During its investigation of a business in California that offers secure deposit boxes to clients, the FBI planned to use civil forfeiture to sell every asset worth over $5,000 in every customer’s box before a judge had even seen an application for a warrant to raid the business, according to a new analysis by the Institute for Justice, a public interest law firm that is legally representing people who said the FBI seized their assets in an overly broad operation.
The news provides an extra wrinkle to a case that has alarmed privacy and Fourth Amendment advocates. Although criminals allegedly made use of U.S. Private Vaults, so did ordinary people, who were swept up in the case and would have lost their property to the FBI for no fault of their own.
“The government has a duty to be honest with the court when it applies for a warrant under the Fourth Amendment,” senior attorney at the Institute for Justice Robert Frommer said in a statement. “But the FBI lied about its intentions in claiming to only be interested in the property of the business, and not the box holders. Ultimately, the lure of civil forfeiture turned these federal cops into robbers.”
Before sending their warrant application to a judge, authorities “failed to tell the judge that, months before, they and other government agencies had already formulated plans to use civil forfeiture against customers’ property. In fact, before the federal magistrate had even seen the warrant application, FBI officials had concluded they would use civil forfeiture against every asset in every customer’s box that was worth over $5,000,” the Institute for Justice writes.
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In May 2021 after the Institute for Justice sued the government on behalf of multiple users of the vault service, a judge blocked some of the forfeiture.
“For months the FBI held onto our precious metals and treated me and my husband like criminals. If we had not fought back, we could have lost a significant part of our life savings forever,” Jeni Pearsons, one of those users, said in a statement published with the analysis. “Our lawsuit can’t turn the clock back and keep our rights from being violated, but we want to make sure the government never does this to anyone else and doesn’t hold onto the records and photos of our private possessions.”
U.S. Private Vaults touted itself as a privacy leaning service that allowed customers to access their boxes with iris scanners and didn’t require an ID. In March last year, the Drug Enforcement Administration (DEA) seized the contents of customers’ boxes, because, according to the DEA, the company facilitated drug deals inside the business, used a nearby gold vendor to help launder money, and more. In short, authorities saw U.S. Private Vaults as a nexus of criminal activity, and decided to target the company itself. Then in May, the FBI sent a letter to U.S. Private Vaults laying out its intention to use civil asset forfeiture to claim more than $85 million in assets.
The Institute for Justice argues that this was the plan essentially all along, before the FBI actually knew what was inside each box.
In the summer of 2020, two FBI agents discussed whether their respective asset forfeiture unit could handle the seizure of a large amount of material, according to a court filing published by the Institute for Justice. FBI Special Agent in Charge Matthew Moon asked Supervisory Special Agent Jessie Murray “if the Los Angeles asset forfeiture was capable of handling a possible large-scale Seizure” and if the FBI field office had “the capacity to handle civil forfeiture regarding U.S. Private Vaults,” according to the filing.
The filing also says that the case’s lead FBI agent Lynn Zellhart testified that “I think I said that we discussed, you know, seizing the nests of the boxes and doing the inventory of them in summer of 2020. And then discussions about asset forfeiture took place a little bit later in the summer or fall.”
In a statement published along with the analysis, Robert Johnson, senior attorney at the Institute for Justice, said “The burden should always be on the government to prove wrongdoing before it can take somebody’s property. The government here just assumed that everything in the boxes worth more than $5,000 was somehow connected to crime.”
“That is a perfect example of how civil forfeiture takes the presumption of innocence and turns it on its head,” he added.
The FBI did not immediately respond to a request for comment.