The precedent was set in 1989. In a United States v. Monsanto case, the Supreme Court held that a suspect who violated the Continuing Criminal Enterprise (CCE) and the Racketeer Influenced and Corrupt Organizations (RICO) should not have access to the funds obtained through illegal activity. Accordingly, the criminal defendant may not use the illegal funds to pay for counsel. Furthermore, the defendant may not benefit from the illegal activity he or she partook in. This is doubly so if the monies obtained from the illegal activity constitutes part of the evidence of the crime perpetrated.
Luis v. United States
For a while, it seemed that the U.S. Supreme Court decision offered prosecution carte blanche to freeze just about any asset belonging to the defendant. It appears that wasn’t the exact interpretation of the 1989 verdict, as a recent decision proves. The recent decision, occurring almost 27 years later, emanated from the Luis v. United States case. It sought to put an end to the age-long practice of freezing all finances and assets of anyone implicated for white-collar crimes.
The Luis v. United States case stems from the prosecution of Sila Luis, a Floridian, accused of Medicare fraud. The details include $45 million in charges for services that were either nonexistent or unnecessary. However, the prosecutors sought to freeze $2 million of Luis’s funds that had no connection to the alleged fraud. In her defense, Luis stated what she aimed to use the untainted funds to:
- Pay fines and restitution is she lost the trial
- Pay her legal defense team
Furthermore, Luis argued that been unable to access her funds unconnected to the fraud, should they be frozen, is tantamount to losing her fundamental right to receive assistance of counsel, a right protected by the Sixth Amendment.
On March 30, 2016, the Supreme Court made a verdict on the Luis v. United States case. The Court decided that assets unconnected to alleged offense or violence may not be frozen; as such freeze would violate the Sixth Amendment right of the defendant to receive assistance of counsel. Be that as it may, the decision does not modify or amend the erstwhile decision of the Court in the United States v. Monsanto, because the assets in Luis case are untainted or have no connection to the crime. Therefore, the current federal statute permits the court to freeze assets of the defendant before trial if the crime committed violates federal healthcare or banking law based only on the following conditions:
- That the defendant obtained the said assets in connection with illegal activity; or
- That the said assets have a connection to a crime
Reasoning Behind the Ruling
First off, the decision to freeze tainted assets stems from the fact that the ownership interest of the defendant in the tainted property is “imperfect”: In the sense that the defendant received rights of ownership in an illegal or fraudulent manner. Therefore, such acquisition through illegal means is not ownership. Moving on, the defendant retains valid ownership rights to assets unconnected to a crime. This is because the defendant acquired the said title in a manner that was legal. Accordingly, the fundamental right to property eclipses the court’s preference to freeze all assets belonging to a criminal defendant. Conclusively, another noteworthy observation is that a defendant should not be denied his or her right to receive assistance of counsel as a result of government’s freezing of the defendant’s untainted assets.