In a Beverly Hills strip mall, a store allowed criminals to conceal weapons, drugs, and cash in a vault.
Federal agents confiscated evidence from US. Private Vaults, a Beverly Hills company that faces three conspiracy charges.
Federal agents descended on a Beverly Hills shopping mall last month and took five days to seize the contents of hundreds of safe deposit boxes inside a store named US. Private Vaults.
The government disclosed on Friday why it was so interested in the seemingly innocuous company sandwiched between a nail salon and a spa: It was laundering money for drug traffickers and allowing them to store weapons, fentanyl, and stacks of $100 bills in secretly rented security boxes, prosecutors claimed.
In an indictment against U.S. Private Vaults, Inc., the United States Attorney’s Office for the Southern District of California charged the corporation with intentionally selling itself to draw criminals, claiming it brazenly marketed itself as a place where consumers could store valuables in the confidence that tax officials would be hard-pressed to discover their identities or what was contained in their locked boxes. Customers did not need to show identification to gain access; all that was needed was an eye and hand scan to open the door.
According to prosecutors, the advertisement said, “We don’t even want to know your name.”
Additionally, prosecutors allege that the company’s owner and staff were involved in drug trafficking at the business and assisted buyers in converting cash to gold in quantities that would escape suspicion.
Just before charges were filed, the case sparked a court dispute over the government’s theft of the contents of each safe deposit box at the shop. Earlier this week, one consumer sued the government, alleging that it overreached by seizing the contents of every security box without explaining why it accused each person of committing crimes.
On March 22, FBI and Drug Enforcement Administration agents raided the company armed with a warrant. According to court records, it took several days for them to go through all the boxes and transfer the valuables to an FBI warehouse. Although the warrant remains sealed, prosecutors contended Friday that the magistrate judge who approved it authorized the broad seizures.
“The government confiscated the nests of safety deposit boxes due to overwhelming evidence that USPV conspired with its criminal clients to sell drugs, launder money, and arrange transactions to circumvent currency reporting requirements, among other offenses,” they wrote in papers filed in federal court in Los Angeles.
Prosecutors alleged that the search uncovered an undisclosed number of weapons, as well as fentanyl, OxyContin, and “huge stacks of $100 bills” discovered by drug dogs. One of the boxes was said to contain $1 million in cash.
A federal grand jury charged US. Private Vaults with three counts of conspiracy — to launder money, sell drugs, and structure cash transactions to evade detection — in a March 9 indictment that was unsealed Friday. None of the individuals believed to be behind the scheme is identified in court documents. It was unclear immediately if any people would face additional criminal charges.
At US. Private Vaults, no one answered the phone Friday, and the voicemail system was not accepting calls. The company’s representatives could not be contacted.
Federal agents collected information regarding transactions at United States Private Vaults through informants and at least one undercover officer.
US Private Vaults shared a storefront with Gold Company, a jewelry and precious metals dealer implicated in the scam. Prosecutors allege that Gold Company aided customers in converting cash to gold and evading federal reporting requirements for money transactions totaling $10,000.
Federal agents used several informants and at least one undercover police officer who pretended to be customers to collect information about alleged store purchases, according to the indictment.
The government unsealed the indictment less than an hour before a court-mandated deadline for responding to legal filings by a consumer of US Private Vaults alleging that the government’s search of what hundreds of people kept in their boxes was unlawful.
The unidentified customer, known in court records as John Doe, argued the search warrant may not have allowed the seizure of the jewelry, money, and bullion he stored in his three boxes at U.S. Private Vaults, saying there was no probable cause to believe the individual committed a crime.
“Just like each occupant of an apartment owns the room and therefore has a fair expectation of privacy within it, each of the hundreds of tenants of safety deposit boxes… has a different reasonable expectation of privacy within his or her separately managed box or boxes,” the person’s counsel, Benjamin N. Gluck, wrote in the lawsuit.
Gluck is requesting a court order prohibiting the FBI from forcing individuals whose property has been confiscated and inventoried by the government to identify themselves and submit to an investigation to establish their legal ownership of the valuables.
Gluck claimed that the government was keeping his client’s unlawfully confiscated property “hostage” before he identified himself, citing a summary of the process for recovering valuables by assistant US Attorney Andrew Brown.
“While Mr. Brown deserves praise for candor, his announced scheme is manifestly inappropriate and unconstitutional,” Gluck wrote in court records.
Brown acknowledged in court records that certain customers of United States Private Vaults were “honest citizens” to whom the government wished to return their property.
“However, the vast majority of box holders are offenders who used the privacy afforded by USPV to conceal their ill-gotten gains,” he wrote. “In order to differentiate between honest and criminal clients, the government must investigate the particular details of each box and assert, which is exactly what the anonymous plaintiff seeks to escape by refusing to reveal not only his name, but also the specific boxes he says are his.”
Nina Marino, a Beverly Hills attorney who represents many clients who stored items at US. Private Vaults, said that even though certain consumers used the boxes for illegal activity, “that does not justify the government’s conduct in this broad action of not only taking but also viewing innocent box owners’ goods.”
“Every single person who charged a monthly fee did so with the intention of protecting their secrecy, and it’s outrageous that the government has such little respect for the Fourth Amendment and an individual’s expectation of privacy,” she said.
Beth Colgan, a UCLA law professor, described the dispute as “fascinating,” noting that the central issue is whether the sealed search warrant established probable cause to suspect proof of criminal activity could be discovered in virtually all of the safe deposit boxes.
“I would be extremely shocked if a judge issued a warrant authorizing the FBI to search every single box without evidence of systemic corruption,” she said. “Perhaps they have proofs, and that is what we do not know.”
On Friday, remnants of the raid were still visible. All that remained of the eye and hand scanners that customers used to gain access to the facility was a hole in the drywall with exposed wires. A sign directly above the hole read, “Location green dot between your eyes.” A surveillance camera and door locks were concealed with black duct tape.
A note taped to the front door instructed customers to visit the FBI’s website to “initiate a claim for your US Private Vaults box.”
A sign posted on the front door of US. Private Vaults guides customers on how to retrieve their belongings.