FBI wants to keep fortune in cash, gold, jewels from Beverly Hills raid. Is it abuse of power?
Three people look through a storefront window
Joseph Ruiz, right, joins Jennifer Snitko and her husband Paul Snitko outside U.S. Private Vaults in Beverly Hills, where they rented safe deposit boxes. The three are among more than a dozen customers suing the federal government to recover cash and valuables seized by the FBI. (Al Seib / Los Angeles Times)
BY MICHAEL FINNEGAN | LOS ANGELES TIMES EXCLUSIVE
JUNE 9, 2021 UPDATED 7:04 AM PT
When FBI agents asked for permission to rip hundreds of safe deposit boxes from the walls of a Beverly Hills business and haul them away, U.S. Magistrate Steve Kim set some strict limits on the raid.
The business, U.S. Private Vaults, had been charged in a sealed indictment with conspiring to sell drugs and launder money. Its customers had not.
So the FBI could seize the boxes themselves, Kim decided, but had to return what was inside to the owners.
“This warrant does not authorize a criminal search or seizure of the contents of the safety deposit boxes,” Kim’s March 17 seizure warrant declared.
Yet the FBI is now trying to confiscate $86 million in cash and millions of dollars more in jewelry and other valuables that agents found in 369 of the boxes.
Prosecutors claim the forfeiture is justified because the unnamed box holders were engaged in criminal activity. They have disclosed no evidence to support the allegation.
Box holders and their lawyers denounced the ploy as a brazen abuse of forfeiture laws, saying prosecutors and the FBI were trampling on the rights of people who thought they’d found a safe place to stash confidential documents, heirlooms, gold, rare coins and cash.
If the FBI wanted to search the boxes, the lawyers say, it first needed to meet the standard for a court-issued warrant: Probable cause that evidence of specific crimes would be found.
The government “can’t take stuff without evidence in the hopes that you’re going to get it later,” said Benjamin Gluck, an attorney who represents box holders suing the government to retrieve their property. “The 4th Amendment and the forfeiture laws require the opposite — that you have the evidence first, and then you can take property.”
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Forfeiture laws enable the government to confiscate assets tied to criminal activity. The generally low standard of proof makes it an appealing tool for prosecutors, who in criminal trials must prove guilt beyond a reasonable doubt.
FBI spokeswoman Laura Eimiller referred questions to the U.S. attorney’s office in Los Angeles.
Agents during the raid of U.S. Private Vaults in Beverly Hills
A video screen capture taken from U.S. District Court documents shows agents during the raid of U.S. Private Vaults in Beverly Hills (U.S. District Court)
Thom Mrozek, a spokesman for the office, denied the government was misusing its powers by trying to confiscate box holders’ belongings.
“We have some basis to believe that the items are related to criminal activity,” he said.
In general, Mrozek said, a number of factors would lead the FBI to pursue forfeiture of the boxes’ contents — such as large stacks of cash kept by a person with a criminal record or no known source of income.
Possession of cash in any amount is legal.
Beyond the $86 million in cash, the FBI is seeking to confiscate thousands of gold and silver bars, Patek Philippe and Rolex watches, and gem-studded earrings, bracelets and necklaces, many of them in felt or velvet pouches. The FBI also wants to take a box holder’s $1.3 million in poker chips from the Aria casino in Las Vegas.
The money and goods are among the contents of about 800 safe deposit boxes the FBI seized in late March during a five-day raid of the U.S. Private Vaults store in an Olympic Boulevard strip mall known for its kosher vegan Thai restaurant.
U.S. Private Vaults store and kosher vegan Thai restaurant in Beverly Hills strip mall
Federal agents spent five days in late March searching the U.S. Private Vaults store where customers stored valuables in roughly 800 safe deposit boxes. A magistrate authorized the FBI’s seizure of the store’s “business equipment” for a drugs and money laundering investigation, but barred searches of the boxes’ contents. (Irfan Khan / Los Angeles Times)
The FBI has returned the contents of about 75 boxes and plans to give back the items found in at least 175 more, because there was no evidence of criminality, Mrozek said. Federal agents have not determined who owns what was stored in many other boxes.
The indictment says U.S. Private Vaults marketed itself to attract criminals who wanted to store valuables anonymously and keep tax authorities at bay. An owner and a manager of U.S. Private Vaults were involved in drug sales, it says, and co-conspirators helped customers convert cash into gold to evade government suspicion.
Among those ensnared in the government’s dragnet was Joseph Ruiz, who lost his life savings in the raid: $57,000 in cash. An unemployed food service worker who lives near Crenshaw Boulevard and the 10 Freeway, Ruiz, 47, distrusts banks and sees world affairs as deeply unstable, so he kept his money at U.S. Private Vaults.
He obtained the money in two legal settlements, one for a spinal injury in a car accident and another for chronic housing code violations in his apartment building, Ruiz said.
The FBI seized it, rejected his requests to return it and is now moving to confiscate it without explanation.
“They just kind of stole my money,” said Ruiz, whose most recent job was at Gate Gourmet, an airline caterer.
When he stopped by U.S. Private Vaults during the FBI raid to claim his money, Ruiz said, a federal agent asked if he belonged to a drug cartel.
“I’m made out to be a criminal, and I didn’t do anything,” said Ruiz, the son of a retired Los Angeles police officer. “I’m a law-abiding citizen.”
Ruiz has joined Jennifer and Paul Snitko, a Pacific Palisades couple who kept jewelry and baptism certificates in their U.S. Private Vaults box, in filing a class-action complaint against Tracy L. Wilkison, the acting U.S. attorney in Los Angeles, and Kristi Koons Johnson, who heads the FBI’s L.A. field office.
It is one of 11 suits filed by box holders that seek the return of their property and court orders declaring the seizures unconstitutional.
“They throw people like Joseph into this upside-down world where they did nothing wrong, but they’re forced to come forward to litigate against the government just to get their property back and prove their own innocence,” said Robert Frommer, an attorney for Ruiz and the Snitkos.
BEVERLY HILLS-CA-APRIL 7, 2021: William, who wishes to conceal his identity, is photographed at U.S. Private Vaults in Beverly Hills where he had stored cash and precious metals before federal agents descended on the Beverly Hills strip mall last month and seized the contents of hundreds of safe deposit boxes inside the store, on Wednesday, April 7, 2021. (Christina House / Los Angeles Times)
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Frommer is a senior attorney at the libertarian Institute for Justice in Virginia, where he specializes in challenging government forfeitures.
Forfeiture is a controversial tool used heavily in recent decades by federal, state and local law enforcement agencies nationwide. Proponents say it deters crime with the threat that cash, cars and other property acquired illegally, or used for illicit purposes, might be confiscated.
Critics, however, say it is often abused by police and prosecutors who can seize people’s property even if they lack evidence to prove their guilt in a criminal trial. Many jurisdictions have faced accusations of excessive use of forfeiture to fund law enforcement operations.
From 2000 to 2019, forfeitures generated $46 billion for the federal government, an Institute for Justice report found.
Joseph Ruiz and Robert Frommer
Robert Frommer, a senior attorney at the libertarian Institute for Justice, represents Robert Ruiz, left, in a class-action suit against the U.S. government to retrieve cash and valuables seized by the FBI from safe deposit boxes at U.S. Private Vaults in Beverly Hills. (Al Seib / Los Angeles Times)
In the U.S. Private Vaults case, the FBI’s May 20 notice of forfeiture against 369 safe deposit boxes marked a major escalation of what was already a raw display of power by the FBI and U.S. attorney’s office in Los Angeles.
“This definitely doesn’t smell good,” said former federal prosecutor David B. Smith, the author of “Prosecution and Defense of Forfeiture Cases.” “They can’t say, ‘you show me this is legitimate money’ — that’s not the law, and no judge is going to let them do that.”
U.S. Private Vaults in Beverly Hills
The FBI is trying to confiscate $86 million in cash and millions of dollars in jewelry and other valuables that it seized from 386 safe deposit boxes that a magistrate ordered the government n…