Federal Asset seizure in Drug Prosecutions and how to get $$ back

Federal Asset Seizure in drug prosecutions

Federal asset seizure generally accompanies a federal criminal indictment against a federal defendant indicted for drug crimes. Federal prosecutors are quite adept at finding and seizing all of the “proceeds” of “unlawful activity”. Congress has seen fit to give federal agencies nearly unfettered ability to seize anything within its sights in drug cases. The Controlled Substances Act permits seizure simply upon a finding of probable cause for any property that represents the “unlawful proceeds” of drug activity. See United States v. Rothstein, 717 F.3d 1205 (11th Cir. 2013).

Federal seizure and forfeiture laws permit the government to sweep the legs out from under a federal defendant prior to the case even beginning. Lets face it, its expensive and time consuming to generate a defense in a multi-year multi-agency drug investigation. Without adequate access to resources and the ability to pay counsel, Defendants are often left to seek a court appointed counsel and certainly cannot afford a significant offense with experts and investigators.

How the Federal Government Seizes Assets

Here’s how its done.

Federal agents an an Assistant United States Attorney seek seizure warrants pursuant to 21 U.S.C. 853(f) supported by a “finding of probable cause”. This warrant gives them the authority to seized assets listed in the warrant. Federal agents paint with a broad brush when describing their probable cause and the assets believed to be the proceeds of unlawful drug activity. Cash, cars, investments, safe deposit boxes, are all usual targets. The feds can also put a lien on real property to ensure that it is not sold pending trial.

Unfortunately, magistrate judges typically only look as deep as the indictment to determine that there was probable case of illicit drug trafficking and fail to make two important inquiries

(1) that the account at issue was traced to alleged drug trafficking operation,

(2) that the money at issue was traced to a specific unlawful transaction supported by probable cause.

This failure to properly trace the funds to an unlawful drug transaction is fatal to the government’s seizure of property.

Or at least it should be.

Once an assistant United States Attorney has received approval to seize nearly all of a defendant’s assets, the seizure warrant is sent to banks identified by federal agents and the property seized by the financial institution. The funds can either be frozen by the financial institution or in some cases liquidated.

The federal government is not just limited to seizing the actual proceeds of unlawful activity. It can also seize untainted assets where the government can show that unlawful assets have been dissipated or moved outside the jurisdiction of the United States.

Stripped of their assets, the Defendant is generally rendered destitute prior to trial and cannot afford to take on the vast resources of the federal government. The government then seeks forfeiture of the funds after they secure a conviction. Forfeiture brings the property formally into the possession of the United States.

How to Get the $$ back after federal seizure

Rule 41(g) permits a motion to return property if the property was obtained by an unlawful search and seizure. A lack of probable cause supporting the seizure is one such example of an unlawful search and seizure. A federal defendant in a drug case should first challenge the probable cause supporting the seizure. This requires a detailed review of the affidavit submitted to the magistrate to determine if it provides probable cause permitting seizure of the specific property at issue. The defendant can file a motion under Rule 41(g) seeking return of the property and request a hearing to challenge the government’s probable cause finding. If accounts and funds are not connected to the alleged unlawful activity, a judge can order them returned.

Special Implications for Unlawful Prescribing Cases

The probable cause determination is especially subject to challenge in unlawful prescribing cases. Many United States Attorneys offices simply seize all of a doctors assets prior to trial under the assumption that they are all the proceeds of unlawful activity. But legitimate medical practice does not generate the probable cause necessary to seize a doctors assets. This is especially true in light of Ruan v. United States. The Government exceeds its authority to seize a doctors assets generated from legitimate medical practice unless it has proven that those assets are traced to actual unlawful distributions. The government must trace the assets to specific unlawful transactions in order to satisfy the requirements of 21 U.S.C. 853.

OBTAINING SEIZED FUNDS TO PAY FOR COUNSEL - Luis v. United States

The government’s decision in Luis v. United States was perhaps one of the most important federal criminal decisions of the last decade. Unfortunately, this decision was quickly tailored by district and circuit courts preventing full application of its constitutional principles. In Luis the Supreme Court held that a pre-trial seizure of untainted assets violates a defendant’s Sixth Amendment right to counsel of choice. The Supreme Court held that there is no dispute that the Sixth Amendment right to counsel is fundamental and the Sixth Amendment grants a defendant a fair opportunity to secure counsel of his own choice.

What does this mean?

Where the government seizes assets pre-trial and they impact a federal criminal defendant’s ability to pay for counsel, the defendant can file a motion seeking return of the property in order to pay for the reasonable expenses of litigation.

About the Author

Ron Chapman has spent his career defending federal defendants in high-profile federal criminal cases at all levels of federal criminal courts - including the United States Supreme Court. He has tried to verdict some of the largest healthcare fraud and drug prosecutions in the United States, including the recent acquittal of four doctors accused of over $450million in healthcare fraud. He is also the author of the Amazon best selling book Fight the Feds: Unraveling Federal Criminal Investigations as well as the main contributor to Federal Defense Blog.