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LOS ANGELES (CNS) - Several Los Angeles residents are suing for the return of property seized from rented safe deposit boxes at a Beverly Hills private vault company that allowed customers to remain anonymous, according to court documents obtained Monday.
A federal judge ruled two years ago that the FBI's search and seizure of property from U.S. Private Vaults was constitutional. The now-defunct company was fined $1.1 million in June 2022 for money laundering after admitting it sought drug traffickers and other criminals as customers who often kept stacks of illegally obtained cash in their safe deposit boxes.
In civil lawsuits filed in Los Angeles federal court, box holders Don Mellein and Jeni Pearsons and husband Michael Storc, contend the government promised to safeguard the contents of their boxes -- but failed.
Mellein alleges the government failed to return 63 precious metal coins worth more than $100,000. Pearsons and her husband contend that while the FBI returned some of their property, the $2,000 in cash they stored below a liner in their safety deposit box has not been returned.
In each instance, the FBI claimed there was no property to return and said it had done nothing wrong by failing to return it, according to attorneys for the Arlington, Virginia-based Institute for Justice, which filed the lawsuits.
"If normal people are held accountable for stealing or losing your property, then the government should be, too," said IJ Attorney Joe Gay. "Don, Jeni, and Michael did nothing wrong. The government never should have broken into their safe-deposit boxes, but once it did, it became responsible for keeping their property safe. If it doesn't give it back, there must be a legal remedy."
About $86 million in cash and millions more in jewelry and other valuables were reportedly seized during the FBI's March 2021 raid, but specific criminal conduct has not been alleged against customers. A federal judge determined that many vault customers used its services for legitimate reasons.
When U.S. Private Vaults, a Nevada-based company that operated on West Olympic Boulevard, was raided by the FBI and the U.S. Drug Enforcement Administration, agents broke open boxes, seizing drugs, firearms and large amounts of gold bullion and cash, as well as other valuables, from about 396 of the rented boxes, according to the criminal indictment alleging three separate conspiracies to violate federal law.
Since then, many box holders who denied criminal culpability successfully petitioned the judge to have their property returned.
The company pleaded guilty two years ago through an attorney to a federal charge of conspiracy to launder money.
U.S. District Judge Mark Scarsi sentenced U.S. Private Vaults to three years of probation and the maximum fine of $1.1 million. He also ordered that a preliminary order of forfeiture of its business equipment be made final.
The federal government has remained silent about the details of its case against the now-defunct business, whose board of directors has not been charged or named.
The company admitted to having "recruited as its customers drug traffickers and other criminals" who paid over $550,000 in cash and bitcoin in exchange for the anonymous use of safety deposit boxes "to store the proceeds of their offenses, most often in stacks of $100 bills," according to the plea agreement filed in Los Angeles federal court.
Box holders seeking the return of their property allege the government overstepped constitutional protections in efforts to uncover illegal activity.
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 client identities secret.
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 the IJ.
The government abandoned its forfeiture claims against the institute's clients and says it has finished returning seized property, the IJ maintains.