A federal appeals ruling last week found that the FBI had violated citizens’ constitutional rights by seizing contents of hundreds of safe deposit boxes during a raid in 2021 on a Beverly Hills company suspected of money laundering.
Rob Frommer, Senior Attorney at the Institute for Justice, who represented several plaintiffs, said that the victory was “a resounding one, not only for our clients but for hundreds of other people who have been living in a nightmare for many years due to what the FBI has done.”
The U.S. 9th Circuit Court of Appeals ruled that the Bureau violated U.S. Private Vaults box holders’ Fourth Amendment rights against unreasonable searches and seizures by opening and cataloging the contents of 1,400 safe deposit boxes without individual criminal warrants for each.
The ruling of Jan. 23, reversed the 2022 decision of a lower court siding with the FBI and required federal officials to destroy all inventory records for the hundreds of box-holders who were not charged with any crimes.
In the raid of March 2021, agents took approximately $86 million worth of cash, along with a treasure trove containing jewelry, coins, gold bars, silver, and other valuables. According to documents filed in court, the FBI began administrative forfeiture procedures against several boxes that were not specified.
Civil asset forfeiture refers to the process by which the government seizes property or money that it believes is linked to a criminal act, even when the owner has not been charged.
The FBI’s raid on U.S. Private Vaults was part of its investigation on the company, which ultimately shut down and pleaded guilty to conspiracy to launder drug money. The government argued to the 9th Circuit court that the warrant it had issued authorized the FBI’s seizure of the deposit boxes, and their inventory following standard policy.
Unsealed documents show that neither the FBI nor the U.S. Attorney’s Office informed the judge when they requested a warrant, that they planned to seize the contents of each box containing $5,000 in cash and/or belongings.
The warrant authorized only the authorities to seize surveillance equipment, money counters, and business computers. The judge allowed them to also seize keys and safety deposit boxes, but wrote specifically that agents were only to “inspect the content of the boxes to try to identify the owners so that they could claim their property” and that the “warrant does not authorize a criminal seizure or search of the contents.”
The 9th Circuit panel found that the government went beyond the scope and rules of the warrant by taking an inventory of items that were not the subject of the warrant.
Circuit Judge Milan D. Smith Jr. said that it was “particularly disturbing” that the government could not explain the limitations of these types of searches. He also questioned the difference between them and the “limitless search of an individual’s belongings” as seen in colonial America.
Smith wrote: “It is these abuses of authority that led to the adoption of the Fourth Amendment.”
Jeni Pearsons said that the victory was “incredibly satisfying.”
She said, “It was satisfying to hear these judges knock them down and explain the situation.” “This extraordinary overreach, and an actual violation of civil rights.”
During the raid, Pearsons and Michael Storc’s rented security box was seized with $20,000 in silver as well as $2,000 in cash. She worked with the Institute for Justice and won her case, but when she returned to retrieve the $2,000 she discovered that the FBI had taken it.
Pearsons stated, “I think the FBI is monitoring this case.” “I hope they will put in place structure if they continue the civil forfeiture process so that there is transparency and it’s not a free-for-all like this appears to be.”
Pearsons said: “It is a free-for-all is a ridiculous defense.”
But Frommer said while this ruling helped “expose the government’s attempt to steal innocent people’s things,” he doesn’t think it will end civil forfeiture abuse.
“I think this ruling on its own is important, but it won’t stop the FBI’s grasping hand,” he stated. “Yeah, they got their hand slapped just now. But unless there are real consequences, they’ll just view this as a dry run for the next time.”
The FBI declined to comment on the decision. Thom Mrozek a spokesperson from the U.S. Attorney’s Office in Los Angeles declined to comment on the decision but stated that the prosecutors were “prepared” to destroy the records of the inventor search which is what the plaintiffs were seeking.