Re: FBI misled judge who signed warrant for Beverly Hills seizure of $86 million in cash

[FBI Bull hockey]

In article <smsetq$o6s$1...@news.dns-netz.com>
governo...@gmail.com wrote:
>
> The FBI is out of control. From the first 20 down, shoot every other
> FBI official as a lesson.
>
The privacy invasion was vast when FBI agents drilled and pried
their way into 1,400 safe-deposit boxes at the U.S. Private
Vaults store in Beverly Hills.

They rummaged through personal belongings of a jazz saxophone
player, an interior designer, a retired doctor, a flooring
contractor, two Century City lawyers and hundreds of others.

Agents took photos and videos of pay stubs, password lists,
credit cards, a prenuptial agreement, immigration and
vaccination records, bank statements, heirlooms and a will,
court records show. In one box, agents found cremated human
remains.

Eighteen months later, newly unsealed court documents show that
the FBI and U.S. attorney’s office in Los Angeles got their
warrant for that raid by misleading the judge who approved it.

They omitted from their warrant request a central part of the
FBI’s plan: Permanent confiscation of everything inside every
box containing at least $5,000 in cash or goods, a senior FBI
agent recently testified.

The FBI’s justification for the dragnet forfeiture was its
presumption that hundreds of unknown box holders were all
storing assets somehow tied to unknown crimes, court records
show.

It took five days for scores of agents to fill their evidence
bags with the bounty: More than $86 million in cash and a
bonanza of gold, silver, rare coins, gem-studded jewelry and
enough Rolex and Cartier watches to stock a boutique.

The U.S. attorney’s office has tried to block public disclosure
of court papers that laid bare the government’s deception, but a
judge rejected its request to keep them under seal.

The failure to disclose the confiscation plan in the warrant
request came to light in FBI documents and depositions of agents
in a class-action lawsuit by box holders who say the raid
violated their rights.

The court filings also show that federal agents defied
restrictions that U.S. Magistrate Judge Steve Kim set in the
warrant by searching through box holders’ belongings for
evidence of crimes.

“The government did not know what was in those boxes, who owned
them, or what, if anything, those people had done,” Robert
Frommer, a lawyer who represents nearly 400 box holders in the
class-action case, wrote in court papers.

“That’s why the warrant application did not even attempt to
argue there was probable cause to seize and forfeit box renters’
property.”

After a two-year investigation that opened in 2019, leaders of
the FBI’s Los Angeles office believed U.S. Private Vaults was a
magnet for criminals hiding illicit proceeds in their boxes.

The business was charged with conspiracy to sell drugs and
launder money.

The FBI and U.S. attorney’s office denied that they misled the
judge or ignored his conditions, saying they had no obligation
to tell him of the plan for indiscriminate confiscations on the
blanket assumption that every customer was hiding crime-tainted
assets.

FBI spokeswoman Laura Eimiller said the warrants were lawfully
executed “based on allegations of widespread criminal
wrongdoing.”

“At no time was a magistrate misled as to the probable cause
used to obtain the warrants,” she said.

U.S. Private Vaults has pleaded guilty to conspiracy to launder
drug money, and the investigation is continuing, she said.

The plaintiffs in the class-action suit have asked U.S. District
Judge R. Gary Klausner to declare the raid unconstitutional. If
he grants the request, it could force the FBI to return millions
of dollars to box holders whose assets it has tried to
confiscate.

It could also spoil an unknown number of criminal investigations
by blocking prosecutors from using any evidence or information
acquired in the raid, including guns and drugs.

Until the FBI shut it down, U.S. Private Vaults was an easy-to-
miss store in an Olympic Boulevard strip mall with a Supercuts
hair salon and kosher vegan Thai restaurant.

Around 2015, it began attracting police attention. Local
detectives and federal agents spotted drug suspects walking in
and out.

FBI agent Lynne Zellhart, a former Sacramento attorney, first
heard about it from a Los Angeles County sheriff’s deputy.
Customers, who could rent boxes without identifying themselves,
entered the store’s vault with a biometric eye scan, the deputy
told her.

The Sheriff’s Department suspected a customer was a criminal but
was “having all kinds of problems getting into the box that they
had a warrant for because of the nature of the business,”
Zellhart testified in the class-action suit.

By 2019, federal and local law enforcement had managed to search
more than a dozen boxes and seized about $5 million from five
drug dealers, a bookie and a debit card thief.

The FBI opened an investigation of the business itself.
Zellhart, who specializes in money laundering, said she thought
it should be shut down. She joined forces with counterparts at
the Drug Enforcement Administration and Postal Inspection
Service.

Through surveillance, informants and undercover work, they
surmised that U.S. Private Vaults and a precious-metals store
next door were helping drug dealers launder cash by converting
it into gold and silver they stashed in their boxes.

Zellhart was tasked with spelling out the government’s case in
an affidavit that took her more than six months to write.
Prosecutors submitted it to Kim in a request for six warrants.

Five of them were for straightforward searches of the store and
the homes of its owners and managers to gather evidence for
prosecution of the company.

But the sixth — to seize the store’s business equipment for
forfeiture — was highly unusual. The government wanted to take
not just computers, money counters, video cameras and iris
scanners, but also the “nests of safety deposit boxes and keys.”

The only way the FBI could seize the racks of boxes would be to
take possession of the contents too. Any judge reviewing the
warrant request would recognize a threat to the rights of what
turned out to be about 700 customers who had locked away some of
their most private and valuable belongings.

Box holders would liken the raid to police barging into a
building’s 700 apartments and taking every tenant’s possessions
when they have evidence of wrongdoing by nobody but the landlord.

A spokesman for the U.S. attorney’s office declined to say
whether the government had evidence of criminal activity by any
specific box holders prior to the raid.

The 4th Amendment protects people against “unreasonable searches
and seizures.” It requires the government to get a warrant by
showing in a sworn statement that it has probable cause to
believe that a particular place needs to be searched and
describing specific people or things to be seized.

In her affidavit, Zellhart made sweeping allegations of criminal
wrongdoing by box holders, saying it would be “irrational” for
anyone who wasn’t a lawbreaker to entrust the store with assets
that a bank could better safeguard.

“Only those who wish to hide their wealth from the DEA, IRS, or
creditors would” rent a box anonymously at U.S. Private Vaults,
she wrote.

But the FBI’s evidence against customers was thin.

Agents had seen some of them pull up to the store in vehicles
with Nevada, Ohio and Illinois license plates, Zellhart wrote.

“Based on my training and experience in money laundering
investigations, Chicago, Illinois is a hub of both drug
trafficking and money laundering,” she said. “I believe these
patrons were using their USPV box to store drug proceeds.” She
cited no facts to back up the suspicion.

Other customers were showing up in rental cars, and that too,
she claimed, was a sign of drug dealers evading law enforcement.
An owner of U.S. Private Vaults told a government witness that
the store’s best customers were “bookies, prostitutes and weed
guys,” Zellhart wrote.

Of all the box holders, Zellhart mentioned only nine, either
identifying them by their initials or not at all. She said they
were “linked” or “associated” with law enforcement
investigations, but again provided no facts specifying criminal
misconduct.

While the majority of customers seemed to be drug dealers, she
wrote, U.S. Private Vaults tried “to attract a non-criminal
clientele as well, so as not to be too obvious a haven for
criminals.”

At Zellhart’s deposition, Frommer asked, “Was it your opinion
that most of the people who rented safe-deposit boxes were
criminals in some way?”

“I was expecting a lot of criminals,” she said. “I don’t know
about most.”

Frommer reminded her of the language in her affidavit.

“I don’t sort of know how to answer your question as to whether
it was all of them, it was most of them,” she responded. “I
don’t — I don’t have a percentage.”

On the affidavit’s 84th and 85th pages, Zellhart assured Kim the
FBI would respect customers’ rights.

That section, she testified, was written by Andrew Brown, an
assistant U.S. attorney and driving force of the investigation.

What Brown wrote contradicts the FBI’s plan for hundreds of box
confiscations. He underlined the government’s lack of evidence
to justify any criminal search of the customers’ property.

“The warrants authorize the seizure of the nests of the boxes
themselves, not their contents,” his section of the affidavit
said. “By seizing the nests of safety deposit boxes themselves,
the government will necessarily end up with custody of what is
inside those boxes initially.”

The affidavit told Kim that agents would “follow their written
inventory policies” and “attempt to notify the lawful owners of
the property stored in the boxes how to claim their property.”

Under FBI policy, it said, inspection of each box would “extend
no further than necessary to determine ownership.” But agents’
inspection of the boxes went substantially further — just as the
government planned, according to FBI records filed in court.

By the time Kim got the warrant request, the FBI had been
preparing an enormous forfeiture operation for at least six
months, according to Jessie Murray, the chief of the FBI’s asset
forfeiture unit in Los Angeles.

In the summer of 2020, she testified, Matthew Moon, then one of
the highest-ranking FBI agents in Los Angeles, asked her if her
team “was capable of handling a possible large-scale seizure” of
safe-deposit boxes at U.S. Private Vaults.

Murray told him yes. She recalled joining a conference call in
late 2020 and another in early 2021 to plan forfeitures of the
box contents with the U.S. attorney’s office, other federal and
local agencies, and “maybe even our legal forfeiture unit at
[FBI] headquarters in D.C.”

Zellhart and a colleague confirmed the grand scale of the
planned forfeiture in a memo to fellow agents with detailed
instructions for carrying out the raid.

The memo, approved by Moon and two other senior FBI managers,
ordered agents to assign “CATS ID” numbers to “all cash” found
in the boxes. The government uses the Consolidated Asset
Tracking System to keep track of everything it seizes for
forfeiture.

Murray testified that once she reviewed the final draft of
Zellhart’s affidavit, it was clear to her that there was
probable cause to seize and confiscate the contents of every box
— as long as it met the $5,000 minimum set by the Justice
Department’s Asset Forfeiture Policy Manual.

Murray offered no explanation for why the FBI believed it had
legal grounds to take away the assets of hundreds of unknown box
holders based on their presumed ties to unknown crimes.

To confiscate an asset under U.S. forfeiture laws, the
government must first have evidence that it was derived from
criminal conduct or used to facilitate it.

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In a court filing in the class-action case, Brown and other
prosecutors claimed the FBI had no obligation to tell Kim that
it was “prepared to seek forfeiture” of property inside the
boxes.

Agents “owe a duty of candor to courts,” they acknowledged, “but
that is about known facts that have already occurred.”

They said the FBI did not need to tell Kim “how later actions,
such as criminal investigations against boxholders or forfeiture
of box contents, would play out.”

Kim was explicit in limiting the scope of the raid. “This
warrant does not authorize a criminal search or seizure of the
contents of the safety deposit boxes,” his warrant stated.

The judge gave the FBI permission to take inventory of the box
contents to protect against theft accusations. He ordered agents
to identify the owners and notify them that they could claim
their property.

But by then, Zellhart and her colleague had already told agents
in their memo to take notes on anything that suggests any of the
cash “may be criminal proceeds,” such as whether it was bundled
in rubber bands or smelled like marijuana.

The FBI also had dogs sniff all the cash for any odor of
marijuana or other drugs, a step that was outside the bounds of
the “written inventory policies” that the government vowed to
follow.

Lyndon Versoza, a postal inspector who often has dogs check mail
for drug investigations, testified that Zellhart or a DEA agent
— he could not remember which — asked him to round up K-9 teams.
He got dogs from the Glendale, El Monte, Chino and Los Angeles
police departments to smell the money.

At his deposition, Versoza was asked whether a drug dog can help
identify the owner of a pile of cash.

“No,” he responded.

What about protecting agents against accusations of theft?
Frommer asked.

“No,” Versoza said.

Could a dog help justify forfeiture of the cash?

“It could,” Versoza replied.

Prosecutors have made extensive use of the dog alerts on cash —
notoriously unreliable evidence in a state where marijuana is
legal — to convince judges to approve confiscation of box
holders’ money.

In the raid’s aftermath, the criminal case against U.S. Private
Vaults sputtered to an end with nobody sent to prison.

The company went out of business. It was sentenced to pay a $1.1-
million fine for laundering drug money, but prosecutors conceded
it lacked the means to pay it.

Under a plea deal, the U.S. attorney’s office agreed not to
prosecute the company’s owners, despite a Justice Department
policy under Atty. Gen. Merrick Garland to hold individuals
accountable for corporate wrongdoing — and despite Zellhart
telling Kim it was “owned and managed by criminals.”

The FBI and U.S. attorney’s office rebuffed repeated Times
requests for a full accounting of what was seized. They divulged
neither how much the government has kept, nor how much it has
returned.

Records from dozens of lawsuits stemming from the raid make
clear, though, that it produced a windfall of tens of millions
of dollars for the Justice Department. Local police departments
that assisted in the raid have sought shares of the money,
according to Murray.

Some of the government’s gains came from customers who abandoned
their boxes. “There’s a good number of people who just said, ‘I
don’t want it,’ ” Zellhart testified. “I think there was 20 or
30 of those.”

When the FBI vacated U.S. Private Vaults, it posted a notice in
the store window inviting customers to claim their property. The
FBI went on to investigate anyone who stepped forward, checking
their bank records, state tax returns, DMV files and criminal
histories, agents testified.

Lawyers for box holders denounced the process as a ploy to
gather evidence for forfeitures and criminal investigations.

Zellhart testified that the FBI was just making sure it was
returning things to rightful owners.

In all, the FBI ultimately returned at least some of the
contents of about 430 of the 700 boxes, according to the
government.

Many box holders have agreed to give up a portion of their cash
and property after deciding it was not worth spending tens of
thousands of dollars in legal fees — or more — to recover the
rest.
Some of those, and many others, have faced baseless FBI
accusations of criminal wrongdoing. In May 2021, the FBI claimed
the contents of 369 boxes — including the $86 million in cash —
were linked to crime and filed papers for confiscation through
forfeiture.

It went on to return everything in about 180 of those boxes
after failing to produce evidence to support the allegations,
court documents show. Those box holders retrieved more than $27
million. Attorneys for other customers say they recovered close
to $25 million more through private negotiations with the U.S.
attorney’s office.

“This entire episode is a stain on the U.S. attorney’s office
and on everyone who played a part in it,” said Benjamin Gluck, a
lawyer for box holders.

Prosecutors have pressed ahead, filing more than 40 court
complaints to confiscate millions of dollars from box holders
who challenged the seizures.

In some of those cases, prosecutors cited no evidence that the
money was tied to any specific crime, alleging simply that a dog
smelled drug residue on the cash, or that it was bagged or
wrapped in a way that aroused suspicion of drug trafficking.

In a few other cases, prosecutors and the FBI accused box
holders by name of committing multiple felonies, offered no
evidence to back up the allegations, and then gave back
everything.

One of those customers was a glassware maker who kept more than
$340,000 in cash and gold in his box.

In a court declaration, he said he rented the box in 2020
because it was a “disturbing and scary” time of social upheaval,
and he distrusted banks.

“Protests and riots were the normal news, banks had been
boarding up their windows, and emergency alerts were prompting
people to stay indoors after curfew,” he wrote.

Prosecutors falsely accused the man of fraud, racketeering,
conspiracy, drug trafficking and money laundering. FBI agent
Madison MacDonald — who co-authored the raid plan — filed a
sworn statement saying the allegations were true.

The complaint included no evidence the glassware maker had
committed any of those crimes, but alleged he had “an extensive
history of narcotic trafficking arrests and convictions.”

The man’s lawyer, Yael Tobi, castigated the prosecutors for
exaggerating expunged misdemeanors, saying they intentionally
omitted that he’d been arrested 16 years ago and was never
convicted of a felony.

She called it “an egregious abuse of power.”

Spokespersons for both the FBI and U.S. attorney’s office
declined to comment on the case.

Prosecutors demanded that the glassmaker provide a sworn
statement on when, why and from whom he received every dollar of
the $340,000; the names of everyone who’d given him gifts since
2017; five years of tax returns for him and his wife, a doctor;
and all of their bank and investment account numbers.

“Before proceeding too far down the road on this case, do you
have a settlement offer to resolve this matter?” Assistant U.S.
Atty. Victor Rodgers asked Tobi in an email six days later. “The
government is prepared to be reasonable in connection with a
resolution, and I think that an early settlement of this case
would probably be beneficial to both parties.”

Tobi refused to cut a deal. She asked U.S. District Judge Mark
C. Scarsi to “put a stop to the government’s abuse and
overreach” by dismissing the complaint.

On March 9, nearly a year after the FBI seized the man’s cash
and gold, Scarsi ordered the government to give it back.

<https://www.latimes.com/california/story/2022-09-23/fbi-beverly-
hills-safe-deposit-box-raid-forfeiture-judge>