A practice of the government, normally the federal government but sometimes state and local law enforcement as well, many people may not be aware of is the freezing of a defendant’s assets before he/she has ever been convicted of a crime. For instance, a law enforcement agency might contact the financial institution of a suspect and have his/her accounts frozen in conjunction with an arrest. Of course, we all know the Constitution provides that a person is innocent until proven guilty. Therefore, at the arrest stage, everyone is innocent under the law. However, the government is still allowed to freeze a person’s assets based on a presumption of guilt rather than the Constitutionally mandated presumption of innocence.
More concerning is the fact that law enforcement may not just seize bank accounts or assets that they believe are directly linked to the crime. They often will seize any and all accounts and assets of a defendant without regard to whether they can prove those assets are related to, or proceeds of, a qualifying crime.
This practice obviously has several very significant and negative ramifications for a defendant. If the defendant cannot access his/her assets, he/she may not be able to pay bills, operate a business if business accounts are frozen, hire a criminal defense lawyer to develop a proper defense to the criminal charges or raise the money necessary to bond out of jail. Of course, the government is not going to care about these problems even though, again, the Constitution tells us we are dealing with an innocent person at that stage in the process.
The United States Supreme Court recently decided a case (Luis v. United States) not far from Jacksonville, Florida that dealt with this issue. The defendant was arrested for Medicare fraud, which normally involves allegations that a doctor and/or medical practice bills Medicare for services and items that were not necessary or never provided. At the time of the arrest, the government knew that almost all of the funds received from the alleged fraud had been spent. However, the government had a judge sign an order freezing an account of the defendant’s with $2 million in it although that money was not connected to the alleged fraud. The defendant objected arguing that she needed the money to hire a proper criminal defense attorney.
The Supreme Court ruled that freezing the defendant’s account with money not directly tied to the alleged crime violated her Sixth Amendment rights. The Sixth Amendment to the Constitution affords defendants charged with a crime, among other things, the right to an attorney. The Supreme Court ruled that freezing a defendant’s assets which would have been used to pay for a criminal defense lawyer violates the Sixth Amendment right to secure a criminal defense attorney.
It is important to note that the Court did not rule that the government can never freeze a defendant’s assets upon arrest if the defendant needs those assets to hire a criminal defense lawyer. The ruling was limited to assets and funds that are not directly related to the alleged crime. If the government can establish probable cause that assets are directly related to criminal activity, the government can freeze those assets even if it renders a defendant destitute and the defendant no longer has the ability to hire a criminal defense attorney.
An example would be a fraud case where the proceeds from the fraud were deposited directly into the defendant’s only bank account. In that case, the government would likely be able to freeze that account even if it is the only source of money for the defendant to retain a criminal defense lawyer.