In the ongoing drama surrounding a controversial federal raid of a Beverly Hills safe deposit box company, the U.S. government is now being accused of botching the return of seized property. In March, a multi-agency raid spearheaded by the FBI seized hundreds of lock boxes from the company, which government officials alleged operated as a front for money laundering and drug trafficking. As a result of the raid, the U.S. government walked away with the contents of 800 safe deposit boxes containing over $85 million in cash and precious metals, jewelry, and other valuables. But, according to attorneys for patrons of U.S. Private Vaults, the government has exceeded the guidelines of its search warrant and in some cases failed to return people’s property.
In one such case, a semi-retired octogenarian pseudonymously listed in a complaint as Dr. Linda R claims that the government has failed to return at least $75,000 in gold coins she stored at U.S. Private Vaults.
According to her attorney, Benjamin Gluck, “Dr. R” has spent the last 20 years investing her retirement savings into gold and silver coins. Distrustful of banks and financial institutions, she opted to store the precious metals at nearby U.S. Private Vaults. On its website, U.S. Private Vaults touts safe deposit boxes “like those found at banks,” but with the promise of enhanced security and “complete privacy.”
After the business was raided on March 22 by agents with the FBI, Drug Enforcement Agency (DEA), and U.S. Postal Inspection Service (USPIS), Dr. R submitted a claim to retrieve her property. But when she and her attorney met with two FBI agents to repossess her savings, she alleges in a lawsuit that “at least forty 1 oz. Gold American Eagle coins, with an estimated value of about $75,000, were missing.”
A spokesperson for the U.S. Attorney’s Office declined to comment, citing on-going litigation. The U.S. government has yet to respond to the claims made in the complaint.
In response to the allegations of missing items, the government provided Dr. R with a receipt of the inventory of belongings compiled by law enforcement at the time of the seizure. The receipt, according to a copy attached to the complaint, listed only “Misc. coins” and “Misc. packaging materials.”
“Notably, the receipt–and apparently the ‘inventory’ from which it was allegedly precisely copied–describes neither the type nor the amount of coins seized,” the complaint says.
In a 45-minute video of an FBI agent going through Dr. R’s box, the agent allegedly fails to actually display its full contents and at one point drops several coins on the ground.
“[T]he removal and handling of Dr. R.’s property was conducted in such a shambolic and disorganized manner that it is no surprise that items were misplaced, lost, or worse,” the suit contends.
According to Gluck, this is far from the only allegation of missing property. He says that he now represents as many as 10 clients who disagree with the government’s inventory of their belongings “in ways that are very, very troubling.” While Gluck currently represents five clients who have filed suits, he says that he has yet to file suits in most of the cases involving missing property.
“The real issue in this case is, where is all the missing property?”
Gluck detailed another unnamed client for whom the government catalogued $50,000 more than the client actually had in storage. In another instance, Gluck says his client received a forfeiture notice for a box that didn’t belong to him.
An unsealed indictment in the case against U.S. Private Vaults alleges that the business operated a front for a drug dealing operation. It documents multiple interactions between unidentified employees and a confidential informant working with law enforcement to sell illegal marijuana products. In one such encounter on July 26, 2019, a “USPV Officer” sold the informant 1,000 vape cartridges containing THC in exchange for $8,000 in cash. The indictment alleges that the same employee sold an ounce of cocaine to “Confidential Informant 3” through intermediaries.
Following the raid, authorities said they recovered “firearms, illegal drugs, and cash,” according to court filings. The most common item found was stacks of $100 bills, with one box containing more than $1 million.
Allegations of government overreach followed fast on the heels of the raid. In all, the federal government is currently named in 12 lawsuits stemming from its actions at U.S. Private Vaults.
One such case brought by the non-profit law firm Institute For Justice on behalf of seven clients accused the government of violating the terms of its search warrant by conducting a search and seizure of U.S. Private Vaults’ customers.
“And while a warrant authorized the government to seize USPV’s property, the warrant did not authorize the government to conduct a criminal search or seizure of USPV’s customers’ property,” the suit says.
A federal judge agreed with their arguments and, on June 22, issued a temporary restraining order halting the government from forfeiting seized property. The temporary restraining order requires the government to disclose the “factual and legal basis for 4th forfeiture” before initiating forfeiture proceedings. The order serves as a stopgap measure until the court can hear arguments over a preliminary injunction, which can last indefinitely.
The Fifth Amendment of the U.S. Constitution guarantees people the right to due process. In the context of civil forfeiture, this means the government must provide the “factual bases for seizure” and “the specific statutory provisions allegedly violated” (i.e., what law did the property owner supposedly violate).
On both requirements, the court had harsh words for the government. The ruling bluntly held that the notice of seizure provided to property owners by the government “provides no factual basis for the seizure of Plaintiff’s property whatsoever” and “fall[s] woefully short of the Government’s duty to provide ‘the specific statutory provision allegedly violated.'”
In response to the ruling, the government argued that it need not give a specific factual or statutory basis for the seizure in its initial notice of forfeiture. Instead, that information could be gained through legally contesting the forfeiture in court.