United States v. E-Gold, Ltd.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 26, 2007 Decided April 11, 2008

No. 07-3074

UNITED STATES OF AMERICA,

APPELLEE

v.

E-GOLD, LTD., ET AL.,

APPELLANTS

Appeal from the United States District Court

for the District of Columbia

(No. 07cr00109)

Lawrence S. Robbins argued the cause for appellants. With

him on the briefs was Donald J. Russell. Andrew S. Ittleman

and Aron U. Raskas entered appearances.

Suzanne C. Nyland, Assistant U.S. Attorney, argued the

cause for appellee. With her on the brief were Jeffrey A. Taylor,

U.S. Attorney, Roy W. McLeese, III, Lisa H. Schertler, William

R. Cowden, Assistant U.S. Attorneys, and Kimberly Kiefer

Peretti, Senior Counsel, U.S. Department of Justice.

Before: SENTELLE, Chief Judge; KAVANAUGH, Circuit

Judge; and WILLIAMS, Senior Circuit Judge.

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Opinion for the Court filed by Chief Judge SENTELLE.

SENTELLE, Chief Judge: Appellants are two corporate

defendants and three individual defendants who are officers

and/or shareholders in the corporate defendants. The originally

sealed indictment against them charges, inter alia, the operation

of an “unlicensed money transmitting business” in violation of

18 U.S.C. § 1960. Based on the indictment, the government

obtained an ex parte seizure warrant. As a result of the

execution of the warrant, the government obtained

$1,481,976.38. In addition to the seizure warrant, the district

court issued a post-indictment restraining order applicable to the

assets and records of transactions of the corporate entity.

Defendants moved to vacate the seizure warrant and to modify

the restraining order, and sought an evidentiary hearing. In

support of their motions, the individual appellants alleged an

inability to pay for counsel of their choice in the absence of the

seized assets. The district court denied the motions. Appellants

brought the present appeal, arguing that the seizure warrant and

restraining order without at least a post-seizure evidentiary

hearing violated their due process rights and right to counsel

under the Fifth and Sixth Amendments to the Constitution. For

the reasons stated below, we agree with appellants and vacate

the order of the district court and remand the case for further

proceedings.

I. BACKGROUND

On April 24, 2007, a grand jury of the United States District

Court for the District of Columbia indicted E-Gold, Ltd.,

operator of an alternative payment system involving online

transactions; Gold and Silver Reserve, Inc. (“GSR”), the

operator of E-Gold’s website and a digital currency exchange

service known as “Omni Pay,” through which funds could be

inter-exchanged with E-Gold; Douglas L. Jackson, Chairman

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and Chief Executive Officer of E-Gold and GSR and majority

owner of GSR; Barry K. Downey, Secretary and Director of E-

Gold and GSR and owner of twenty-five percent of GSR; and

Reid A. Jackson, Managing Director of E-Gold and GSR and

owner of three percent of GSR. The indictment alleged one

count of conspiracy to operate an unlicensed money transmitting

business in violation of 18 U.S.C. § 371, two counts of operation

of an unlicensed money transmitting business, and one count of

money transmitting without a license. On April 25, 2007, while

the indictment remained sealed, the United States filed an ex

parte application and a supporting affidavit with the United

States District Court seeking to seize for forfeiture to the United

States property held in two E-Gold digital currency accounts,

one in the name of E-Gold and the other of GSR. The

application alleged that the accounts constituted “property

involved in an unlicensed money transmitting business” in

violation of 18 U.S.C. § 1960. The district court properly issued

the seizure warrant upon a finding that “there is probable cause

to believe that the property at issue . . . may become worthless

property for purposes of its forfeitures . . . and that, at this time,

conversion of property valued as E-Gold into gold or funds

denominated as United States currency . . . is reasonable and

necessary.” The court further ordered GSR to

“exchange/convert the E-Gold held in the E-Gold account[s] at

issue into gold or into the funds denominated as United States

currency . . . within twenty-four (24) hours of the execution of

this warrant and to provide that gold or currency through the

federal law enforcement officers serving the warrant.” The post-

indictment restraining order also imposed restrictions on further

transactions by the defendants. The government obtained

$1,481,976.38 from appellants under the seizure warrant.

Appellants move to vacate the civil seizure warrant and

modify the restraining order to permit, inter alia, the use of the

seized assets for the purpose of retaining counsel in defense of

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the action. In their motion, appellants sought an evidentiary

hearing as to the propriety of the seizure of assets, and

specifically as to the existence of probable cause to believe that

the defendants had committed an offense warranting the

issuance of the seizure warrant and restraining order. In a bench

ruling, reflected in a minute order, the district court denied

appellants’ motion, and in so doing, ruled the defendants were

not entitled to a post-seizure evidentiary hearing.

Appellants filed the instant appeal, arguing that the seizure

without a post-seizure evidentiary hearing violated their due

process rights in violation of the Fifth Amendment. Appellants

further argue the seizure violates the Sixth Amendment’s right

to counsel because they were unable to afford counsel of their

choice without the seized assets. During the pendency of this

appeal, a magistrate judge ruled that the individual defendants

had made a showing of financial inability to retain counsel and

were eligible for appointed counsel.

For the reasons more fully set forth below, we conclude that

appellants have established that their constitutional rights are

being violated by the continued seizure of their assets without a

post-seizure evidentiary hearing. We therefore vacate the order

of the district court and remand the case to the district court for

such a hearing.

II. ANALYSIS

A. Jurisdiction

The government first asserts that this appeal should be

dismissed for lack of jurisdiction. As in any appeal, this court,

as a court of limited jurisdiction, must first ascertain if we have

jurisdiction to entertain the controversy before us. The

government argues that we do not have jurisdiction over this

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case.

While the government’s argument is not simplistic, it rests

on the simple proposition that our appellate jurisdiction in

criminal cases is limited to “final decisions of the district

courts.” 28 U.S.C. § 1291. In the government’s view, review of

the court’s ruling on the seizure warrant and the restraining

order does not fall within our jurisdiction, as the court’s ruling

did not constitute a final decision. That is, we will not have

jurisdiction to review the court’s rulings until a trial and final

judgment. The government candidly admits that there are

exceptions to the rule of finality, but it argues that this case falls

within none of those exceptions. Appellants assert that the

restraint of their assets pending trial and judgment is reviewable

on interlocutory appeal under 28 U.S.C. § 1292(a)(1). We

agree.

While we have not previously passed on the jurisdiction of

circuit courts to hear interlocutory appeals in cases like the one

before us, other circuits have. In United States v.

Kirschenbaum, 156 F.3d 784 (7th Cir. 1998), the Seventh

Circuit considered the same argument the government makes

before us. That circuit analyzed 28 U.S.C. § 1292(a)(1), which

establishes the jurisdiction of the circuit courts to hear appeals

from:

Interlocutory orders of the district courts of the United

States . . . granting, continuing, modifying, refusing or

dissolving injunctions, or refusing to dissolve or modify

injunctions, except where a direct review may be had in the

Supreme Court.

The Kirschenbaum court concluded that the order before it,

paralleling the order under review in this case, constituted such

a refusal “to dissolve or modify [an] injunction[]” and was

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therefore within the jurisdiction of the court to hear interlocutory

appeals. Id. at 788. We agree. As the Seventh Circuit noted,

there is considerable weight of authority from numerous circuits

in support of this proposition. The Seventh Circuit noted the

following cases to that effect:

United States v. Floyd, 992 F.2d 498, 500 (5th Cir. 1993)

(post-indictment pretrial ex parte protective order under 18

U.S.C. § 982(b)(1) (seizure of property) is “injunction”

covered by 28 U.S.C. § 1292(a)(1)); United States v.

Ripinsky, 20 F.3d 359, 361 (9th Cir. 1994) (same) (citing

United States v. Roth, 912 F.2d 1131, 1132 (9th Cir. 1990))

(restraining order under 21 U.S.C. § 853(e)(1)); see also

United States v. Field, 62 F.3d 246, 248 (8th Cir. 1995)

(reviewing postindictment ex parte restraining order under

18 U.S.C. § 982(b)(1) without discussing basis for appellate

jurisdiction). And courts have reached the same conclusion

regarding restraining orders under 21 U.S.C. § 853(e)(1),

which 18 U.S.C. § 982(b)(1) incorporates. Roth, 912 F.2d

at 1132 (postindictment ex parte restraining order under 21

U.S.C. § 853(e)(1) appealable under § 1292(a)(1)); United

States v. Monsanto, 836 F.2d 74, 77 (2nd Cir. 1987) (same),

vacated on rehearing en banc on other grounds, 852 F.2d

1400 (2nd Cir. 1988) (per curiam), and rev’d on other

grounds, 491 U.S. 600 (1989) (reviewing merits without

addressing jurisdictional basis); cf. United States v. Estevez,

852 F.2d 239, 240 n.3 (7th Cir. 1988).

Id. Additionally, the Tenth and Third Circuits reached the same

conclusion with respect to parallel forfeiture orders under other

statutes. See United States v. Musson, 802 F.2d 384, 385 (10th

Cir. 1986) (reviewing order under RICO, 18 U.S.C. §

1963(e)(1)); In re Assets of Martin, 1 F.3d 1351, 1355 (3d Cir.

1993) (same).

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The government argues that § 1292(a)(1) is inapplicable to

forfeitures under 18 U.S.C. § 981, as the forfeiture involved is,

in the government’s view, not the subject of an “injunction.”

That statute, as the government reminds us, provides that

“seizures pursuant to this section shall be made pursuant to a

warrant obtained in the same manner as provided for a search

warrant under the Federal Rules of Criminal Procedure . . . .”

Id. § 981(b)(2). The word “injunction” is not used either in 18

U.S.C. § 981 or in the order of the district court.

However, the formal denomination of the court’s order,

either in the rules or in the order itself, is not dispositive.

The definition of an injunction under § 1292(a)(1) is broad:

it is any order directed to a party, enforceable by contempt,

and designed to accord or protect some or all of the

substantive relief sought by a complaint in more than

preliminary fashion.

I.A.M. Nat’l Pension Fund Benefit Plan A v. Cooper Industries,

Inc., 789 F.2d 21, 24 (D.C. Cir. 1986) (quoting United States v.

Western Elec. Co., Inc., 777 F.2d 23, 28 n.12 (D.C. Cir. 1985))

(quotation marks omitted). In this case, the seizure warrant and

restraining order, among other things, ordered the defendants to

(1) convert the E-Gold in the relevant accounts into gold or

United States currency, (2) provide the gold or currency to the

government within 24 hours, and (3) to do so by cash, wire

transfer, or certified check. We do not understand the

government to be contending that these words were

unenforceable or that the defendants would not, at the very least,

have been penalized by contempt had they failed to comply.

Shakespeare had Juliet famously opine that “that which we call

a rose by any other name would smell as sweet.” SHAKESPEARE,

ROMEO AND JULIET, act 2, sc. 2. Indeed, as Gertrude Stein

pointed out, a “[r]ose is a rose is a rose.” STEIN, Sacred Emily,

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in GEOGRAPHY AND PLAYS 178 (1922). In this case we would

advise the government that an injunction is an injunction is an

injunction. That which we call an injunction by any other name

is reviewable on interlocutory appeal.

We therefore join our fellow circuits and hold that the

seizure warrant and restraining order are properly within our

jurisdiction to hear interlocutory appeals under § 1292(a)(1).

B. Due Process

Having determined that the seizure warrant and restraining

order are properly before us for review, we must then determine

the merits of appellants’ claim that seizure of their assets upon

the issuance of the indictment without an opportunity for

adversary hearing constitutes a violation of their due process

rights under the Fifth Amendment, at least in a case in which

they have demonstrated the inability to retain counsel of their

choice without access to the seized assets. We hold that the due

process clause does require such an opportunity to be heard.

As in the case of the jurisdictional question, this circuit has

not yet considered the question before us. Other circuits have,

as we will discuss more fully below. To begin with, we repair

to first principles. In ascertaining the requirements of the due

process clause in affording a hearing to those whose assets are

the subject of seizure, we look first to the Supreme Court’s

declarations in Mathews v. Eldridge, 424 U.S. 319 (1976). That

case commands that “the fundamental requirement of due

process is the opportunity to be heard ‘at a meaningful time and

in a meaningful manner.’” Id. at 333 (quoting Armstrong v.

Manzo, 380 U.S. 545, 552 (1965)).

So far as the meaning of “meaningful time” is concerned,

“[a] fundamental norm of the due process clause jurisprudence

9

requires that before the government can constitutionally deprive

a person of the protected liberty or property interest, it must

afford him notice and hearing.” National Council of Resistance

v. Dep’t of State, 251 F.3d 192, 205 (D.C. Cir. 2001) (citing

Mathews v. Eldridge, 424 U.S. at 334-35). We recognize that in

many circumstances – indeed, the circumstances of this case –

it may be impossible to afford a full adversarial hearing before

the initial seizure of the property in question. It may well be that

in the case of a criminal proceeding in which the government

may ultimately have rights in the property at issue, immediate

protective measures must be taken in order to prevent

dissipation or deterioration of the assets before the time for trial

is reached. This does not, however, compel a conclusion that an

adversarial hearing after the initial seizure may be finessed

without violating the due process rights of the persons whose

assets have been seized. To make that determination requires

further inquiry.

In Mathews v. Eldridge, the Supreme Court set forth three

elements of inquiry which the courts must apply in determining

the due process rights of citizens who were subjected to the

seizure of their property or other constitutionally protected

interests:

First, the private interest that will be affected by the official

action; second, the risk of an erroneous deprivation of such

interest through the procedures used, and the probable

value, if any, of additional or substitute procedural

safeguards; and finally, the Government’s interest,

including the function involved and the fiscal and

administrative burdens that the additional or substitute

procedural requirement would entail.

424 U.S. at 335.

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We have previously employed the Mathews v. Eldridge

three-part analysis in determining the constitutional necessity of

a post-deprivation hearing to invasions of constitutionally

protected interests occurring pretrial where circumstances may

compel protective seizure before merits adjudication. See

National Council of Resistance v. Dep’t of State, 251 F.3d at

205-08. We have not, however, applied that analysis to civil

seizure under 18 U.S.C. § 1960 or similar statutes. But as we

noted above, other circuits have.

In Monsanto v. United States, 924 F.2d 1186 (2nd Cir.

1991), the Second Circuit considered just the question before us

on circumstances paralleling those we review. In Monsanto, the

Second Circuit, en banc, reviewed the case on remand from the

Supreme Court’s decision in United States v. Monsanto, 491

U.S. 600 (1989). The Supreme Court had held that although a

pretrial asset restraining order based upon a grand jury “finding

of probable cause to believe that the assets are forfeitable” may

make unavailable any funds that a criminal defendant wishes to

use “for his private purposes,” including funds needed to pay for

his counsel of choice, it did not inherently run afoul of the Fifth

Amendment due process rights of the property owner or his

rights to counsel under the Sixth Amendment. Id. at 614-15.

However, the Supreme Court left open for the circuit’s decision

on remand the question “whether the Due Process Clause

requires a hearing before a pretrial restraining order can be

imposed.” Id. at 615 n.10. The Second Circuit then determined

the question before us in the present case, and we find its

reasoning most instructive.

On remand, the en banc court first considered whether

notice and a hearing were required before the initial seizure.

The Second Circuit held, and we agree, that because the seizure

“‘operates to remove the assets from the control of the defendant

on the claim of the government that it has a higher right to those

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assets,’ Moya-Gomez, 860 F.2d at 725,” even though the seizure

is potentially temporary, the “deprivation of property” is

“subject to the constraints of due process.” Id. at 1192 (quoting

North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601,

606 (1975)). Thus, faced with the underlying principle that

“[t]he due process clause of the fifth amendment generally

requires ‘notice and an opportunity to be heard,’” a pre-

deprivation hearing would normally be in order. Id. at 1192

(quoting United States v. Property at 4492 S. Livonia Rd.,

Livonia, 889 F.2d 1258, 1263 (2nd Cir. 1989)). However, the

Second Circuit noted, and again we agree, that in

“‘extraordinary situations’ . . . notice and a hearing [may] be

postponed until after the deprivation.” Id. (quoting Fuentes v.

Shevin, 407 U.S. 67, 90 (1975)).

The extraordinary circumstances for the postponement of

the due process hearing are satisfied where

[f]irst, . . . the seizure has been directly necessary to secure

an important governmental or general public interest.

Second, there has been a special need for very prompt

action. Third, the State has kept strict control over its

monopoly of legitimate force: the person initiating the

seizure has been a government official responsible for

determining, under the standards of a narrowly drawn

statute, that it was necessary and justified in the particular

instance.

Id. (quoting Fuentes, 407 U.S. at 91).

Like the Second Circuit, we hold that the circumstances

giving rise to the seizure of assets upon probable cause that the

assets were used in violation of specified criminal statutes meets

the “extraordinary circumstances” three-part test for seizure

without a predeprivation hearing. There is no doubt that the first

12

requirement is met. As the Second Circuit noted, the “several

governmental and public ends[] includ[e]: (1) separating a

criminal from his ill-gotten gains, Caplin & Drysdale, Chartered

v. United States, 491 U.S. 617, 629 (1989); (2) obtaining

substantial funds for the furtherance of law enforcement, see id.;

(3) permitting recovery of assets by their rightful owners, id.;

and (4) lessening the economic power of organized crime and

drug enterprises, id.” Monsanto, 924 F.2d at 1192.

Thus, “[i]n order to effectuate these purposes, the

government needs some means of promptly heading off any

attempted disposal of assets that might be made in anticipation

of a criminal forfeiture.” Id. Likewise, the ease of disposition

of valuable assets, particularly by owners already subject to

indictment, would seem to satisfy the second requirement; the

third requirement is not even at issue. Therefore, we agree with

the Monsanto court’s conclusion that “because of the exigent

circumstances presented, notice and a hearing need not occur

before an ex parte restraining order is entered” pursuant to the

civil forfeiture requirements of the relevant criminal statutes.

However, this leaves open the question then before the

Monsanto court and presently before us: “whether a hearing is

required after the entry of such an order, but before trial.” Id. at

1193 (emphasis in original).

The Monsanto court went on to consider, as we must, the

three Mathews v. Eldridge factors. That court concluded, and

we agree, that the first factor – that is, the private interests to be

affected by the official action – weighs particularly heavily. Id.

There, as here, “[t]he private interest at stake is not merely a

defendant’s wish to use his property in whatever manner he sees

fit.” Id. While that interest by itself is of course weighty, it is,

as the Second Circuit noted, “augmented by an important liberty

interest: the qualified right, under the sixth amendment, to

counsel of choice.” Id. As we noted above, that need is clearly

13

established in the case before us where a magistrate judge has

found that the defendants are not financially capable of retaining

counsel of choice without the seized property. While the

deprivation is nominally temporary, it is “in that respect

effectively a permanent one.” Id. “The defendant needs the

attorney now if the attorney is to do him any good.” Moya-

Gomez, 860 F.2d at 726 (emphasis in the original).

Therefore, the first Mathews v. Eldridge factor weighs

heavily in favor of a conclusion that the owners of the seized

property are entitled to a post-deprivation pretrial opportunity to

be heard. It would seem apparent that a successful showing by

defendants at such a hearing provides potential protection

against the quasi-temporary but effectively permanent

deprivation of assets required by the defendants for an effective

exercise of their Sixth Amendment right to counsel.

As did the Monsanto court, we must move then to the

second Mathews v. Eldridge factor: the risk of an erroneous

deprivation of a defendant’s interest in retaining counsel of

choice, and the probable value of procedural alternatives. Based

as it is on a grand jury’s finding of probable cause, a seizure

warrant is the product of an ex parte proceeding. The

defendants have had no opportunity to be heard.

The inherent risk in allowing the deprivation of a property

interest through ex parte proceedings accounts for the

general rule that a prior adversary hearing is required,

absent special circumstances.

Monsanto, 924 F.2d at 1195. Because a pre-seizure hearing is

rendered unavailable by the secrecy of the grand jury

proceeding, we, like the Second Circuit in Monsanto, “must

therefore explore the value of an additional or substitute

procedural safeguard.” Id. While we cannot know what

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evidence the property owners might adduce in an adversary

hearing, it is precisely that lack of knowledge on the part of the

court and the prosecution that makes it apparent that there is

“considerable worth in a post-indictment, pre-trial adversarial

hearing” on the issue of the restraint of the seized property. Id.

It is the right to adduce such evidence that underlies the

Supreme Court’s longstanding determination that “[a]

fundamental requirement of due process is the opportunity to be

heard. It is an opportunity which must be granted at a

meaningful time and in a meaningful manner.” Armstrong v.

Manzo, 380 U.S. 545, 552 (1965) (internal citation and

quotation marks omitted). In the absence of a pre-seizure

adversary hearing, the most meaningful alternative available –

one which can prevent the evisceration of a defendant’s rights

by a trial tainted by the violation of the defendant’s Sixth

Amendment rights – is a pretrial adversary hearing.

Again we follow the Second Circuit in “conclud[ing] that a

pretrial adversary hearing addressing the existence of probable

cause as to both the [predicate criminal offense] and the

forfeitability of the specified property affords a procedural

safeguard of substantial value.” Monsanto, 924 F.2d at 1197.

Even where the normal due process requirement of a hearing

prior to the deprivation of a property interest in the first instance

is precluded by exceptional circumstances, those circumstances

authorize only “postponement of notice and hearing” until after

the seizure but within such time as may allow the defendant a

meaningful opportunity to be heard before the deprivation of his

rights has become permanent, as would be the case if he were

subjected to trial without the opportunity to exercise his Sixth

Amendment rights. Calero-Toledo v. Pearson Yacht Leasing

Co., 416 U.S. 663, 679-80 (1974).

As to the third element of the Mathews v. Eldridge inquiry

– the government’s interest, including the burden to be imposed

15

by a pretrial probable cause hearing – we certainly find weight

in favor of the government’s position, but not sufficient weight

to offset the due process rights of the defendant as established

under the totality of the Mathews v. Eldridge inquiry. It is true

that the grand jury proceeding is not only ex parte but subject to

orders of secrecy for compelling reasons. Certainly, it is

important to protect, inter alia, the identity and location of

witnesses who might be subject to threat or interference. But it

is not necessarily the case that affording indicted defendants a

right to be heard before the deprivation of their property rights

and liberty interests under the Fifth and Sixth Amendments

entails an invasion of grand jury secrecy or an evisceration of

the important goals of that secrecy. As the Monsanto court

noted, the district court, in such a post-indictment pretrial

hearing, would need only to require the government to “establish

probable cause as to the defendant’s guilt and the forfeitability

of the specified assets.” Monsanto, 924 F.2d at 1195; see also

id. at 1203 (“[T]he fifth and sixth amendments, considered in

combination, require an adversary, post-restraint, pretrial

hearing as to probable cause that (a) the defendant committed

crimes that provide a basis for forfeiture, and (b) the properties

specified as forfeitable in the indictment are properly

forfeitable.”). In such an adversary hearing, the court could use

limitations on the disclosure of evidence, such as in camera

hearings and appropriate application of the normal rules of

evidence to protect the grand jury proceedings against

unwarranted invasion.1

Thus, while we recognize the weightiness of the

government’s concern in grand jury secrecy, we find nothing

that outweighs the defendant’s constitutional rights to due

1

We note that when asked directly at oral argument, the

government could not identify any harm to its law enforcement efforts

in the Second Circuit that has resulted from the Monsanto standard.

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process and to counsel under the Fifth and Sixth Amendments.

We thus join the Second Circuit in holding that defendants have

a right to an adversary post-restraint, pretrial hearing for the

purpose of establishing whether there was probable cause “as to

the defendant[s’] guilt and the forfeitability of the specified

assets” needed for a meaningful exercise of their rights to

counsel. Monsanto, 924 F.2d at 1195.

We note that in addition to the Second Circuit’s decision in

Monsanto, there are several other circuit decisions addressing

similar constitutional issues. See United States v. Moya-Gomez,

860 F.2d 706, 731 (7th Cir. 1988); United States v. Melrose East

Subdivision, 357 F.3d 493, 498-507 (5th Cir. 2004); United

States v. Crozier, 777 F.2d 1376, 1383-84 (9th Cir. 1985);

United States v. Lewis, 759 F.2d 1316, 1324-25 (8th Cir. 1985);

United States v. Spilotro, 680 F.2d 612, 616-19 (9th Cir. 1982);

United States v. Long, 654 F.2d 911, 915-16 (3rd Cir. 1981); see

also United States v. Noriega, 746 F. Supp. 1541, 1545 & n.2

(S.D. Fla. 1990). But see United States v. Bissell, 866 F.2d

1343, 1354 (11th Cir. 1989); United States v. Jones, 160 F.3d

641, 645 (10th Cir. 1998); United States v. Farmer, 274 F.3d

800 (4th Cir. 2001). We join the majority of those circuits in

holding that the adversarial hearing sought by the appellants is

constitutionally required.

We note that in briefing the government alluded to the

proposition which it asserted specifically at oral argument that

if a grand jury finding of probable cause is adequate to deprive

a person of liberty interests, as it historically has been, then

surely it should be sufficient to survive due process examination

of the invasion of the “lesser” interest in access to their property.

This might perhaps be a more compelling argument if the

interest invaded were not only lesser, but included. However,

the interests of the defendants in their property stand

independent of their interests in their freedom. Defendants

17

deprived of liberty pending trial either by imprisonment or by

limitation under bail bond normally have full property rights in

whatever they owned before indictment and in many, if not

most, cases will retain those interests even if convicted. And

they may use such property to retain counsel. Absent criminal

statutes of the sort invoked in this case and in others such as

Monsanto, the indicted but unconvicted defendant remains a

citizen free to hold property, retain counsel, and indeed to

exercise the mass of rights available to other citizens not so

indicted. The historic power, indeed the necessary power, of the

state to limit liberty interests of those persons as to whom

probable cause exists warranting a criminal trial are normally

irrelevant to other constitutional or even statutory or common

law rights. A brief examination of the history and reasons for

grand jury secrecy makes it apparent that this not only is but

should be so.

Rule 6 of the Federal Rules of Criminal Procedure codifies

the ancient rule of grand jury secrecy. In the Anglo-American

tradition of respecting the rights of accused persons while

maintaining the rule of law, grand juries have met ex parte and

under that tradition, as well as Rule 6, the proceedings of the

grand juries have been subject to near absolute secrecy. The

Supreme Court has reminded us that “[g]rand jury secrecy . . .

is ‘as important for the protection of the innocent as for the

pursuit of the guilty.’” United States v. Sells Eng’g, Inc., 463

U.S. 418, 424 (1983) (quoting United States v. Johnson, 319

U.S. 503, 513 (1943)). The Supreme Court has

catalogued additional reasons for preserving grand jury

secrecy: (1) disclosure of pre-indictment proceedings would

make many prospective witnesses “hesitant to come

forward voluntarily, knowing that those against whom they

testify would be aware of that testimony”; (2) witnesses

who did appear “would be less likely to testify fully and

18

frankly, as they would be open to retribution as well as to

inducements; and (3) there “would be the risk that those

about to be indicted would flee or would try to influence

individual grand jurors to vote against indictment.”

In re North, 16 F.3d 1234, 1242 (D.C. Cir. Spec. Div. 1994)

(quoting Douglas Oil Co. v. Petrol Stops Northwest, 441 U.S.

211, 218-19 (1979)).

All the reasons offered by the Supreme Court demonstrate

the necessity of employing ex parte proceedings for the

indictment of persons suspected of criminal offenses. It is

necessary to invade their liberty interests in order to hold them

in place to be tried for those offenses for which there is probable

cause to believe they are guilty. Even in the face of that

necessity, their liberty interests receive some protection by a due

process hearing as to whether they may remain at large on bail

or recognizance pending a trial to determine their guilt beyond

a reasonable doubt. See U.S. CONST. amend. VIII. Neither the

need to assure the presence of the defendant at trial nor any of

the other historic reasons recognized by the Supreme Court for

the ex parte secret nature of the grand jury proceedings compels

the deprivation of property rights without due process pending

a trial to determine whether the defendant is in fact guilty of the

crimes charged and the property properly forfeitable.

It is true that in the due process hearing on the question of

the seizure of the defendants’ assets, the government risks the

premature disclosure of otherwise undiscoverable evidence

before trial on the merits. It is also true, however, that at such

a hearing the trial court may invoke whatever protections are

necessary to protect such evidence. It is further true that the

defendant may have access to evidence not presented to the

grand jury which the defendant may choose to offer the court in

support of the proposition that there is no probable cause

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supporting the seizure of the assets.

Conclusion

In short, we hold that where the government has obtained a

seizure warrant depriving defendants of assets pending a trial

upon the merits, the constitutional right to due process of law

entitles defendants to an opportunity to be heard at least where

access to the assets is necessary for an effective exercise of the

Sixth Amendment right to counsel. We need not determine, nor

do we determine, whether the due process rights of the

defendants compel such a hearing when the assets are not

necessary to obtaining counsel of choice.

This case is remanded to the district court for further

proceedings consistent with this opinion.

It is so ordered.