srebnick will have a half hour to make his case, and the U.S. government’s lawyer will have the same amount of time to counter his challenge.
Srebnick will argue that defendants should be allowed to keep their bank accounts and other worldly possessions unless prosecutors can show before trial that the evidence supporting an indictment justifies the seizure of those assets.
For decades, prosecutors have only needed to point to a federal grand jury indictment to argue that defendants’ assets are traceable to the criminal allegations and therefore can be seized. And judges have almost always ruled in the prosecution’s favor because of the presumption that the grand jury found “probable cause” that a crime was committed.
Eventually, depending on whether a defendant is found guilty or innocent, frozen assets are either kept or returned by the government.
In legal briefs, Srebnick has asked the Supreme Court to allow a hearing that would test the strength of the prosecution’s evidence before an actual jury hears the government’s case against his two clients, a New York couple. Kerri and Brian Kaley were charged in 2007 with illegally profiting from the resale of older medical devices in South Florida’s “gray market.” The equipment had been given to the wife and other equipment sales representatives by hospitals that no longer needed them because they purchased newer devices.
The couple obtained a $500,000 equity line of credit on their home so they could pay projected legal fees to their “preferred” defense lawyers, Srebnick, and colleague, Susan Van Dusen, who claimed the government’s case was “baseless.” But after the couple’s indictment, prosecutors obtained a judge’s order to seize their home and other assets valued at nearly $2.2 million, leading to the Supreme Court case.
There have been other recent, high-profile asset grabs as well: The U.S. attorney seized millions of dollars of bank deposits, waterfront property and jewelry that once belonged to notorious Fort Lauderdale Ponzi schemer Scott Rothstein, who was charged in late 2009 and eventually sentenced to 50 years in prison.
In that instance, Rothstein was allowed to hire his own attorney, a former partner in his bankrupt law firm, but he agreed to plead guilty to a $1.2 billion investment scheme and cooperate with prosecutors against other targets of the still-ongoing conspiracy investigation.