A federal judge has dismissed a class action lawsuit that accused the FBI and Justice Department of deceiving another magistrate to obtain a search warrant for a private safe and ultimately seizing approximately $85 million in assets at individual.
But lawyers for the plaintiffs and those in similar circumstances warn that the seizures were still improper.
“The FBI lied about its intentions by claiming to be interested only in company assets, not [deposit] box holders,” Robert Frommer, an attorney for the plaintiffs, said in a statement ahead of the judge’s ruling. “Ultimately, the lure of civil forfeiture turned these federal cops into thieves.”
Judge R. Gary Klausner disagreed — and the company itself admitted foul play in a separate case.
The vault company, US Private Vaults (USPV), pleaded guilty in June to conspiracy to launder money, a DOJ spokesperson noted Monday.
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“The government obtained the search and seizure warrants based on evidence that the USPV was operating as a large-scale money laundering operation,” said Thom Mrozek, director of media relations for the prosecutor’s office. American from the Central District of California. “The USPV pleaded guilty, admitting…that it ‘recruited drug dealers and other criminals as clients'”.
But while the government has “a number of ongoing investigations” related to the USPV, the US attorney’s office said it has not filed any other criminal charges.
Rob Johnson, another attorney for the class action plaintiffs, has vowed to appeal.
“If today’s shocking decision stands, it will set a dangerous precedent that will allow the FBI and other law enforcement agencies to circumvent the Fourth Amendment,” he said in a statement after the Klausner’s decision. “The decision will give a plan to the government to open safes, storage lockers and other private spaces – and to take the contents with civil forfeiture.”
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Tens of millions seized, over $50 million was returned to “hundreds” of USPV customers, Mrozek said, but several million remain unclaimed.
According to the FBI, any remaining private parties who wish to recover their property can seek restitution.
USPV had hundreds of clients in California, according to Brian Silber, an asset forfeiture attorney who represented a different group of box holders — many of whom were law-abiding citizens who used the anonymous vault service out of fear. that their personally identifiable information may be stolen. or pirated elsewhere.
For them to recover their property through the FBI, he said, they would have to turn over that same sensitive information to the government.
“The claim form requires you to provide your name, address, phone number, social security number, and you must sign it under oath,” he said. “So they put landlords in a position where they had to either give up their property and preserve their privacy, or give up their privacy and preserve their property.”
His strategy, which involved filing a motion for restitution of property in the criminal case and not a separate civil suit, led to his clients getting their property back last year, he said, describing the seizure as a excess in the first place, and he said the government had overestimated the extent of the criminal activity going on at the USPV.
“Usually when it comes to civilian asset forfeiture, criminals walk away because they don’t want to be investigated – who’s going to cry for that?” he said. “But these innocent people were storing their savings in this place.”
The USPV appealed to both law-abiding citizens who seek privacy and a criminal element for the same reasons, he said – it was a high-security storage facility, not a bank, therefore it was subject to less regulation and had a greater promise of ensuring confidentiality. The FBI search warrants were “completely legitimate,” Silber said, but he doesn’t believe they warrant the wholesale seizure of the assets of all of the company’s clients.
“There were a few bad apples working in the business,” he said. “The owner, by his own admission.”
But in the summer of 2020, there was also a population of wealthy citizens, increasingly concerned about looting, anti-police protests, the coronavirus pandemic and a faltering economy, who wanted to secure cash and valuables, he said.
“They [the government] “I just assumed that all the money stored there was of criminal origin,” he said.
The USPV used high-tech security measures, including biometric scans to access its safes, but did not require personally identifying information, such as social security numbers, some of which customers feared they would be stolen, according to court documents. It also had 24-hour security from ADT and heat and motion sensors throughout its facilities.
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However, due to anonymity and heightened security, the business has also attracted “disreputable characters to store the proceeds of crime” – including prostitution, gambling and drug rings as well as payouts. ransom, according to court documents. The FBI, DWA and US Postal Inspection Service all conducted different investigations of USPV customers between 2015 and 2019, according to court documents.
On the other hand, the law-abiding citizens in the class action had a variety of legitimate uses for the company safes.
Paul and Jennifer Snitko, the court noted, live in a wildfire-prone area and turned to USPV because their bank had a waiting list for safe deposit boxes.
Another plaintiff, Joseph Ruiz, stored $57,000 in cash in his box “because he feared the COVID pandemic would make it impossible [him] Retract [his] funds from a bank.”
“Although the government has charged the USPV, the government has not charged USPV customers, such as the Snitkos, Ruiz and [Tyler] Gothier – of breaking a law,” reads the class action lawsuit filed last year. “And although a warrant authorized the government to seize USPV property, the warrant did not authorize the government to conduct a criminal search or seizure of the property of USPV customers. .”
In his judgment last month, Klausner found that while the original warrant did not authorize the government to conduct a criminal search and seizure of the client’s safes, it did allow law enforcement to inspect and document their content” for the purpose of identifying their owners in order to notify them so that they can claim ownership.
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“Plaintiff’s assertion that the government exceeded warrant limits hinges on whether the government’s actions constituted valid inventory,” the judge wrote. “Having found a valid inventory, the Court necessarily concludes that the government did not exceed the limits of the warrant. The plaintiffs failed to prove this aspect of their Fourth Amendment argument.”
Mrozek, the DOJ spokesman, said “the court’s decision expressly dismissed any allegations of improper conduct” on behalf of the FBI or prosecutors.