FBI misled judge who signed warrant for Beverly Hills seizure of $86 million in cash
U.S. Private Vaults in Beverly Hills
A customer who rented a safe-deposit box at U.S. Private Vaults outside the store in Beverly Hills. (Christina House / Los Angeles Times)
BY MICHAEL FINNEGANSTAFF WRITER
SEPT. 23, 2022 5 AM PT
The privacy invasion was vast when FBI agents drilled and pried their way into 1,400 safe-deposit boxes at the U.S. Private Vaults store in Beverly Hills.
They rummaged through personal belongings of a jazz saxophone player, an interior designer, a retired doctor, a flooring contractor, two Century City lawyers and hundreds of others.
Agents took photos and videos of pay stubs, password lists, credit cards, a prenuptial agreement, immigration and vaccination records, bank statements, heirlooms and a will, court records show. In one box, agents found cremated human remains.
Eighteen months later, newly unsealed court documents show that the FBI and U.S. attorney’s office in Los Angeles got their warrant for that raid by misleading the judge who approved it.
They omitted from their warrant request a central part of the FBI’s plan: Permanent confiscation of everything inside every box containing at least $5,000 in cash or goods, a senior FBI agent recently testified.
The FBI’s justification for the dragnet forfeiture was its presumption that hundreds of unknown box holders were all storing assets somehow tied to unknown crimes, court records show.
A video screen capture taken from U.S. District Court documents show agents during the raid of U.S. Private Vaults in Beverly Hills
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It took five days for scores of agents to fill their evidence bags with the bounty: More than $86 million in cash and a bonanza of gold, silver, rare coins, gem-studded jewelry and enough Rolex and Cartier watches to stock a boutique.
The U.S. attorney’s office has tried to block public disclosure of court papers that laid bare the government’s deception, but a judge rejected its request to keep them under seal.
The failure to disclose the confiscation plan in the warrant request came to light in FBI documents and depositions of agents in a class-action lawsuit by box holders who say the raid violated their rights.
FBI agents search safe-deposit boxes at U.S. Private Vaults.
FBI agents search safe-deposit boxes during at the U.S. Private Vaults store in Beverly Hills, shown in a video screen capture taken from U.S. District Court records. (U.S. District Court)
The court filings also show that federal agents defied restrictions that U.S. Magistrate Judge Steve Kim set in the warrant by searching through box holders’ belongings for evidence of crimes.
“The government did not know what was in those boxes, who owned them, or what, if anything, those people had done,” Robert Frommer, a lawyer who represents nearly 400 box holders in the class-action case, wrote in court papers.
“That’s why the warrant application did not even attempt to argue there was probable cause to seize and forfeit box renters’ property.”
After a two-year investigation that opened in 2019, leaders of the FBI’s Los Angeles office believed U.S. Private Vaults was a magnet for criminals hiding illicit proceeds in their boxes.
BEVERLY HILLS, CA – MAY 27: Plaintiffs Jennifer Snitko, husband Paul Snitko, and Joseph Ruiz, left to right, outside US Private Vaults in Beverly Hills where the three had rented safety deposit boxes. The three with their attorney Robert Frommer, senior attorney at the Institute for Justice, held a press conference to announce a new lawsuit demanding return of their belongings. The FBI is trying to confiscate $86 million in cash and millions more in jewelry and other valuables from 376 safety deposit boxes it seized in a raid. But box holders say it was an illegal search – that the warrant the FBI secured from a judge explicitly barred the government from searching the contents of their boxes. U.S. Private Vaults on Thursday, May 27, 2021 in Beverly Hills, CA. (Al Seib / Los Angeles Times).
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The business was charged with conspiracy to sell drugs and launder money.
The FBI and U.S. attorney’s office denied that they misled the judge or ignored his conditions, saying they had no obligation to tell him of the plan for indiscriminate confiscations on the blanket assumption that every customer was hiding crime-tainted assets.
FBI spokeswoman Laura Eimiller said the warrants were lawfully executed “based on allegations of widespread criminal wrongdoing.”
“At no time was a magistrate misled as to the probable cause used to obtain the warrants,” she said.
U.S. Private Vaults has pleaded guilty to conspiracy to launder drug money, and the investigation is continuing, she said.
The plaintiffs in the class-action suit have asked U.S. District Judge R. Gary Klausner to declare the raid unconstitutional. If he grants the request, it could force the FBI to return millions of dollars to box holders whose assets it has tried to confiscate.
It could also spoil an unknown number of criminal investigations by blocking prosecutors from using any evidence or information acquired in the raid, including guns and drugs.
Until the FBI shut it down, U.S. Private Vaults was an easy-to-miss store in an Olympic Boulevard strip mall with a Supercuts hair salon and kosher vegan Thai restaurant.
Around 2015, it began attracting police attention. Local detectives and federal agents spotted drug suspects walking in and out.
U.S. Private Vaults store in Beverly Hills
The U.S. Private Vaults store in a strip mall on Olympic Boulevard in Beverly Hills. (Irfan Khan / Los Angeles Times)
FBI agent Lynne Zellhart, a former Sacramento attorney, first heard about it from a Los Angeles County sheriff’s deputy. Customers, who could rent boxes without identifying themselves, entered the store’s vault with a biometric eye scan, the deputy told her.
The Sheriff’s Department suspected a customer was a criminal but was “having all kinds of problems getting into the box that they had a warrant for because of the nature of the business,” Zellhart testified in the class-action suit.
By 2019, federal and local law enforcement had managed to search more than a dozen boxes and seized about $5 million from five drug dealers, a bookie and a debit card thief.
The FBI opened an investigation of the business itself. Zellhart, who specializes in money laundering, said she thought it should be shut down. She joined forces with counterparts at the Drug Enforcement Administration and Postal Inspection Service.
Through surveillance, informants and undercover work, they surmised that U.S. Private Vaults and a precious-metals store next door were helping drug dealers launder cash by converting it into gold and silver they stashed in their boxes.
A video screen capture taken from U.S. District Court documents show agents during the raid of U.S. Private Vaults in Beverly Hills
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Zellhart was tasked with spelling out the government’s case in an affidavit that took her more than six months to write. Prosecutors submitted it to Kim in a request for six warrants.
Five of them were for straightforward searches of the store and the homes of its owners and managers to gather evidence for prosecution of the company.
But the sixth — to seize the store’s business equipment for forfeiture — was highly unusual. The government wanted to take not just computers, money counters, video cameras and iris scanners, but also the “nests of safety deposit boxes and keys.”
The only way the FBI could seize the racks of boxes would be to take possession of the contents too. Any judge reviewing the warrant request would recognize a threat to the rights of what turned out to be about 700 customers who had locked away some of their most private and valuable belongings.
Box holders would liken the raid to police barging into a building’s 700 apartments and taking every tenant’s possessions when they have evidence of wrongdoing by nobody but the landlord.
A spokesman for the U.S. attorney’s office declined to say whether the government had evidence of criminal activity by any specific box holders prior to the raid.
An FBI agent inspects gold coins taken from a safe-deposit box.
An FBI agent inspects the contents of a safe-deposit box during the raid of U.S. Private Vaults in this video screen-capture taken from U.S…