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.
 2

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
 3

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
 4

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
 5

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
 6

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).
 7

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,
 8

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.
 10

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
 11

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
 14

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.
 16

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
 19

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.