LOS ANGELES—When the FBI asked a federal magistrate judge for a warrant to seize the property of US Private Vaults, it concealed critical details about its plan for the hundreds of individually rented security deposit boxes at the Beverly Hills business. Evidence brought to light in a federal class action lawsuit filed by the Institute for Justice (IJ) reveals the previously hidden history of the federal government’s raid, which deliberately violated the constitutional rights of hundreds of people throughout Southern California.
“The government has a duty to be honest with the court when it applies for a warrant under the Fourth Amendment,” said IJ Senior Attorney Robert Frommer. “But the FBI lied about its intentions in claiming to only be interested in the property of the business, and not the box holders. Ultimately, the lure of civil forfeiture turned these federal cops into robbers.”
For almost five years the government investigated individual customers of US Private Vaults, using the business as (in the words of one agent) a “honey pot” to target customers. However, the government shifted its focus to the company after deciding its initial approach was not “effective.”
As part of that shift in focus, in summer 2020 the government started planning to apply for search and seizure warrants against US Private Vaults and its owners. One of those warrants was to seize US Private Vaults’ business property, including the “nest,” a relatively worthless superstructure that held renters’ safe-deposit boxes. When the FBI applied for that seizure warrant in March 2021, its affidavit did not allege that the customers had done anything wrong, and both the FBI and the United States Attorney’s Office swore that agents would merely “inventory” box renters’ property. They promised the warrant would “authorize the seizure of the nests of the boxes themselves, not their contents,” and that agents would pry “no further than necessary to determine ownership.”
But the FBI and the United States Attorney’s Office failed to tell the judge that, months before, they and other government agencies had already formulated plans to use civil forfeiture against customers’ property. In fact, before the federal magistrate had even seen the warrant application, FBI officials had concluded they would use civil forfeiture against every asset in every customer’s box that was worth over $5,000.
Why $5,000? Because $5,000 is the FBI’s minimum monetary threshold for forfeitures. In other words, the government testified that it planned to seize and administratively forfeit every box renter’s property so long as it thought it would make money on the deal. It planned this despite not knowing who those renters were, what was in their boxes or if they had committed any crimes.
“The burden should always be on the government to prove wrongdoing before it can take somebody’s property. The government here just assumed that everything in the boxes worth more than $5,000 was somehow connected to crime,” said IJ Senior Attorney Robert Johnson. “That is a perfect example of how civil forfeiture takes the presumption of innocence and turns it on its head.”
When FBI officials marched into US Private Vaults in March 2021, they executed their plan. And to gather more evidence to support their forfeiture efforts, those same FBI officials ignored the seizure warrant’s command that it “does not authorize a criminal search or seizure of the contents of the safety deposit boxes.” Under the warrant, agents were only supposed to “inspect the contents of the boxes”—not to search for potential violations of law, but simply to “identify their owners in order to notify them so that they can claim their property.”
But despite its promises to the court, the FBI created custom forms that asked agents to look for information the government could use in pursuing forfeitures. One document, for instance, asked agents to “note things such as how the cash is bundled,” “if it has a strong odor,” or “if there appears to be drug residue.” Another instructed that cash over $5,000 should be sniffed by a “canine unit,” and, in fact, the U.S. Postal Inspection Service arranged for numerous drug dogs to be on site. The government agreed that it gathered this evidence because it “could be probative later on” in showing that the government could forfeit that money or other property.
Under the warrant’s terms, agents should have stopped when they encountered letters taped to the top of closed boxes that identified the box’s renter and beneficiaries. Yet invariably agents pored through each box, capturing photographic and video records of renters’ password lists, wills, personal notes and other sensitive documents. Now, the FBI and other agencies have copies of these records in their evidentiary databases, where renters’ private, personal information will remain for agents to access and analyze.
In May 2021, the government carried out its plan to commence administrative forfeiture proceedings against hundreds of boxes containing over $80 million in cash and tens of millions more in gold, silver, jewelry and other valuables.
That same month, IJ sued the government on behalf of several named box holders and a broader class of people who had identified themselves to the FBI seeking return of their property. They won an early victory when the court barred some of the government’s forfeiture proceedings, holding that the government’s failure to tell renters what crime it thought they committed violated due process. But due to the government’s shocking violation of Fourth Amendment rights, the FBI and other agencies continue to hold onto the detailed records of hundreds of peoples’ boxes.
“For months the FBI held onto our precious metals and treated me and my husband like criminals. If we had not fought back, we could have lost a significant part of our life savings forever,” said Jeni Pearsons, one of the plaintiffs in the suit. “Our lawsuit can’t turn the clock back and keep our rights from being violated, but we want to make sure the government never does this to anyone else and doesn’t hold onto the records and photos of our private possessions.”
The Institute for Justice is a national non-profit law firm dedicated to upholding individual rights. IJ is joined in this case by local counsel Nilay Vora and Jeff Atteberry of The Vora Law Firm, P.C.