FBI agents cataloged Cartier bracelets, Rolex watches and stacks of cash as they combed through safe deposit boxes seized from a Beverly Hills business accused of money laundering. But the owners of many of those boxes were not accused of any crimes.
After hearing arguments from both sides Thursday, a panel of judges from the 9th Circuit Court of Appeals will decide whether the sweeping raid violated customers’ Fourth Amendment rights.
“I think the public sees this and recognizes that this is just a total abuse of people’s constitutional rights,” Institute for Justice senior attorney Rob Johnson told Fox News, adding that he felt “extremely optimistic” about the panel’s forthcoming decision.
On March 22, 2021, the FBI seized around 1,400 safe deposit boxes from U.S. Private Vaults, a Beverly Hills–based company that, according to court documents, was regularly used by “unsavory characters to store criminal proceeds.”
Agents took about $86 million in cash from the boxes, as well as a trove of jewelry, gold bars and coins, silver and other valuables. In May of that year, the FBI “commenced administrative forfeiture proceedings” against an unspecified number of the boxes, according to court documents.
Civil asset forfeiture is the process through which the government seizes money or other property believed to be linked to a crime without ever charging the owner.
Federal agents seized around 1,400 safe deposit boxes from U.S. Private Vaults in Beverly Hills, California. (Irfan Khan/Los Angeles Times via Getty Images)
U.S. Private Vaults eventually pleaded guilty to money laundering, but as of October 2022, the U.S. Attorney’s Office said it had not filed any other criminal charges. A spokesperson on Thursday declined to comment on the case and could not immediately answer whether additional criminal charges were ever filed.
Several of the safe deposit box renters who haven’t been charged filed a class action lawsuit accusing the government of violating their Fourth Amendment protection from unreasonable search and seizure and their Fifth Amendment protection from having private property taken without compensation.
On Thursday, attorneys from the Institute for Justice argued that the FBI “broke open hundreds of safe deposit boxes, and then it tried to civilly forfeit everything in those boxes worth over $5,000” after the raid without any probable cause.
“The search … had an objective function to uncover evidence of crimes,” Johnson argued.
IJ wants the appeals court to definitively state that the FBI violated individuals’ rights and to force the federal government to destroy copies it made of customers’ private documents — including medical records, wills and trusts — while agents searched the boxes.
The appeal comes after a lower court last year sided with the FBI.
Unsealed court documents showed the FBI and U.S. Attorney’s Office never told the judge in their warrant request that they planned to confiscate the contents of every box containing at least $5,000 in cash or belongings.
The warrant only authorized agents to seize business computers, money counters and surveillance equipment. The judge also allowed them to seize safety deposit boxes and keys, but specifically wrote that agents should only “inspect the contents of the boxes in an effort to identify their owners … so that they can claim their property,” and that the warrant “does not authorize a criminal search or seizure of the contents of the safety deposit boxes.”
But while attorneys for the plaintiffs showed the government “had a dual motive in inventorying the contents of each deposit box,” agents did not exceed the bounds of the warrant, federal Judge R. Gary Klausner ruled.
Any reasonable judge would have “inferred that the inventory could lead to the potential discovery of criminal proceeds in certain boxes, which would then lead to forfeiture,” Klausner wrote.
During Thursday’s court appearance, Victor Rodgers argued on behalf of the government that the FBI went above and beyond to reunite customers with their property by posting a notice on the window of USPV.
“All they had to do was contact the FBI,” Rodgers said.
Judges grilled the government’s attorney on whether the FBI ignored the warrant’s limitations, why agents even needed to open the seized boxes and why drug-sniffing dogs were present during the seizure, a move IJ alleged was taken solely for the purpose of uncovering evidence of crimes.
“It was really nice to hear the judges ask questions that seemed to put the counsel for the FBI on the back foot,” said Jeni Pearsons, a nonprofit director who rented a box at USPV. “That they were being truly questioned about the morality of what happened … it was a good feeling to be there in court today.”
The panel is expected to issue a decision in a few months.