The constitutionally guaranteed rights of a criminal defendant sometimes conflict with the interpretation of a criminal statute. When these situations arise, a case generally works its way to the U.S. Supreme Court to resolve the issue. That’s what has happened in the case of Sila Luis v. United States.
Allegations of Medicare Fraud
Ms. Luis was a health care provider to homebound patients. Along with two other individuals, she was indicted in October 2012 for conspiracy to pay kickbacks for patient referrals and to defraud Medicare by filling for services that were either not performed or unnecessary. The indictment alleged that she was the owner of two health care companies that defrauded Medicare out of $45 million between 2006 and 2012.
Demand for Forfeiture of Assets
Included in Ms. Luis’s indictment was a demand for forfeiture of assets in the amount of $45 million under 18 U.S.C. § 982. This has become a recognized Government practice to seize assets that were proceeds of the illegal activity or that were used in the commission of the offense.
Section 982 forfeitures generally occur as part of sentencing following conviction.
Government Moved to Freeze All Assets
But in the Luis case, the Government took the practice to the next level. Federal prosecutors petition to seize $15 million of legitimate funds obtained from two other companies Ms. Luis owned—money made outside of the alleged Medicare conspiracy.
Prosecutors would argue that the seizure was proper to prevent her from disposing of assets that could be used to later satisfy a forfeiture order, should she be found guilty. As an added benefit, this strategy would keep Ms. Luis penniless to keep her from mounting a strong defense against the charges they had leveled against her. This was made evident when the Government filed a civil action under 18 U.S.C. § 1345 to seize all of Ms. Luis’s assets, regardless of how they were obtained.
Section 1345 provides that if “a person is alienating or disposing of property, or intends to alienate or dispose of property, obtained as a result of [fraud] or property which is traceable to” fraud, the Government can petition the court to (A) “enjoin such alienation or disposition of property” or (B) obtain “a restraining order to prohibit” the alienation “of any such property or property of equivalent value …”
Government Strategy Prevented Retaining Legal Counsel of Choice
Clearly, the Government part of the government’s strategy was to restrain Ms. Luis’s personal assets to prevent her from retaining private counsel of her choice and to fund a vigorous defense.
Ms. Luis resides in Florida. Therefore, her case is under 11th Circuit Court of Appeals precedent. That court has construed both tainted and non-tainted assets subject to restraint under Section 1345. That is relatively consistent with U.S. Supreme Court precedent which held that a criminal defendant does not have a constitutional right to challenge a grand jury’s finding of probable cause of guilt that results in his assets being frozen, even if the seizure restricts his ability to hire an attorney.
Thus, following legal precedent in the district, the U.S. District Court granted the Government’s Section 1345 petition to freeze assets that the Government conceded were legitimately obtained.
Ms. Luis appealed to the 11th Circuit, arguing that the Government’s seizure prevented her from retaining private counsel and presenting an effective defense. She said this violated her Sixth Amendment right to counsel of her choice.
In a summary opinion, the 11th Circuit in May 2014 denied her appeal, finding that her arguments were foreclosed by Supreme Court precedent.
U.S. Supreme Courts Agrees to Hear Case
The Supreme Court granted certiorari review in the Luis case in October 2014.
The Luis case is extremely significant: it raises not only a serious question about the parameters of the Sixth Amendment right to counsel but the reach of the forfeiture provisions of Section 1345.
Context is important here. Ms. Luis has not been convicted of any crime. Unrebutted evidence (conceded to by the Government) was presented in the federal district court that the $15 million in assets prosecutors enjoined under Section 1345 were obtained through legitimate means and had absolutely nothing to do with the Medicare fraud scheme the Government alleged she was involved.
The Government’s position—and by extension, the 11th Circuit’s as well—is that because all of Ms. Luis’s assets would be subject to forfeiture under Section 982 should she be convicted, federal prosecutors should not be prevented from freezing those “forfeitable” assets before trial even if it impacts her ability to retain counsel.
Put simply, the Government argued the dangerously flawed notion that legitimate assets cannot be used retain counsel to defend against charges not yet proven because those assets may be needed to cover the forfeiture of criminally obtained assets should a defendant be convicted.
Oral arguments were heard in the Luis case by the Supreme Court on November 10, 2015.
Government can Seize Tainted and Untainted Assets
Ms. Luis’s attorneys effectively conceded the Government could seize both tainted and untainted assets, but not if seizure of the untainted assets interfered with a defendant’s right to retain counsel.
Government attorneys compared pretrial asset seizures to bail, saying that a bond keeps a defendant from fleeing with his body while pretrial seizures prevent “asset flight.”
Writing in the Washington Post, Radley Balko said the justices appeared more receptive to the Government’s arguments.
“ … Samuel Alito, John Roberts, Anthony Kennedy, Sonia Sotomayor and Ruth Bader Ginsburg, all made some variation of the point that money is fungible. So unless there’s some clear separation in a defendant’s finances, such as a trust, tainted assets will inevitably be commingled with untainted assets. That’s a valid point, although in this particular case, the government is actually conceding that the assets it wants to seize are untainted. There [are] also practical problems here. How much of a defendant’s own money should he be allowed to spend on his defense? Who gets to make that determination? Chief Justice Roberts also made the point that it seems somewhat absurd to say that the government can seize all of a defendant’s assets, then allow some of those assets to be used to pay an attorney, but not to, say, pay for rent or for college tuition. In short, the attorneys challenging the law were left with unconvincing arguments, but only because once you’ve allowed the government to seize all of someone’s property, even property the government concedes has no criminal taint whatsoever, there isn’t much left to debate. And there’s pretty much where we are.”
The Sixth Amendment guarantees an individual facing a criminal charge with the undeniable right to procure counsel of his own choice. But that right becomes essentially meaningless if the Government can seize that individual’s legitimately obtained assets—from which he would retain an attorney—on the faulty premise that the assets could be subject to forfeiture upon conviction.
Criminal Defense Lawyers Relegated to Contingency Fees?
Justice Kennedy made at least one salient observation during oral arguments:
“ … It seems to me that if the government prevails in this case, every State in the union, every locality could say that in the event o assault and battery, malicious mischief, an accident caused by drunk driving, any crime involving a bodily injury, that the government is entitled to restrain disposition of assets that might be used for medical care, for pain and suffering. And this would, in effect, prevent the private bar from practicing law unless it did so on a contingent basis.”