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Supreme Court Rules in Favor of Leaving Untainted Assets Unfrozen

In 1989, the United States Supreme Court held in United States v.  Monsanto that a criminal defendant who has violated the Racketeer Influenced and Corrupt Organizations (RICO) and the Continuing Criminal Enterprise (CCE) may not use funds that were acquired through illegal activity to pay for the defendant’s counsel. The Court, at this time, believed that a defendant should not be able to benefit from his or her illegal activity, especially when the monies from the illegal activity represent evidence of a crime committed.

Luis v. United States, 27 Years after United States v. Monsanto

Almost 27 years later, the United States Supreme Court, in a 5-to-3 decision in Luis v. United States, published a holding that would better interpret the extent in which the government may be able to freeze a criminal defendant’s assets. It had long been practice that when a criminal defendant was arrested for white collar crimes, all of his finances and assets were to be frozen so that he could not avail himself of money that was linked to the criminal activity.

Background of the Luis v. United States Case

Luis v. United States stemmed from the prosecution of Sila Luis, a woman from Florida accused of Medicare fraud involving $45 million in charges for services that were either unnecessary or nonexistent. Prosecutors requested that the court in her case freeze $2 million of Luis’s funds that were not considered to be connected to the alleged fraud. Luis stated that those funds were to be used to pay fines and restitution in the event that she was convicted of the Medicare fraud. She also was going to use the funds to pay her lawyers. If the funds were to be frozen, she argued, she would lose her fundamental right to receive assistance of counsel, which is protected by the Sixth Amendment.

The Holding of Luis v. United States

The U.S. Supreme Court decided on March 30, 2016 that assets which are not connected to the alleged violation or offense should not be frozen, as to freeze the assets would violate the criminal defendant’s Sixth Amendment right to counsel. This does not amend or modify the finding in United States v. Monsanto as the assets in the Luis case relate to untainted assets, or assets that have no connection to the crime.

The federal statute permits the courts to freeze assets before trial if the defendant is accused of violating federal healthcare or banking laws and the assets were:

  • Obtained in connection with illegal activity; or
  • Property held within the assets have a connection to a crime.

Reasoning Behind The Supreme Court’s Ruling

The reasoning behind the Supreme Court’s determination stems largely from the fact that the criminal defendant’s ownership interest in tainted property is “imperfect” because the rights of ownership were received by the defendant in a fraudulent or illegal manner. In this case, ownership that was acquired through illegal means is not ownership. However, the assets that are unconnected to a crime maintain their ownership rights because the manner in which title was acquired was legal. The fundamental right to property predominates over the court’s preference to freeze all assets that a criminal defendant may hold in an attempt to punish misconduct.

It is also important to note that a criminal defendant should not be de facto stripped of his/her right to receive assistance of counsel through the government’s freezing of his/her untainted assets.

Experienced Criminal Defense Attorney in Fort Lauderdale

If you or a loved one has been arrested for a crime, it is important to speak with an experienced defense attorney like Kevin J. Kulik who can argue on your behalf to ensure effective advocacy on your behalf. Contact Kevin J. Kulik today for a free and confidential consultation in the Fort Lauderdale area.

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