How Feds Thwart the Right to Counsel: Seize Property Before Trial

When a defendant is indicted for white collar crimes, the charging documents are frequently paired with a seizure warrant, permitting the government to seize a defendant’s property based merely on the government’s assertion that it was criminally obtained.  This practice deprives pretrial defendants of access to their funds while they remain cloaked in the constitutional presumption of innocence, before they have been convicted of any crime.  Worse yet, defendants whose bank accounts are frozen by the government often have no means of paying their counsel of choice, infringing on their Sixth Amendment right and impeding their last line of defense to protect their liberty.  A recent Southern District of New York decision in United States v. Bannon, et. al, No. 20-cr-412 (AT) (S.D.N.Y.), once again upheld this practice. 

On August 20, 2020, Steve Bannon, and three co-defendants were arrested for conspiracy to commit wire fraud and money laundering in violation of 18 U.S.C. §§ 1349 and 1956(h) for their alleged role in diverting donations for personal use from the “We Build the Wall” crowdfunding campaign.  See United States v. Bannon, et. al, No. 20-cr-412, Indictment, ECF Doc 3 ¶¶ 1, 9, 11-14, 17, (S.D.N.Y. Aug. 20.2020).  The indictment also stated that the defendants would be required to forfeit property used in or acquired through the charged offenses.  See id. ¶¶ 34–35. 

On August 24, 2020, shortly after the indictment was issued, the government obtained a post-indictment restraining order precluding the transfer of funds from the “We Build the Wall” bank accounts.  The government thus seized the funds it had “probable cause” to trace back to the allegations against these defendants.  In other words, the government was able to cut the legs out from under the defendants by seizing their property, preventing them from using it to pay legal fees and expenses to fight the charges.  And the government was able to do this with minimal proof of a crime. “Probable cause” is the lowest standard of proof in federal criminal law, requiring only a reasonable belief that a crime has been committed.  Although the indictment against Steve Bannon was recently dismissed following a presidential pardon, his three co-defendants remained subject to criminal prosecution, and the post-indictment restraining order.  See United States v. Steve Bannon, 20-cr-412 (AT), Order Dismissing Indictment as to Steve Bannon, ECF Doc. 117 (S.D.N.Y. May 25, 2021). 

One of Bannon’s co-defendants, Brian Kolfage, challenged this seizure, arguing that those funds were necessary for his legal defense.  United States v. Bannon, et. al, No. 20-cr-412, Mot. to Modify Post-Indictment Restraining Order, ECF Doc. 77 (S.D.N.Y. Feb. 3, 2021).  Although acknowledging that without the funds restrained by the government, Kolfage’s lawyer would “have to withdraw from this action,” on May 5, 2021, the district court denied Kolfage’s motion.  United States v. Bannon, et. al, No. 20-cr-412, Order, ECF Doc. 111 at 4 (S.D.N.Y. May 5, 2021). 

The district court recognized that “[w]hen a pretrial restraining order prohibits a defendant from using funds to pay for counsel, tensions may arise between the restraining order and the defendant’s Fifth Amendment right to due process and his Sixth Amendment right to counsel.”  Id.  However, the court explained that nothing “requires” permitting “a defendant to use assets adjudged to be forfeitable to pay that defendant’s legal fees,” and “[t]herefore, so long as a court finds probable cause that the restrained assets are forfeitable, a defendant is not entitled to modification of the restraining order to allow him to access funds to pay for an attorney.”  Id. at 4-5 (citations omitted). 

The Bannon court is correct that a defendant does not have a right to use ill-gotten gains for legal fees.  But pre-conviction seizure of assets based on just probable cause seems to contradict the very protections at the heart of our constitutional system.  During the pretrial phase, the defendant has not been found guilty of any crimes, nor has a jury determined beyond a reasonable doubt that the defendant acquired any funds improperly.  To the contrary, prior to conviction, defendants are presumed innocent and should also be the presumptive rightful owner of any property in their possession.  The current practice of seizing defendants’ assets pretrial, upheld once again by the Bannon decision, turns the Fifth Amendment presumption of innocence on its head.  It also all but negates the Fifth Amendment right to due process prior to being “deprived of . . . property, without due process of law.” U.S. Const. Amend. V.

When the forfeited monies are defendants’ only means of funding their defense by counsel of choice, pre-conviction seizure also jeopardizes their Sixth Amendment rights.  Because the right to counsel of choice is an indicted defendant’s last safeguard to protect other constitutional guarantees—including the Fifth Amendment presumption of innocence and right to due process—any interference with that right jeopardizes the fundamental fairness of our justice system.  Indeed, as Justice Kagan forcefully argued in her dissent in Luis v. United States:

It is one thing to hold that a convicted felon has no Sixth Amendment right to pay his lawyer with funds adjudged forfeitable. Following conviction, such assets belong to the Government . . . .But it is quite another thing to say that the Government may, prior to trial, freeze assets that a defendant needs to hire an attorney, based on nothing more than probable cause to believe that the property will ultimately be proved forfeitable.

Luis v. United States, 136 S. Ct. 1083, 1112 (2016) (Kagan, J., dissenting) (quotation marks and citations omitted). As Justice Kagan highlighted, prior to trial “the presumption of innocence still applies and the Government’s interest in the assets is wholly contingent on future judgments of conviction and forfeiture.” Id. At that point, there is simply no reason that “the Government’s interest in recovering the proceeds of crime ought to trump the defendant’s (often highly consequential) right to retain counsel of choice.” Id. (quotation marks and citations omitted).

Defense counsel need to challenge these seizures more aggressively and more frequently in the future, and push appellate courts to change the legal standard for seizure of clients’ property pre-conviction.  Otherwise, defendants will only face further infringements on their right to counsel, permitting prosecutors to force unfavorable guilty pleas from defendants without the means to adequately defend themselves.   The presumption of innocence is just not worth much when defendants are unable to put up a real fight against an indictment because the government has seized the very funds they need to retain counsel.