Federal authorities have suffered two new court setbacks in their attempt to confiscate tens of millions of dollars seized from Beverly Hills safe deposit boxes that the government was legally barred from searching.
U.S. District Judge R. Gary Klausner, in rulings issued Friday, rejected prosecutors’ rationale for keeping the cash that two people stored in the boxes they rented at the U.S. Private Vaults store on West Olympic Boulevard.
The FBI is trying to confiscate about $86 million in cash and millions more in jewelry and other valuables that agents found in about 369 boxes, based on allegations that the box holders engaged in unspecified criminal wrongdoing.
Warrants authorizing the March raid of the store prohibited the government from searching whatever was inside roughly 800 boxes that contained valuables, because the FBI did not show it had probable cause to believe that evidence of crimes would be found in each one.
In March, a federal grand jury indicted U.S. Private Vaults on charges of conspiring with its customers to sell drugs, launder money and structure financial transactions to dodge detection by the government. But the only customers identified by prosecutors so far are a Drug Enforcement Administration agent working undercover and some unnamed government informants.
An April court statement by a postal inspector detailed suspected laundering of drug trafficking money by one of the company’s owners, Michael Poliak, but he has not been charged publicly with any crime. The statement was first disclosed Monday by the Daily Beast. Poliak could not be reached for comment.
"If the government believes that plaintiff did not lawfully possess the contents of box number 904, the government can, of course, defend this suit on that basis," Klausner wrote. "But the government has made no showing that plaintiff possessed the items seized from box number 904 unlawfully."
Later, he added that the government's case against Coe has not been based on "anything more than pure conjecture that plaintiff might have unlawfully possessed the items seized from box number 904."
That's been true for much of the government's case against the hundreds of safe deposit boxes seized from U.S. Private Vaults. When the FBI raided the facility on March 22, agents were armed with a warrant that explicitly forbade them from seizing the contents of the safe deposit boxes kept there. But the FBI took them into custody anyway. In May, the FBI filed administrative forfeiture proceedings against 369 of the nearly 800 boxes seized—including more than $85 million in cash and other valuables.
In a brief filed Monday, prosecutors made no substantial claims about why the information in the four depositions should be kept secret. Instead, they argued that "customary practice" means the only pages of depositions filed as part of the legal record would be those specifically cited in the plaintiff's opening briefs.
In other words, if attorneys for the plaintiffs agree to limit the pages of transcripts filed, they would be able to un-redact the citations in their briefs (including the screenshots posted above). In return, the rest of the depositions would remain confidential.
But why keep any parts secret? The public has a right to know how the plan to raid U.S. Private Vaults unfolded, particularly in light of Klausner ruling last year in a related case that the FBI had provided "no factual basis" for the seizures. Separately, in a ruling that denied the government's attempt to get a lawsuit over the seized items dismissed, Klausner found that the government's case against U.S. Private Vault's customers was not based on "anything more than pure conjecture."
So far, the legal wrangling over the U.S. Private Vaults raid has raised serious questions about the FBI's respect for the Fourth Amendment and whether federal agents willfully ignored the limits imposed by the very warrant authorizing the raid. Those details matter, and not just to the victims of the FBI's raid. It's understandable why the FBI wants to keep the media and public from seeing those transcripts, but that's not a compelling reason for a judge to allow this attempted cover-up.
The FBI told a federal magistrate judge that it intended to open hundreds of safe deposit boxes seized during a March 2021 raid in order to inventory the items inside—but new evidence shows that federal agents were plotting all along to use the operation as an opportunity to forfeit cash and other valuables.
In the affidavit submitted as part of the effort to obtain a warrant for the search, Assistant U.S. Attorney Andrew Brown wrote that federal agents intended to merely inventory the contents of the seized safe deposit boxes. But the newly unredacted documents show that the FBI had drawn up plans months earlier to forfeit property from the boxes, and failed to inform the magistrate judge about those plans.
"We had already determined that there was probable cause to move forward" with civil forfeiture proceedings against the contents of the safe deposit boxes before the search occurred, FBI Special Agent Jessie Murray said in a deposition, according to court documents.
Those crucial details were omitted from the affidavit submitted to the magistrate judge who granted the warrant that allowed the FBI to search U.S. Private Vaults. As Reason has previously detailed, that same warrant expressly forbade federal agents from engaging in a "criminal search or seizure of the contents of the safety [sic] deposit boxes."
The newly unredacted documents suggest the FBI never intended to abide by that limitation. In a deposition, Special Agent Lynne Zellhart said she drew up "supplemental instructions" for the agents who would be conducting the raid of U.S. Private Vaults. They were instructed to be on the lookout for cash stored inside the safe deposit boxes and to note "anything which suggests the cash may be criminal proceeds." Agents arranged to have drug-sniffing dogs present for the supposed inventory of the contents of the safe deposit boxes—which doesn't do anything to help inventory items, of course, but makes more sense if the actual goal is to initiate forfeiture proceedings.
"The government misled the court about its forfeiture plans when applying for the seizure warrant, intentionally disregarded the warrant's substantive limitations, and conducted a pretextual sham 'inventory' while searching for evidence of criminality," wrote Robert Frommer and Robert Johnson, attorneys with the Institute for Justice, which is representing some of the victims of the U.S. Private Vaults raid.
See, Vrai, this is why you don't blindly trust the gubbmint. Or will you tell me its okay if the govt lies, cheats and then steals if they truly think it was criminal enterprise? Govt thinks a billion Bullshot things before breakfast every day