Feds Claim Win in Controversial $86 Million Beverly Hills Vault Raid

After several legal setbacks for DOJ, a judge ruled that the federal seizure of $86 million from safe deposit box renters was kosher

Federal law enforcement on Friday won a round in the legal battle over that troublesome March 2021 FBI raid on the U.S. Private Vaults store in Beverly Hills. A judge dismissed a class action suit filed by roughly 400 safe deposit box renters who had their property taken in part of the $86 million seizure of cash, jewelry and other goods from hundreds of box holders in a search that plaintiffs’ lawyers say was based solely on the assumption that all of them were arch criminals.

In his ruling, U.S. District Judge R. Gary Klausner found that the Feds had not, as the plaintiffs claim, violated their Fourth Amendment protection against unlawful search and seizure. The judge agreed with lawyers for the government that the seizures were a legitimate example of “specifically established and well-delineated exceptions” to the constitutional prohibition against warrantless searches.

In this case, the government contends that its agents were in the right when confiscating all that loot because it was adhering to an exception to the Constitution in which such warrantless seizures are legally tolerable to “produce an inventory” intended to “protect an owner’s property while it is in the custody of the police.”

The plaintiffs counter that the “inventory” claim was merely a pretext for agents to grab their stuff. Klausner found otherwise.

“Whether an inventory was impermissibly pretextual hinges on one question: would the challenged search have occurred but for the Government’s allegedly improper investigatory purpose?” Klausner wrote. “Here, the answer is yes.”

Klausner did not let federal agencies off the hook completely, however, writing, “Given this evidence, there can be no question that the government expected, or even hoped, to find criminal evidence during its inventory.”

But, he explains, “Unfortunately for Plaintiffs, the mere presence of a motive is not by itself enough.”

This case has been trouble from the start.

In June 2021, three months after the raid on the Olympic Boulevard strip mall location, Klausner issued a temporary restraining order halting a government attempt to keep the fortune it seized from 369 safe deposit boxes, saying investigators hadn’t proven that the owners committed any crimes. Three months after that, the government was still itching to hold onto other people’s money, asking a judge to let it keep an additional $154,600 in cash from one box holder and $330,000 from another because a drug-sniffing dog alerted on the money.

Last week, the FBI admitted it had not mentioned in its search warrant application to the issuing judge that it intended to take anything totaling $5,000 or more in any safe deposit box. Klausner found that that, too, was not out of bounds, writing, “In all, Plaintiffs have not demonstrated either that: (1) the omission of the Government’s forfeiture plans from the affidavit was material to a finding of probable cause as to USVP; or (2) that the Government’s conduct in this matter was equal to or greater than the violative conduct… Thus the Court finds that finds that Plaintiffs’ second Fourth Amendment argument fails.”

In statement to LAMag, Thom Mrozek, a spokesman for the U.S. Attorney’s Office in Los Angeles, said, “The court’s ruling expressly rejected every claim of improper conduct. In fact, prosecutors and agents acted professionally and ethically during the investigation. Contrary to the assertions made by the plaintiffs and adopted by some in the media, investigators were open and honest with the court that authorized the search and seizure warrants. This ruling demonstrates that the actions taken in relation to a business that catered to criminals were legally authorized, adhered to policy and were conducted in full compliance with the Constitution.”

The owners of U.S.Vaults pleaded guilty to laundering drug money back in March.

Attorneys for the plaintiffs say they plan to to appeal.

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