Kaley v. United States

Kerri Kaley and Brian Kaley (defendants) were indicted by a grand jury for a scheme to steal medical devices and resell them. Kerri worked as a sales representative for a Johnson & Johnson subsidiary. The Kaleys argued that the devices were unwanted, surplus hospital inventory that they were legally permitted to take and sell. The district court entered a restraining order, which the government (plaintiff) had requested, preventing the Kaleys from transferring any assets traceable to the scheme. The assets subject to the order included a $500,000 certificate of deposit. The Kaleys intended to use the certificate of deposit for legal fees. The Kaleys requested an evidentiary hearing regarding the restraint of their assets. The district court denied the request for a hearing and permitted the Kaleys to access $63,000 that was not found to be connected to the alleged criminal scheme. The Kaleys made an interlocutory appeal to the circuit court. The circuit court remanded the issue to the district court to determine whether an evidentiary hearing was deserved. The district court found that it should hold a hearing to determine whether the assets were traceable to the alleged criminal scheme. The Kaleys conceded that the assets were traceable to the conduct, but they asserted that their conduct did not constitute a crime. The district court affirmed the restraining order. The Kaleys appealed again to the circuit court, which then affirmed the district court order. The United States Supreme Court granted certiorari.