Something Went Sideways When the FBI Confiscated the Contents of Safe Deposit Boxes in an LA Bank

Photo credit: PAUL FAITH - Getty Images
Photo credit: PAUL FAITH - Getty Images

There is a genuinely weird story unfolding in Los Angeles that has played out so far like a Michael Mann movie come to life. In March, the FBI raided a bank at a strip mall in Beverly Hills and confiscated the contents of safe-deposit boxes belonging to some 800 people. Except something seems to have gone sideways in the whole business. From the Los Angeles Times:

Federal agents had suspected for years that criminals were stashing loot there, and they assert that’s exactly what they found. The government is trying to confiscate $86 million in cash and a stockpile of jewelry, rare coins and precious metals taken from about half of the boxes. But six months after the raid, the FBI and U.S. attorney’s office in Los Angeles have produced no evidence of criminal wrongdoing by the vast majority of box holders whose belongings the government is trying to keep. About 300 of the box holders are contesting the attempted confiscation. Ruiz and 65 others have filed court claims saying the dragnet forfeiture operation is unconstitutional.

Mr. Ruiz seems to have a bit of a case, albeit one with distinctly Californian aspects to it.

After the FBI seized Joseph Ruiz’s life savings during a raid on a safe deposit box business in Beverly Hills, the unemployed chef went to court to retrieve his $57,000. A judge ordered the government to tell Ruiz why it was trying to confiscate the money. It came from drug trafficking, an FBI agent responded in court papers. Ruiz’s income was too low for him to have that much money, and his side business selling bongs made from liquor bottles suggested he was an unlicensed pot dealer, the agent wrote. The FBI also said a dog had smelled unspecified drugs on Ruiz’s cash. The FBI was wrong. When Ruiz produced records showing the source of his money was legitimate, the government dropped its false accusation and returned his money.

This kind of willy-nilly confiscation was a part of the “war” on drugs that everybody criticized back when Both Sides were pretending to care about criminal-justice reform. (We all recall those 25 minutes fondly.) What is plain is that this particular exercise in confiscation may wind up costing the government more than it grabbed.

Prosecutors, so far, have outlined past criminal convictions or pending charges against 11 box holders to justify the forfeitures. But in several other cases, court records show, the government’s rationale for claiming that the money and property it seized was tied to crime is no stronger than it was against Ruiz.

There is some evidence that the bank itself was more than a little skeevy. The FBI and the prosecutors didn’t drop a pin on a map. But then again, they haven’t exactly been lighting the landscape on fire in pursuit of these miscreants.

U.S. Private Vaults was indicted in February on charges of conspiring with unnamed customers to sell drugs, launder money and structure cash transactions to dodge government detection. No people were charged.

The criminal case has remained dormant since then, with no attorney or other representative of U.S. Private Vaults appearing in court to enter a plea. A spokesman for the U.S. attorney’s office in Los Angeles declined to comment on why the case appears to have stalled.

Michael Singer, a Las Vegas lawyer who has represented U.S. Private Vaults on other matters, declined to comment on the charges against the business but said he was unaware of any criminal activity by its owners. He also said the government had “overstepped its bounds” in its search, seizure and attempted confiscation of the customers’ money and property.

Of course, the evidence seems to be a little curiously well ventilated. This seems to have occasioned some snarky punctuation by the LAT.

Prosecutors also produced scant evidence in another forfeiture case to confiscate more than $900,000 from a box holder whose identity they have been unable to learn. They accused him of being “either a top-level drug trafficker or money launderer.” The “indicia” of those crimes included the way the person bundled his cash in thick, thin and broken rubber bands; tightly tape-wrapped paper; bank bands; and plastic CVS and paper Good Neighbor pharmacy bags.

Using the pseudonym Charles Coe, the box holder has filed suit challenging the seizure of his money. Gluck, who represents Coe, declined to discuss the specific case but said U.S. Private Vaults customers “included many immigrant business owners who escaped repressive regimes where banks are unsafe and have collected amounts of cash as their life savings over many, many years.”

“The notion that the old rubber bands mean they must be drug dealers is ludicrous,” he said.

Confiscation is still a policy worthy of examination, if not of at least partial evisceration. And, despite the burlesque aspects of this case, it’s a perfect example of why.

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