A federal judge has issued a temporary restraining order against the FBI, blocking the agency from using civil asset forfeiture procedures to seize the property of four customers of a Beverly Hills safe deposit box company that the FBI raided in connection with a criminal probe.
In the June 22 restraining order (pdf), U.S. District Judge R. Gary Klausner faulted the FBI for “inadequate forfeiture notices” sent to individuals who had property in safe deposit boxes operated by U.S. Private Vaults (USPV), which the agency raided on March 22 and claimed in subsequent court filings was at the center of a criminal conspiracy involving drugs and money laundering.
Klausner ruled that the defendants are “enjoined from civilly forfeiting the property of Jeni Verdon-Pearsons, Michael Storc, Travis May, and Joseph Ruiz without first sending forfeiture notices that identify the specific factual and legal basis for the Government’s determination to commence civil forfeiture proceedings.”
He gave the FBI until June 29 to explain in writing why the court should not issue a preliminary injunction on behalf of the plaintiffs.
The Epoch Times reached out to the FBI for comment, with the agency responding by saying they are unable to comment on pending litigation.
On March 22, the FBI raided USPV and seized the contents of hundreds of safe deposit boxes, including ones rented by the four plaintiffs, who later filed claims with the FBI requesting their seized property be returned. The FBI has not returned the property—which includes silver, gold, personal documents, and a total of around $122,000 in cash—and has indicated that it is seeking to forfeit the items, sending notices to the plaintiffs to that effect.
The plaintiffs sued, arguing that the notices sent by the FBI do not satisfy their Fifth Amendment right to due process.
“The Court agrees,” Klausner wrote, adding in regards to one of the notices that, “put bluntly, [it] provides no factual basis for the seizure of Plaintiffs’ property whatsoever.”
In an indictment against USPV, cited by the Los Angeles Times, the U.S. attorney for Los Angeles accused the company of engaging in a criminal conspiracy.
“The government seized the nests of safety deposit boxes because there was overwhelming evidence that USPV was a criminal business that conspired with its criminal clients to distribute drugs, launder money, and structure transactions to avoid currency reporting requirements, among other offenses,” stated court documents filed in Los Angeles federal court in March, which were unsealed on April 2, according to the LA Times.
Prosecutors claimed the raid turned up an unspecified number of weapons, along with fentanyl and “huge stacks of $100 bills” sniffed out by drug dogs.
A federal grand jury has charged USPV with three counts of conspiracy—to launder money, distribute drugs, and structure cash transactions to avoid detection by authorities.
In May, the FBI sent out a letter (pdf) detailing what it found in the boxes along with its plans to use civil asset forfeiture procedures to claim the more than $85 million that the vaults contained.
But Klausner argued that the FBI went too far in seizing every asset in the boxes and failed to provide enough specificity for the forfeiture.
“The list of purported statutory bases for forfeiture is anything but specific,” the judge wrote.
“These include code sections outlawing influencing a loan officer, forgery, counterfeiting, uttering counterfeit obligations, smuggling, loan fraud, computer fraud, and bank fraud among others. The notices, therefore, fall woefully short of the Government’s duty to provide ‘specific statutory provision allegedly violated,’” he noted.
Robert Frommer, Senior Attorney at the Institute for Justice said in a press release following the issuance of the restraining order that, “hundreds of innocent people have had their lives turned upside down by the government’s $85 million cash grab.”
“This order squarely rejects the government’s ‘anemic notices’ as an unconstitutional attempt to take box holders’ property for no good reason,” he added.
Rob Johnson, Senior Attorney at the Institute for Justice, said that, while the order formally applies “just to our four clients, the reasoning of the order applies to every one of the hundreds of U.S. Private Vaults box holders in this situation.”
Johnson called on the FBI and the U.S. Attorney to bring the forfeiture proceedings to a close.
This article has been updated to reflect receipt of a response from the FBI.