United States v. Konrad
| Decision Date | 05 September 2013 |
| Docket Number | No. 12-1393,12-1393 |
| Parties | UNITED STATES OF AMERICA v. JOSEPH KONRAD, Appellant |
| Court | U.S. Court of Appeals — Third Circuit |
PRECEDENTIAL
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(Honorable Michael M. Baylson)
Before: SCIRICA, AMBRO, and FUENTES, Circuit Judges.
Brett G. Sweitzer, Esq. [ARGUED]
Federal Community Defender Office for the Eastern District
of Pennsylvania
Counsel for Appellant
Mary Kay Costello, Esq. [ARGUED]
Office of United States Attorney
Counsel for Appellee
The Criminal Justice Act requires courts to furnish legal counsel to criminal defendants "financially unable to obtain adequate representation." 18 U.S.C. § 3006A(a). Joseph Konrad was appointed a federal defender under the Criminal Justice Act (CJA), based on information he provided in a financial disclosure affidavit. At sentencing, the District Court found several discrepancies between Konrad's pre-sentencing report and his financial disclosure. The court ordered Konrad to show cause that he was financially eligiblefor appointed counsel. After a hearing, the court found Konrad had significant funds in two individual retirement accounts so he was not financially unable to pay the cost of legal representation. After appointing a Master to determine the cost of private legal representation, the court ordered Konrad to repay $6,000 because he was not financially eligible to be represented by the federal defender.
We hold individual retirement funds and jointly-held bank accounts can be available funds within the meaning of the Criminal Justice Act. We also hold the District Court did not abuse its discretion in ordering Konrad to repay the market value of his legal representation rather than the hourly rate paid to an attorney appointed under the Criminal Justice Act.
The Federal Community Defender Office for the Eastern District of Pennsylvania was appointed by a Magistrate Judge to defend Joseph Konrad against charges of making fraudulent statements to the Federal Aviation Administration. Konrad pleaded guilty. As noted, upon sentencing the District Court noted disparities between the assets Konrad reported in the CJA Form 23 Financial Affidavit of November 15, 2010 and those in the presentencing report. The court ordered Konrad to show cause he was financially eligible for court-appointed counsel. The court found Konrad failed to disclose the $258,000 value of his home, and only reported $50,000 in retirement accountsworth $70,463.1 Konrad underreported his household monthly income by $4,300, stating his monthly household income was $2,500 in the Financial Disclosure Affidavit when it was actually $8,600.
The District Court found the $70,463 in the individual retirement accounts was available to pay for Konrad's legal representation. The court did not reach the question whether a bank account worth $34,893 Konrad held jointly with his wife was also available because the retirement savings accounts had several times the amount needed to pay for legal counsel.
The District Court found Konrad had financial resources to pay for his own defense while meeting the cost of the necessities of life. The District Court ordered Konrad to pay for his legal representation and appointed a Master to determine the cost of private criminal defense counsel in this case. The Master surveyed hourly rates in the relevant geographic area, and selected the lowest estimate, $400 an hour. The Master determined the cost of Konrad's defense was $6,000, based on the hourly rate and number of hours. Konrad appeals from that order.
The Criminal Justice Act requires district courts to provide legal counsel for criminal defendants charged with a felony when they are unable to pay for an attorney. 18 U.S.C. § 3006A(a)(1)(A). A defendant bears the burden to prove he is unable to pay for the cost of representation. United States v. Evans, 155 F.3d 245, 252 n.8 (3d Cir. 1998) (citing United States v. Lefkowitz, 125 F.3d 608, 621 (8th Cir. 1997)). "Whenever the United States magistrate judge or the court finds that funds are available for payment from or on behalf of a person furnished representation, it may authorize or direct that such funds be paid to the appointed attorney, to the bar association or legal aid agency or community defender organization which provided the appointed attorney . . . ." 18 U.S.C. § 3006A(f). The Guide to Judiciary Policy Guidelines for Administering the CJA and Related Statutes explicitly recommends an evaluation of financial eligibility after the presentencing report becomes available "in order to make a final determination concerning whether the person then has funds available to pay for some or all of the costs of representation." 7A Guide to Judiciary Policy § 210.40.30("[E]rroneous determinations of eligibility may be corrected at a later time.").
"A person is 'financially unable to obtain counsel' . . . if the person's net financial resources and income are insufficient to obtain qualified counsel" considering "the cost of . . . the necessities of life." Id. at § 210.40.30(a) (quoting 18 U.S.C. § 3006A(6)). The Guide instructs courts to "consider pertinent information contained in the presentence report, the court's intention with respect to fines and restitution, and all other available data bearing on the person's financial condition, in order to make a final determination concerning whether the person then has funds available to pay for some or all of the costs of representation." Id. at § 210.40.30(d) ().3 "In the absence of a serious abuse of discretion, a district judge's findings as to 'availability' of funds, if supported by an 'adequate inquiry', will not be disturbed on appeal." United States v. Bracewell, 569 F.2d 1194, 1200 (2d Cir. 1978). The District Court properly ordered Konrad to pay the cost of court-appointed counsel, because Konrad's netfinancial resources exceed the amount needed for the necessities of life.
We consider "the defendant's personal and family needs and the liquidity of his finances." Evans, 155 F.3d at 252 n.8 (citing Museitef v. United States, 131 F.3d 714, 716 (8th Cir. 1997); Bracewell, 569 F.2d at 1199). Assets are available when a defendant has control over or discretionary use of them. Fullan v. Comm'r of Corr., 891 F.2d 1007, 1011 (2d Cir. 1989). The test for determining a defendant's ability to pay "is whether repayment would cause such financial hardship as to make it impractical or unjust." Museitef, 131 F.3d at 716 (citing Bracewell, 569 F.2d at 1199).
The District Court found Konrad was able to pay because he had $70,463 in individual retirement savings accounts—more than ten times the amount he was ordered to pay. Konrad contends the IRAs are not liquid because of the early-withdrawal penalty,4 and cites to United States v. Lexin for the proposition IRAs are future income. 434 F. Supp. 2d 836, 844 (S.D. Cal. 2006). We do not agree that IRAs are future income because they are an accumulation of past earnings paid into the account and accrued investment income. Only taxation on those earnings is deferred. 26U.S.C. § 72(b).5 Accordingly, we agree with the District Court's finding that IRAs are not future income. United States v. Konrad, No. 11-15, 2011 WL 6739464, at *5 (E.D. Pa. Dec. 21, 2011) ().
We consider the liquidity of assets in determining a defendant's ability to pay. Evans, 155 F.3d at 252 n.8. Assets may not be available "[i]f by their nature [those] assets cannot be timely reduced to cash and cash is required . . . ." Barry v. Brower, 864 F.2d 294, 300 (3d Cir. 1988) (). "Before a finding of 'availability' can properly be made, the district judge should be satisfied that, in ordering reimbursement in any specified amount, the defendant will not suffer extreme hardship as a consequence of being deprived of his funds." Bracewell, 569 F.2d at 1199.
"In some cases, liquidation of assets may be required." Barry, 864 F.2d at 299 (citation omitted). In Barry, we found the defendant's home valued at $80,000 did not disqualify him from public counsel because evidence showed six private attorneys recommended by the public defender's office declined to take a security interest in his house in lieu of legal fees. Id. at 300. Moreover, the defendant could not sell hishome because it was held jointly with his wife who refused to sell or encumber the home. Id. at 297. Finally, the defendant's debts exceeded his assets, as he owed an $85,000 fine to the state. Id. Accordingly, the defendant did not have funds available to meet his legal costs. Id. at 300.
In contrast, the defendant in United States v. Fincher was required to sell his property, despite his wife's dower interest, because the value of the property encumbered by the dower interest was still sufficient to cover the defendant's legal costs. 593 F.3d 702, 707 (8th Cir. 2010). Other courts have found defendants able to afford legal counsel because they held substantial equity in their property. See, e.g., United States v. Simmers, 911 F. Supp. 483, 486-87 (D. Kan. 1995) ( ); United States v. Bedoya, No. 89 CR. 803, 1990 WL 194934, at *3 (S.D.N.Y. Nov. 28, 1990) (...
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