wsj_0778.xml

WSJ891027-0117 WSJ891027-0117 = 891027
= 891027
891027-0117 . 891027-0117 . Law : @ U.S. Threats to Seize Fees @ Scare Lawyers From Cases @ ---- @ By Laurie P. Cohen @ Staff Reporter of The Wall Street Journal Law : @ U.S. Threats to Seize Fees @ Scare Lawyers From Cases @ ---- @ By Laurie P. Cohen @ Staff Reporter of The Wall Street Journal 10/27/89 10/27/89
10/27/89
WALL STREET JOURNAL ( J ) WALL STREET JOURNAL ( J ) CRZYQ CRZYQ LAW AND LEGAL AFFAIRS ( LAW ) BANKRUPTCIES ( BCY ) LAW AND LEGAL AFFAIRS ( LAW ) BANKRUPTCIES ( BCY ) JUSTICE DEPARTMENT ( JUS ) SECURITIES AND EXCHANGE COMMISSION ( SEC ) JUSTICE DEPARTMENT ( JUS ) SECURITIES AND EXCHANGE COMMISSION ( SEC ) The government is sharpening its newest weapon against white-collar defendants : the power to prevent them from paying their legal bills . And defense lawyers are warning that they wo n't stick around if they do n't get paid . The issue has come to a boil in Newark , N.J. , where federal prosecutors have warned lawyers for Eddie Antar that if the founder and former chairman of Crazy Eddie Inc. is indicted , the government may move to seize the money that Mr. Antar is using to pay legal fees . The warning by the U.S. attorney 's office follows two decisions by the U.S. Supreme Court last June . In those cases , the high court ruled that federal law gives prosecutors broad authority to seize assets of people accused of racketeering and drug-related crimes , including fees paid to lawyers before an indictment . If the government succeeds in seizing Mr. Antar 's assets , he could be left without top-flight legal representation , because his attorneys are likely to quit , according to individuals familiar with the case . A seizure also would make the case the largest -- and one of the first -- in which lawyers ' fees have been confiscated in a prosecution unrelated to drugs . `` The people who suffer in the short run are defendants , but the people who suffer in the long run are all of the people , because there wo n't be a vigorous private bar to defend the Bill of Rights , '' says Gerald Lefcourt , a criminal defense attorney who says he has turned down a number of cases to avoid possible fee seizures . Mr. Antar is being investigated by a federal grand jury in Newark , where prosecutors have told him that they may soon seek an indictment on racketeering and securities fraud charges . Under the Racketeer Influenced and Corrupt Organizations law , or RICO , the government has the authority to seek to freeze or seize a defendant 's assets before trial . According to individuals familiar with Mr. Antar 's case , prosecutors issued their warning this week after one of Mr. Antar 's attorneys asked whether legal fees might be subject to seizure . In a letter , prosecutors told Mr. Antar 's lawyers that because of the recent Supreme Court rulings , they could expect that any fees collected from Mr. Antar may be seized . Prosecutors have told Mr. Antar 's attorneys that they believe Mr. Antar 's allegedly ill-gotten gains are so great that any money he has used to pay attorneys derives from illegal activities . Therefore , they said , the money can be taken from the lawyers even after they are paid . Justin Feldman and Jack Arseneault , attorneys for Mr. Antar , both declined to comment on the matter . In Newark , U.S. Attorney Samuel A. Alito said , `` I do n't think there 's any legal reason to limit forfeiture of attorney 's fees to drug cases . '' Mr. Alito said his office `` just responded to an attorney 's question about whether we would go after attorney 's fees , and that is different from actually doing it , although we reserve that right . '' Mr. Antar was charged last month in a civil suit filed in federal court in Newark by the Securities and Exchange Commission . In that suit , the SEC accused Mr. Antar of engaging in a `` massive financial fraud '' to overstate the earnings of Crazy Eddie , Edison , N.J. , over a three-year period . Through his lawyers , Mr. Antar has denied allegations in the SEC suit and in civil suits previously filed by shareholders against Mr. Antar and others . The SEC has alleged that Mr. Antar aimed to pump up the company 's stock price through false financial statements in order to sell his stake and reap huge profits . Mr. Antar , the SEC said , made more than $ 60 million from the sale of his shares between 1985 and 1987 . The Justice Department has emphasized that the government 's fee-forfeiture power is to be used sparingly . According to department policy , prosecutors must make a strong showing that lawyers ' fees came from assets tainted by illegal profits before any attempts at seizure are made . Still , criminal defense lawyers worry that defendants are being deprived of their Sixth Amendment right to counsel and a fair trial if the government can seize lawyers ' fees . They also worry that if the government applies asset-forfeiture laws broadly , the best defense lawyers will be unwilling to take criminal cases unless they are assured of being paid .