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LOS ANGELES (CNS) - More than four months after the FBI seized $57,000 in cash that a Los Angeles man kept in a private safe deposit box in Beverly Hills, prosecutors have agreed to return the money, according to court papers obtained this morning.
The Los Angeles federal court filing comes after U.S. District Judge R. Gary Klausner issued an order in July directing the government to “show cause to the court in writing as to why the government continues to seize the contents'' of Joseph Ruiz's box.
Klausner wrote that months after Ruiz asked the FBI for his property back, “the government has neither returned the $57,000 nor provided an adequate justification for the prolonged seizure.''
The government responded on Aug. 3 that after reviewing the information, a judicial forfeiture action would not be filed against the funds and the cash would be returned to Ruiz.
A U.S. Attorney's Office spokesman declined comment.
Ruiz, a 47-year-old food service worker, has said he used U.S. Private Vaults to store his cash because he distrusts banks.
In March, the FBI and other law enforcement raided the West Olympic Boulevard storefront. Prosecutors accused the vault -- but not its owners – of conspiring to launder money, structuring financial transactions, and distributing controlled substances.
A raft of lawsuits has been filed by box holders seeking the return of their property, alleging the government overstepped constitutional protections in efforts to uncover illegal activity. About $86 million in cash and millions more in jewelry and other valuables were reportedly seized from about 369 boxes, but specific criminal conduct has not been alleged.
In the indictment, Los Angeles prosecutors allege that U.S. Private Vaults adopted “business practices that attracted customers in possession of proceeds from criminal offenses, including drug trafficking'' and other offenses.
U.S. Private Vault customers were not required to use their names to access their boxes. Instead, the company used iris scans and other means to keep customer identities secret.
A November scheduling conference has been set for the Ruiz lawsuit, which was filed by the Institute for Justice on behalf of Ruiz and other box holders. The case was filed as a proposed class action and, ultimately, seeks to secure relief on behalf of a broader class of U.S. Private Vaults box holders.
“It's amazing the FBI needs to be told this, but the government cannot go around seizing property without a good reason,'' said Rob Johnson, IJ's senior attorney. “The FBI grabbed over $85 million from U.S. Private Vaults customers, including (Ruiz), and it has never provided a good explanation why. The FBI needs to give all that property back.''
The warrant authorizing the raid on U.S. Private Vaults stated that it “does not authorize a criminal search or seizure of the contents of the safety deposit boxes,'' according to Johnson.
The IJ maintains that despite the direction of the judge who signed the warrant, “the FBI opened every box in the vault and forced individuals to prove their own innocence to get their property back.''
Ruiz was able to persuade the government to return his cash, which he said resulted from legal settlements, after he submitted copies of the settlement checks, according to the IJ.
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