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United States v. Kahn

United States Court of Appeals, Tenth Circuit

May 17, 2018

UNITED STATES OF AMERICA, Plaintiff - Appellee,
v.
SHAKEEL KAHN, Defendant-Appellant.

          Appeal from the United States District Court for the District of Wyoming (D.C. No. 2:17-CR-00029-ABJ-1)

          Megan L. Hayes, Laramie, Wyoming, for Defendant-Appellant.

          Stephanie Hambrick, Assistant United States Attorney (John R. Green, United States Attorney, District of Wyoming, with her on the brief), Casper, Wyoming, for Plaintiff-Appellee.

          Before HARTZ, McKAY, and MORITZ, Circuit Judges.

          HARTZ, Circuit Judge.

         Defendant Shakeel Kahn seeks a district-court hearing to challenge the seizure of assets that he contends are necessary for him to retain an attorney to represent him in his upcoming criminal trial. The district court denied a hearing because he has some unseized assets with which to pay an attorney. We reverse and remand because the proper test is whether he has sufficient unseized assets to pay for the reasonable cost of obtaining counsel of his choice.

         In January 2017 a grand jury in the United States District Court for the District of Wyoming returned a 21-count indictment against Kahn (who is a physician) and others charging distribution of controlled substances and money laundering. The indictment included a criminal forfeiture count under 21 U.S.C. § 853, which listed a number of his assets that the grand jury identified as fruits of the alleged crimes. Most of those assets had been seized by the government before filing the indictment. Two weeks after the indictment, Kahn moved for a hearing to challenge the seizure of $1, 140, 699.95 in currency and bank accounts. He asserted that he needed this money to retain private counsel of his choice, noting that his only unseized assets were a $175, 000 home encumbered by an $80, 000 lien and a business that brought in less than $3, 000 a month after taxes. He estimated that he would need at least $200, 000 to pay counsel and that his total defense costs would be at least $450, 000.

         In April the district court denied the motion. The court recognized that the case is not a simple one-it had granted the government's motion to declare the case complex for purposes of the Speedy Trial Act-but it declined to consider whether Kahn's unseized assets were sufficient to retain counsel of his choice. It interpreted this court's opinion in United States v. Jones, 160 F.3d 641 (10th Cir. 1998), as requiring such a pretrial hearing only if (1) the defendant has no assets with which to pay an attorney and (2) there is good reason to believe that the grand jury erred in finding that the seized assets are traceable to the alleged crime. Under that interpretation of the first requirement, the court needed to determine only whether a defendant had any assets remaining after seizure, not whether those assets would be sufficient to cover the cost of his defense. See R., Vol. 1 at 425-26 ("It is possible that the cost of defense is an inherent factor of the Jones test, but this Court will not consider the cost of defense as a factor in the Jones test without any supporting authority to do so or instruction from the Tenth Circuit to do so."). Because Kahn still had some unencumbered assets, the court held that he had failed to make the showing necessary to obtain a hearing. It therefore did not consider whether the assets had been properly tied to his alleged offenses.

         Kahn filed a timely interlocutory appeal and obtained a stay of the proceedings. We have jurisdiction under the collateral-order doctrine. See id. at 644. We clarify our holding in Jones, and reverse and remand for further proceedings. A hearing on a pretrial challenge to the seizure of assets is not barred under the first prong of the Jones test just because the defendant has some unseized assets. The test is whether the defendant lacks sufficient unseized assets to pay for the reasonable cost of counsel of choice.

         I. DISCUSSION

         Jones is this court's leading precedent governing pretrial challenges by criminal defendants to the seizure of assets allegedly necessary to pay for an attorney. In that case the defendant had been indicted for health-care fraud. See Jones, 160 F.3d at 643. The indictment included a count alleging that certain assets were subject to forfeiture and the government invoked § 853(e)(1)(A) to freeze these assets pending trial, based solely on the indictment. See id. The defendant moved for a pretrial hearing to challenge the seizure so that some of the assets could be used for legal and living expenses. See id. The district court denied the motion. It held that a defendant was not owed a hearing under either § 853 or the Fifth Amendment's Due Process Clause. See id. at 644. We reversed, concluding that the seizure of a defendant's assets without affording the defendant a pretrial hearing could violate due process. See id. at 649.

         The Due Process Clause forbids the federal government from depriving a person of life, liberty, or property without due process of law. U.S. Const. amend. V. To assess its application in this context, Jones employed the balancing test in Mathews v. Eldridge, 424 U.S. 319, 335 (1976). See Jones, 160 F.3d at 645. Under the Mathews approach a court must consider the "private interest affected by the restraint; the risk of an erroneous deprivation of that interest through the procedures used, as well as the probable value of an adversarial hearing; and the government's interest, including the administrative burden that an adversarial hearing would impose." Id.

         We identified two important interests of the defendant: a property right and a right to counsel. Both parties in Jones acknowledged that "a restraining order issued under section 853(e)(1)(A) deprives one of property even though the assets named in the indictment are only frozen and may eventually be returned." Id. The defendant had a significant interest in "paying for ordinary and necessary living expenses (food, shelter, and the like) until the conclusion of her trial." Id. at 646. "A restraining order that prevents a defendant from supporting herself and her family pending and during trial would likely work an injustice with constitutional implications." Id.

         In addition, the defendant had an essential interest in the Sixth Amendment's "qualified right to counsel of choice." Id. The right to counsel of choice "stems from a defendant's right to decide what kind of defense he wishes to present, for the selection of one attorney over another can profoundly affect the course and outcome of trial." Id. (citation and internal quotation marks omitted). "To improperly impede this interest would likely work a permanent deprivation on a defendant-a ...


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