“How glorious to be an American citizen,” wrote U.S. District Judge Jed S. Rakoff in his Feb. 5, 2009 Order granting bail to prominent New York attorney turned Ponzi-scheme defendant Marc Dreier. “In so many countries, the rights of citizens are not worth the paper they are printed on. But here, any citizen—good, bad, indifferent, famous, infamous, or obscure—may call upon the courts to vindicate his constitutional rights and expect that call to be honored.” United States v. Dreier, 596 F. Supp. 2d 831 (S.D.N.Y. 2009).

The constitutional right to which Judge Rakoff referred was the Eighth Amendment's mandate that “Excessive bail shall not be required.”

Judge Rakoff applied that mandate by granting Dreier's request for bail on conditions that have long been a conundrum for district courts: 24/7 home detention, secured not only by electronic monitoring but by on-premises armed security guards, supplied by a third-party company, paid for by the defendant, his family, or his employer, and empowered to use force to thwart any attempt to flee.

Essentially, Marc Dreier created a “private prison” in his Midtown Manhattan apartment, in which he would serve months of pre-trial detention. Judge Rakoff ratified the arrangement under the plain language of the Bail Reform Act, 18 U.S.C. §3141, et seq., and the Eighth Amendment.

In the decade since Judge Rakoff's decision, and even before it, courts in the Second Circuit have wrestled with public policy issues surrounding the “private prison” bail model—an arrangement exclusively available to those defendants with the significant means to fund it.

The issue was recently revisited when U.S. District Judge William F. Kuntz denied pre-trial release to defendant Jean Boustani. Boustani had proposed a “private prison” bail package very similar to the one approved in Dreier, including home detention secured by private armed guards. But in an Order issued Feb. 4, 2019—nearly 10 years to the day after Judge Rakoff's Dreier decision—Judge Kuntz wrote that although Boustani “has vast financial resources to construct his own 'private prison,' the Court is not convinced 'disparate treatment based on wealth is permissible under the Bail Reform Act.'” United States v. Boustani, 18 Cr. 681 (WFK), 2019 WL 440642 (E.D.N.Y. Feb. 4, 2019).

This recurring issue has no simple solution. Should a wealthy defendant be permitted to “buy” his way out of pre-trial incarceration, when a defendant with less resources cannot? To date, the Second Circuit has offered little guidance, leaving district courts to (inconsistently) reach their own conclusions.

The Bail Reform Act and 'Risk of Flight'

Under the Bail Reform Act, a court is required to order the pre-trial release of a defendant on a personal recognizance bond, unless the court determines that such release “will not reasonably assure the appearance of the person as required or will endanger the safety of any other person or the community.” 18 U.S.C. §3142(b).

If the court determines that a defendant's release on an unsecured bond presents a risk of flight or a danger to the community, the Act still requires pre-trial release subject to “the least restrictive further condition, or combination of conditions” that the court determines will “reasonably assure the appearance of the person as required and the safety of any other person and the community.” 18 U.S.C. §3142(c)(1)(B).

Under the Act, pre-trial detention should only be ordered if a detention hearing shows that “no condition or combination of conditions will reasonably assure the appearance of the person as required and the safety of any other person and the community.” 18 U.S.C. §3142(e)(1).

'United States v. Boustani'

Jean Boustani was a “wealthy international businessman” and a non-citizen who was charged in connection with a $2 billion fraud, bribery, and money laundering scheme.

The government argued that Boustani's “deceptive character, substantial wealth, minimal ties to the United States, and extensive ties to countries without extradition” made him a serious risk of flight. The government opposed any pre-trial release, arguing that Boustani was a flight risk “with access to significant financial resources and no ties to the United States,” and therefore “no condition or combination of conditions” could reasonably assure his appearance.

The defense countered that assertion by proposing a bail package that they argued would make flight “virtually impossible,” including home confinement secured by 24-hour private armed guards. Those armed guards, the defense argued, would be responsible for keeping Boustani confined “in a highly securitized and heavily monitored residence” and assuring his appearance as required.

Judge Kuntz rejected the defense's “private jail proposal.” Among other reasons, the court held that allowing the defendant to use his financial resources “to construct his own 'private prison'” could constitute impermissible disparate treatment for the wealthy under the Bail Reform Act, because other defendants “may not currently possess the financial capacity to pay for the private jail solution Defendant requests.”

Courts Are Split

The Court of Appeals for the Second Circuit has, to date, offered little guidance to district courts on the “private prison” issue.

In United States v. Sabhnani, 493 F.3d 63 (2d Cir. 2007), the court concluded that home detention enforced by private security guards was sufficient, along with other conditions, to ensure against the defendants' risk of flight. However, the court expressly declined to address the larger issue of “whether it would be contrary to principles of detention and release on bail to allow wealthy defendants to buy their way out by constructing a private jail,” because the government had not specifically raised that argument.

In United States v. Banki, No. 10 Cr. 373, 369 Fed. Appx. 152 (2d Cir. March 10, 2010), the court held that Sabhnani created no legal obligation on district courts to consider whether “privately-financed home confinement would suffice to secure a defendant's attendance,” and added that it “remain[ed] troubled” by that possibility that wealthy defendants could secure pre-trial release by “constructing a private jail.”

More recently, in United States v. Esposito, 18 Cr. 923, 749 Fed. Appx. 20 (2d Cir. Sept. 11, 2018), the court held that “district courts are not required to consider private security guards as a condition of release, but they are not precluded from doing so when the defendant has substantial resources and such wealth contributes to his risk of flight.”

In light of the Court of Appeals' largely ambiguous rulings on the issue, district courts have taken different approaches and reached different results.

In Dreier, Judge Rakoff granted pre-trial release under home confinement secured by private armed guards, opining that “many kinds of bail conditions favor the rich, and … [t]his is a serious flaw in our system. But it is not a reason to deny a constitutional right to someone who, for whatever reason, can provide reasonable assurances against flight.” More recently, in United States v. Ng Lap Seng, 15 Cr. 706 (VSB) (Order dated Oct. 23, 2015), Judge Vernon S. Broderick granted pre-trial release secured by, among other things, an “armed security team” responsible for ensuring the defendant's appearance in court.

On the other side of the ledger, various district courts have rejected a “private prison” solution. In United States v. Agnello, 101 F. Supp. 2d 108 (E.D.N.Y. 2000), for example, Judge Gershon opined that a wealthy defendant is not “entitled to greater consideration in the making of a bail decision than a defendant of modest means,” and that “Congress did not intend that a dangerous individual should be released because that individual was sufficiently affluent to be able to pay the cost of extravagant release conditions monitored by private security officers.” In Borodin v. Ashcroft, 136 F. Supp. 2d 125 (E.D.N.Y. 2001), Judge Nickerson opined that “it is contrary to underlying principles of detention and release on bail that individuals otherwise ineligible for release should be able to buy their way out by constructing a private jail, policed by security guards not trained or ultimately accountable to the government, even if carefully selected.” In United States v. Cilins, No. 13 Cr. 315 (WHP), 2013 WL 3802012 (July 19, 2013), Judge Pauley opined that “Federal judges swear an oath, with ancient roots dating to Deuteronomy, to 'administer justice without respect to persons, and do equal right to the poor and to the rich,'” and that “[t]hat pledge is violated if a defendant, who is a serious risk of flight with every incentive to flee and the means to do so, is permitted to buy his way out of detention.”

Going Forward

District courts appear destined to wrestle with the “private prison” issue unless and until the Second Circuit issues definitive guidance, or the legislature amends the Bail Reform Act. As detailed above, district judges currently appear to rule on such bail proposals based on some combination of statutory interpretation and their own view of fundamental fairness and public policy. This is not ideal. At best, it leads to inconsistent results in connection with a basic constitutional right.

The plain language of the Act allows for defendants to propose creative bail solutions that minimize any risk of flight. Following the plain language of the Act to its natural end, for wealthy defendants that may include using their own resources to secure pre-trial release in a self-funded “virtual prison.” If a set of conditions reasonably protects against a risk of flight, defense attorneys would seem remiss in failing to propose them, even though many district judges appear to find them morally dubious. Unless and until the Court of Appeals takes a firmer stand against it, attorneys representing defendants with the means to create a “private prison” can continue to argue, as Judge Rakoff opined in Dreier, that wealth inequality “is not a reason to deny a constitutional right to someone who, for whatever reason, can provide reasonable assurances against flight.”

Ross M. Kramer is a partner with Winston & Strawn in New York. Seth C. Farber is co-chair of the firm's white-collar, regulatory defense, and investigations practice and is a former Assistant U.S. Attorney for the Southern District of New York. Michelle D. Tuma, a law clerk with the firm, assisted with the preparation of this article.