FBI seizes tens of millions in cash, other assets from business owners claiming it’s evidence of crime-but is it?

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BEVERLY HILLS, CA- We suppose if you can’t balance the federal budget the right way, just illegally seize people’s assets and that will work. That seems to be the case with the FBI, where we are seeing a situation in which a man’s life savings were seized from a safe deposit box business in Beverly Hills, CA.

Joseph Ruiz, an unemployed chef went to court to retrieve some $57,000 seized by the FBI, whereby the judge ordered the agency to tell Ruiz why they were trying to confiscate the money.

According to court papers, an FBI agent claimed the money was from drug trafficking…or so they apparently assumed.

According to the FBI, Ruiz’s income was insufficient to justify him having that much money, and claimed that his side business, in which he sold bongs made from liquor bottles meant he was apparently an unlicensed dealer of marijuana. The agent also claimed a dog had smelled unspecified drugs on Ruiz’s cash.

The latter claim is interesting because according to a CNN report from 2009, research showed that 90 percent of paper money circulating in the United States had traces of cocaine on it.

The report noted that while some money could be contaminated during drug deals or if an abuser snorted cocaine by rolling a dollar bill, some can get contaminated inside currency counting machines at banks.

As it turned out, the FBI was wrong. Ruiz was able to produce records showing the amount of money he had in the bank was legitimate, whereby the FBI having been caught lying (seems to happen a lot) dropped the false narrative and returned the money.

As it turns out, Ruiz is not alone. The FBI seized money and valuables from some 800 people who rented safe deposit boxes at a business called U.S. Private Vaults, a store located in a strip mall in Beverly Hills.

According to documents, the FBI suspected criminals had been using that location to hide cash and jewelry. The FBI is now attempting to confiscate some $86 million in cash, as well as a boatload of jewelry, rare coins, and precious metals seized from around half the boxes.

Despite those allegations, neither the FBI nor the U.S. attorney’s office in Los Angeles have been able to provide evidence of criminal liability by the majority of box holders where the government is attempting to seize their assets.

The Los Angeles Times  noted that about 300 of the box holders are contesting the attempted confiscation, with Ruiz and about 65 others filing court claims deeming the forfeiture operation unconstitutional.

“It was a complete violation of my privacy,” Ruiz said. “They tried to discredit my character.”

Thus far, prosecutors have only been able to identify past criminal convictions or pending charges against 11 safety deposit box users in order to justify forfeitures. However in several other cases, the government used pretty thin justification for claiming the money and/or property seized was tied to a crime, similar in nature to their claims against Ruiz.

Agents tried to claim that the use of rubber bands and other typical ways to store money were somehow indications of drug trafficking or money laundering, the Times said.

The claim that dogs had alerted to narcotics on much of the cash as being key to their claim of narcotics involvement, however all of the money was deposited into a bank, which makes it impossible to determine specifically which bills were those seized, which drugs the money may have come in contact with, and how long ago this happened.

“You actually don’t know anything until that currency is run through a lab,” said Mary Cablk, a Nevada scientist and expert witness on drug dogs.

She works for both prosecutors as well as defense attorneys. She noted that a dog alert to drug residue on cash “might be valid” or it “might be complete bunk.”

Last February, U.S. Private Vaults was indicted on charges of conspiring with unnamed customers to sell drugs, launder money and structure cash transactions in order to avoid government detection. No persons have yet been charged in the case.

The Times noted that the case has been in limbo since then, and that no attorney or other representative of U.S. Private Vaults had appeared in court to enter a plea. The outlet reached out to the U.S. attorneys office in Los Angeles declined to comment on why the case has stalled.

An attorney who represented the company on other matters, Michael Singer, wouldn’t comment on the charges against the business, however said he was unaware of any criminal activity by its owners. He complained that the government had “overstepped its bounds” in the search, seizure and attempted confiscation of money and property from its customers.

Prosecutors responded to 15 lawsuits and other claims filed by box holders in which they demand return of their belongings by claiming that the company “intentionally marketed itself” to criminals by advising boxes could be rented anonymously.

The government also alleged that a U.S. postal inspector claimed that an owner of the business named Michael Poliak had admitted to making money from healthcare fraud and illegal marijuana sales. The Times could not reach him for comment.

Meanwhile, a number of lawyers representing the box holders claim this is nothing but a giant “money grab” for the Justice Department to acquire tense of millions of dollars through asset forfeiture. The government denies those claims and says some of the money it recovers goes to crime victims.

In the case of civil forfeitures, the government doesn’t even need to secure a criminal conviction. All they have to do is prove it is more likely than not that the money or other property it seeks to seize was linked to criminal activity.

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How thin is that standard? Last week, a forfeiture complaint was filed against two brothers from Woodland Hills, CA., in which they government wants to keep $960,100 in cash seized from one of their safe deposit boxes and $519,000 from the other. Prosecutors claim “theft, fraud and money laundering” justify the seizures.

However, the only evidence presented by the government was that one of the brothers—who was not named—had allegedly “been in contact with” suspected armed robbers of cell phone stores.

The attorney for the two brothers, Benjamin Gluck referred to the complaint as “an appalling and unconstitutional abuse of power.”

In another case, the DOJ is attempting to confiscate some $900,000 from a box holder whose identity they haven’t been able to confirm. He is referred to as being “either a top-level drug trafficker or money launderer.” Well, which is it?

Their justification? It was the way the person bundled the cash, with thick, thin and broken rubber bands, tape-wrapped paper, bank bands and plastic CVS and paper pharmacy bags.

The box holder, using a pseudonym is challenging the seizure of the money.

Gluck is also representing this box holder, who uses the name Charles Coe, and while he refused to discuss that specific case, he said U.S. Privacy Vault’s customers include “many immigrant business owners who escaped repressive regimes where banks are unsafe and have collected amounts of cash as their life savings over many, many years.”

“The notion that the old rubber bands mean they must be drug dealers is ludicrous,” he said.

Prosecutors’ only other “evidence” against Coe is a drug dog’s alert on the cash.

Due to the legalization of recreational pot across the country by a number of states, the value of such alerts has greatly diminished. The Times noted that many departments across the country are retiring drug dogs that alert for marijuana while training new ones to find drugs such as cocaine, meth and heroin.

In the case of Coe, the dog that sniffed his cash is cross trained in marijuana detection, according to his handler’s court statement. She said the dog, named Smithy has “led to the seizure of more marijuana than the other three drugs combined.”

Clearly, with the advent of legal recreational pot sales across the nation, more bills that cycle through those businesses are exposed to the odor of marijuana, which then ends up in the hands of people who neither smoke the drug nor sell it.

For example, in the case of U.S. Private Vaults, two of the boxes contained large sums of cash from licensed pot dealers which are unable to open bank accounts due to federal laws which ban the sale and possession of the drug. Since the safe deposit boxes are not airtight, the scent of marijuana spread from box to box.

Last Friday, prosecutors filed complaints in an attempt to confiscate money from more box holders, seeking $154,600 from one, $330,000 from the other. The basis for those seizures? Both owners had been unsuccessful in applying for state licenses to sell marijuana, which led to the assumption that “the funds are drug-related,” according to Assistant U.S. Attorneys Victor Rogers and Maxwell Coll.

Still, the government insists that the use of dog alerts is “strong evidence” of drug crimes, however they were “not the only factor contributing to probable cause,” according to Thom Mrozek, spokesman for the U.S. attorney’s office.

He noted that marijuana is still illegal under federal law, and noted it is still illegal to sell marijuana under California law “without having an appropriate license.”

Preliminary rulings went in favor of the plaintiffs, with U.S. District Judge Gary Klausner blocking the government’s cases against Ruiz and three others, saying the lock of any “specific factual and legal basis” had violated their rights to due process.

He also found “the facts and the law clearly favor Ruiz” in his claims that the FBI violated protections against unreasonable searches and seizures outlined in the 4th Amendment.

There is also the possibility that Klausner or another judge may rule the entire raid on U.S. Private Vaults was unconstitutional, which would jeopardize prosecutors’ ability to use evidence seized from the safe-deposit boxes in either forfeiture or criminal cases.

In approving the search and seizure of all “business equipment” at the company, there were strict limits put on the government by U.S. Magistrate Steven Kim, which barred federal agents from searching the contents of each box for evidence of criminal wrongdoing.

While the warrant application submitted by Assistant U.S. Attorney Andrew Brown contained a statement from FBI agent Lynne Zellhart that inspections of boxes would “extend no further than necessary to determine ownership,” that doesn’t seem to be the case.

Box holders suggest that those promises were false, and agents searched without probable cause with the intention to go through the safe deposit boxes in search of evidence to initiate a criminal investigation.

A University of Arizona law professor, Jane Bambauer said that based on the restrictions placed on the search by Kim, agents violated the 4th Amendment by using drug dogs to sniff cash inside the boxes.

“In terms of just real-world, commonsense assessments of how this should work, what happened was wrong,” Bambauer said. “I think it is also pretty clearly wrong on the 4th Amendment doctrine terms.”

Not surprisingly, the U.S. attorney’s office disagrees, with Mrozek saying that “nothing requires the government to ignore evidence of a crime that it sees” while taking inventory of seized goods.

“The search and seizure of items from the U.S. Private Vaults facility were authorized by a federal judge, and the entire operation has been conducted in accordance with the Constitution and applicable laws.”

Robert E. Johnson is an attorney representing Ruiz and six other box holders in a class-action suit which seeks the destruction of all records generated by the search. He says this case identifies a sign that the government is trying to “criminalize financial privacy.”

“The government’s theory is that having cash makes you a presumptive criminal, and I think every American should be worried about that,” he said.

In the case of Ruiz, the FBI concluded that because he was making bongs as a sideline, which meant he “may be involved in the cannabis industry in other ways,” the FBI wrote.

Upon checking state records for Ruiz’s wage and tax history, it was discovered he had only earned some $18,510 in income since 2019, “less than a third of the cash in the box,” he said.

The FBI said they reviewed court records to verify Ruiz’s claim he had received money from legal settlements, however once he turned over records confirming the payments—one for a car accident injury and another for chronic housing code violations at his apartment building—the FBI, grudgingly under court order returned his money.

“They pulled a bank heist in broad daylight,” Ruiz said. “They didn’t even apologize.”

The American people better get used to having the government snoop on their financial transactions. In the Democrats $3.5 trillion budget resolution is a proposal that will give the Internal Revenue Service access to Americans’ private banking records, reported in August by The Western Journal.

Under the proposal, financial institutions will be required to report all transactions on accounts with a balance in excess of $600.

Sen. Mike Crapo (R-ID) railed against the proposal:

“This time-draining burden disregards banking privacy in order to squeeze more resources out of responsible Americans and entrepreneurs. It subjects law-abiding Americans to more intense targeting from the IRS and additional data collection, a concern that was recently amplified by a leak of private taxpayer information out of the IRS.”

The budget resolution would also provide the IRS with $80 billion in additional funding over the next decade to “fight tax avoidance.” In other words, to unleash more IRS agents to harass conservative Americans. Politico reported much of that funding would be used to hire about 87,000 new workers for the IRS. Bigger government…just what we need.

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