Friday, September 27, 2013

Funds Held In Individual Retirement Accounts and Joint Bank Accounts Are Available Funds Under Under the Criminal Justice Act (CJA).

            The Third Circuit held in United States v. Konrad, -- F. 3d --, 2013 WL 5289087 (3d Cir. September 20, 2013) that individual retirement funds (IRAs) and jointly held bank accounts are considered available funds under the Criminal Justice Act, 18 U.S.C.  § 3006A(a).  

            In this case, Joseph Konrad was appointed a federal public defender to represent him against charges of making false statements to the Federal Aviation Administration.  Disparities in CJA 23 Financial Affidavit and in his disclosure during his presentencing report interview revealed that Konrad did not disclose the value of his home ($258,000), underreported the value of his retirement accounts by more than $20,000, and underreported his household monthly income by $4,300.  Additionally, Mr. Konrad and his wife had several large joint accounts. The district court found he had sufficient funds to pay for an attorney and with full disclosure would not have been entitled to the services of the federal public defender.  In reaching this decision the court ruled that the money in his individual retirement accounts could be considered in determining his ability to pay for legal representation.  The Third Circuit affirmed.  The circuit court noted that liquidity is a major factor in determining an individual’s ability to pay for an attorney.  Although funds withdrawn early from an IRA are subject to a penalty, they can still be liquidated.  Similarly, funds are considered available when a person has control over them and authority to use them.  Mr. Konrad had access to funds from the joint accounts with his wife, and discretion to use them.  Accounts where both holders have authority to use funds are different from money held in a spouse’s individual account.  Here Mr. Konrad had authority to use the funds in the account. Therefore, these funds were available for legal expenses.   
             Mr. Konrad was ordered to repay $6,000 for his legal services by the district court.   He argued that he should only have to repay an amount based on the CJA rate of $125 an hour.  The Third Circuit disagreed holding that the CJA rate was under market value for a criminal defense attorney, and since Mr. Konrad did not qualify for a court appointed attorney, he could not take advantage of the subsidized rate.  The district court’s order was affirmed. This holding is consistent with other federal courts.

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