Appeals Court Says FBI Violated The Fourth Amendment During Its Raid Of US Private Vaults

Legal Issues

from the mind-the-Constitution,-g-men dept

US Private Vaults has an interesting business model. It offered something akin to end-to-end-encryption for physical goods. Unlike banks and their safety deposit boxes, US Private Vaults did not collect or retain information about its customers. Nor did it retain master keys that would allow it to access stored goods. This lack of master keys meant it was much more difficult for law enforcement to obtain access as well.

Obviously, this sort of service would appeal to criminals seeking somewhere to house ill-gotten goods. But it also appealed to people who didn’t trust banks or the government or any combination of the two.

This arrangement thwarted any Third Party Doctrine application to physical property. This doctrine says anything information shared willingly with a third party (i.e., personal information provided to banks) can be obtained without a warrant. Searching safety deposit boxes could be assumed to be a physical analogue. Anything stored on a bank’s property can be accessed with the permission of the bank, without needing to bother with the person who decided to store their personal property on the bank’s property.

The FBI seemed pretty sure it could get away with a full-scale raid of a US Private Vaults location in Beverly Hills, California. It was so sure it could get away with this that it immediately violated the restrictions it placed on itself in order to obtain a judge’s signature on its search warrant.

The FBI promised to do something akin to an inventory search when raiding US Private Vaults. The rough equation is this: a car being towed by law enforcement needs to be inventoried to protect both cops and the towing company from accusations of theft. That’s what the FBI told a magistrate judge it planned to do: inventory the contents of this location and release property to any customers investigators couldn’t tie to illegal activity.

The FBI’s warrant application said this specifically:

This warrant does not authorize a criminal search or seizure of the safety deposit boxes. In seizing the nests of safety deposit boxes, agents shall follow their written inventory policies to protect their agencies and the contents of the boxes. Also in accordance with their written policies, agents shall inspect the contents of the boxes in an effort to identify their owners in order to notify them so that they can claim their property.

That’s what the FBI told a judge. But that’s definitely not what the FBI did. It took everything and then immediately started moving forward with civil forfeitures, presuming everything it found to be linked to criminal activity. It only started following its stated restrictions when judges began forcing it to return seized property to its owners.

This wasn’t the only lie. The FBI claimed — in sworn statements — it was only interested in pursuing criminal charges against US Private Vaults for providing a home for presumably ill-gotten gains. But, in addition to its civil forfeiture efforts, it began pursuing criminal charges against some of the company’s customers.

Misleading courts has not worked out well for the FBI. In addition to telling the court it would not engage in a mass search and seizure, the warrant it obtained bypassed the sort of specificity required to remain constitutionally-compliant. Searching everything is never an acceptable option, especially when doing so Involves digging through the personal property of (at the time of the warrant’s acquisition) dozens of people the FBI did not — at that point — consider to be criminal suspects.

This is the upshot of the latest ruling against the FBI, handed down by the Ninth Circuit Appeals Court and reported here by the Los Angeles Times, which is apparently incapable of actually linking to the decision.

The FBI violated people’s constitutional rights when it opened and “inventoried” the contents of hundreds of safe-deposit boxes during a raid on a Beverly Hills vault in 2021, a federal appellate court ruled Tuesday.

The ruling by a three-judge panel of the U.S. 9th Circuit Court of Appeals reverses a lower court decision in favor of the FBI. The panel found that the agency’s cataloging of the contents of the privately rented boxes, without individual criminal warrants for each, violated the box holders’ 4th Amendment rights against unreasonable searches and seizures.

That is what the decision [PDF] says. The FBI can’t hope to paper over its extremely general warrant with the application of a bunch of constitutional exceptions, says the Appeals Court.

The inventory search doctrine is rejected by the Ninth Circuit, along with the court finding the FBI exceeded the limits of the warrant when it chose to ignore its self-imposed search restrictions.

In Part I of its analysis, the panel held that the inventory search doctrine, an exception to the warrant requirement that allows authorities to search items within their lawful custody, did not apply. One of the most important features of the doctrine is the existence of standardized instructions, which limit the discretion of officers and apply consistently across cases. Here, in support of its warrant application, the government, in addition to submitting standardized instructions, also submitted Supplemental Instructions that were designed specifically for the USPV raid. The panel held that the Supplemental Instructions took this case out of the realm of a standardized “inventory” procedure.

In Part II of its analysis, the panel held that the government exceeded the scope of the warrant, which did not authorize a criminal search or seizure of the contents of the safe deposit boxes.

As the opinion notes, this was an investigation into US Private Vaults. The mass search of the contents of every box at the Beverly Hills site took it outside the bounds of that investigation, turning customers into suspects and allowing the government to seize anything and everything it came across when it physically dismantled the storage boxes at that location.

Contrary to its own promises to the court when securing the warrant, the FBI made no effort to identify the owners of USPV boxes and instead chose to seize everything it found and route it either to its forfeiture division or hold indefinitely as “evidence” whiles its investigation proceeded.

The Government executed the search and seizure warrants on-site at USPV from March 22 to March 26, 2021. During that time, the FBI inventoried the contents of over 700 safe deposit boxes. In performing the “inventory,” agents found letters taped to the inside sleeve of the deposit box, identifying the owner of the box and providing the owner’s contact information. The district court found, however, that “occasionally” “[e]ven after finding these letters, agents would break open the interior of the box and inventory the box’s contents.”

Per the Supplemental Instructions, agents used the inventory form to document the condition of cash; ran all cash over $5,000 by drug-sniffing dogs; tagged items with forfeiture numbers; and photographed objects found in the boxes. All cash was “taken to Loomis,” which generated receipts, and the money was “wired to the US Marshals Service.” All non-cash valuables were “transported toEvidence Control” for storage.

The intent was always to seize everything and convert as much of it as possible to government property. Running cash past drug dogs proves nothing, but makes it easy to claim the money is linked to criminal enterprises. Nearly all cash in circulation contains trace amounts of illegal substances. This is just agents asking a dog to give them permission to take people’s property because the law itself didn’t allow them to just pocket whatever cash they came across.

The FBI also made assumptions not supported by the facts:

Despite the affidavit’s assertion that “it would be irrational for non-criminal customers to choose USPV,” it turned out that a number of non-criminals were customers at the facility.

Not that it mattered to the FBI. It sought to forfeit everything it had come across that was part of the larger investigation into US Private Vaults, including legally obtained property owned by non-criminal USPV customers.

The problem with the FBI’s “inventory search” procedure is that the agency kept changing the parameters to allow it to dig through every box located at USPV and route its contents to either its evidence store room or forfeiture proceedings. As the Ninth Circuit points out, this is a completely impermissible abuse of government power. This isn’t “inevitable discovery.” This is the government continuously moving the goalposts to ensure it could walk away with everything it found.

If an officer follows a truly “standardized” policy, it is inevitable that he or she would find evidence of a crime, regardless of whether he or she intends it.

[…]

However, if an agency is given the discretion to create customized inventory policies, based on the features of each car it impounds and each person detained, the ensuing search stops looking like an “inventory” meant to simply protect property, and looks more like a criminal investigation of that particular car or person, i.e., more like a “ruse.”

That’s what happened here. The FBI took it standardized inventory policy and then added a ton of “supplemental” instructions that were crafted solely for the purpose of allowing the FBI to portray an invasive, general rummaging as a “standardized” inventory search.

Even when given the chance to explain itself to multiple courts, the DOJ managed to do nothing more than alarm the Ninth Circuit judges, who saw this as an attempt by the FBI to pretend the Fourth Amendment simply did not exist.

We note that it is particularly troubling that the government has failed to provide a limiting principle to how far a hypothetical “inventory search” conducted pursuant to customized instructions can go. At oral argument, for example, the government failed to explain why applying the inventory exception to this case would not open the door to the kinds of “writs of assistance” the British authorities used prior to the Founding to conduct limitless searches of an individual’s personal belongings. It was those very abuses of power, after all, that led to adoption of the Fourth Amendment in the first place.

And while the government maintains this was an “inventory” search, rather than a “criminal” search, all evidence on the record says otherwise.

Moreover, the government has confirmed that the records of box contents can be used to investigate crimes, and that they have been stored on a criminal database called Sentinel and are to be kept there indefinitely. If there remained any doubt regarding whether the government conducted a “criminal search or seizure,” that doubt is put to rest by the fact the government has already used some of the information from inside the boxes to obtain additional warrants to further its investigation and begin new ones.

The lower court got this all wrong, says the Ninth Circuit. This search clearly violated the Constitution multiple times. The lower ruling is reversed and remanded, with instructions the lower court grant the plaintiffs’ motion for relief, which will force the government (for starters) to “sequester or destroy” the records of its illegal so-called “inventory search.”

The government was so sure it was in the right it decided it didn’t need to worry about anyone’s rights. The Ninth Circuit has made it clear the government was completely in the wrong here. Hopefully, the next several months will see more people recover their property from an agency that apparently felt its desire to engage in a criminal investigation outweighed the restraints of long-held rights.

Filed Under: 4th amendment, 9th circuit, beverly hills, california, civil asset forfeiture, fbi, safety deposit boxes, warrant
Companies: us private vaults