LOS ANGELES (CN) — A federal judge on Tuesday temporarily barred federal agents from seizing property from people who claim the government’s civil forfeiture of their safe deposit boxes violates their constitutional rights.
In March, FBI agents armed with warrants crowded a Beverly Hills strip mall and seized the contents of hundreds of safe deposit boxes inside U.S. Private Vaults. The commercial facility houses over 800 safe deposit boxes and allows customers to rent them anonymously.
Authorities said after the March 22 raid that a search for weapons, drugs and contraband resulted in the seizure of items now held in an undisclosed location.
The government has not returned the property and has said customers must identify themselves as verified owners of seized property in order to reclaim it.
U.S. Private Vaults was indicted by a federal grand jury in March on three counts of conspiracy. No charges have been filed against any customers.
After the federal raid, multiple customers filed federal lawsuits claiming the federal raid was unconstitutional and seized at least $85 million in cash, precious metals and other property.
U.S. Private Vaults customer Travis May said in a lawsuit he lost access to at least $63,000 in cash and an unspecified amount of gold placed in a safe deposit box he rented.
Joseph Ruiz, another customer, said in the lawsuit $57,000 in cash — which he claims he relies on for personal and medical expenses — was seized by authorities.
As legal challenges mounted, the federal government notified both the company and its customers it would initiate civil forfeiture proceedings to permanently take the property without filing criminal charges.
Plaintiffs moved to bar federal agents from inspecting the boxes, using the contents in criminal investigations and requiring customers to share personal information with investigators.
U.S. District Judge R. Gary Klausner denied the motion but said the raid may have violated customers' constitutional rights.
May and Ruiz along with co-plaintiffs Jeni Pearsons and her husband Michael Storc filed an ex parte motion for a temporary restraining order barring federal authorities from seizing property based on civil forfeiture notices that didn’t explain the legal basis for the action.
The motion argued the civil forfeiture notices violated their Fifth Amendment rights to due process.
In a 7-page ruling Tuesday, Klausner sided with plaintiffs and granted the temporary restraining order preventing the government from forfeiting Jeni, Michael, Joseph and Travis’ property.
To satisfy due process, the government must provide property owners notice of the statutes buttressing forfeiture proceedings, the ruling said, adding that the notices sent to plaintiffs failed to do so.
“The notices therefore fall woefully short of the government’s duty to provide ‘the specific statutory provision allegedly violated,’” Klausner wrote in the order.
The restraining order does not extend to U.S. Private Vaults customers who didn’t join the plaintiffs’ motion.
In a statement, Robert Frommer of the Institute for Justice, an attorney for plaintiffs, applauded the ruling.
“Hundreds of innocent people have had their lives turned upside down by the government’s $85 million cash grab,” Frommer said. “This order squarely rejects the government’s ‘anemic notices’ as an unconstitutional attempt to take box holders’ property for no good reason.”
A Justice Department spokesperson did not immediately respond to a request for comment on the ruling.
Klausner also found plaintiffs established they’d likely suffer irreparable harm without the restraining order since they would’ve faced upcoming deadlines to file claims for remission with the FBI.
The judge, however, declined to certify a class of U.S. Private Vaults customers whose property was seized in the raid.
Institute for Justice attorney Rob Johnson said in the statement the “reasoning” of Klausner’s order applies to all affected customers.
“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 said. “If the government presses forward with these forfeitures now, it will be defying the court. We’re calling on the FBI and the U.S. Attorney to do the right thing, to follow the judge’s ruling, and to bring these sham forfeiture proceedings to a close.”
Klausner ordered the federal government to show cause in writing by June 29 why he should not grant a more wide-ranging preliminary injunction.
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