LOS ANGELES—At her deposition, an FBI agent described her reaction when she learned that the agency had misplaced dozens of valuable gold coins: “Uh oh.” Now, to resolve lawsuits brought by the Institute for Justice (IJ), the government has agreed to fully compensate property owners who had cash and coins go missing after the FBI raided their safe deposit boxes.
Don Mellein was one of hundreds of safe deposit box holders at US Private Vaults who had his box opened, searched, and subjected to civil forfeiture during an FBI raid in March 2021. A federal appellate court in January held that the entire raid violated the Fourth Amendment. This separate case arose because the FBI failed to return 63 gold coins worth over $166,000. The FBI refused to compensate Don for his lost coins, so he was forced to sue.
The FBI responded to Don’s lawsuit by claiming immunity, but a federal judge rejected that position earlier this year. The FBI continued to fight the case for months, but it finally gave up and agreed to compensate Don after it was ordered to produce records of instances where other box holders’ property was misplaced or went missing.
“The FBI had no reason to go through my box and they were careless in losing my coins,” said Don. “It should not have taken a lawsuit for the government to do the right thing.”
While the FBI’s decision to compensate Don means that it can avoid sharing documents and records concerning other lost or misplaced property, Don’s lawsuit has already uncovered troubling details about the FBI’s handling of valuable property during the raid.
The agent in charge of the raid testified, at her deposition, that the raid “didn’t go down exactly as we planned it.” The process of searching through hundreds of boxes was far more time consuming than the FBI had planned, and “we weren’t moving fast enough.” So the FBI abandoned procedures that it had planned to safeguard property—for instance, jettisoning plans to videotape all the searches and to keep a log of people going in and out of the vault.
“We really did try,” the agent testified about the plan to keep an access log. “Maybe the first shift it worked and then after that it probably did not.”
In Don’s case, although there was a total of 110 gold coins in his box, the agents who searched it did not list any coins on the property receipt or any other paperwork. As far as the FBI’s records reflected, the coins did not exist.
Valuable property was supposed to be removed and stored in a secure valuables vault, while the boxes themselves were allowed to sit in a parking lot and eventually were taken to a less secure evidence room. When the FBI went to return Don’s box, they found 47 of his coins still inside the unlocked and unsecured box, a scenario that one of the FBI’s evidence technicians described as a kind of “malpractice.” As the agent in charge later testified, “There should not have been coins in that box.” She added, “This is a problem.”
Even after the FBI found 47 of Don’s 110 coins in the unsecured box, the FBI concealed the existence of those coins from Don for almost six months. The FBI finally fessed up and returned the 47 coins, but it still had no answer for what happened to Don’s other 63 coins, prompting this lawsuit.
“The FBI is supposed to protect innocent people, but they misplaced Don’s property and then fought tooth and nail to keep him from being compensated,” said IJ Attorney Joseph Gay. “They stonewalled, claimed immunity, and tried to block discovery. This shows why it’s so vitally important for courts to hold government accountable.”
Don’s is not the only box that had valuable property misplaced. After finding coins in Don’s unsecured and unlocked box, the FBI searched through all the boxes and found misplaced property in three others. In addition, multiple other box holders have alleged that property has gone missing. The Institute for Justice filed another lawsuit on behalf of boxholders Jeni Pearsons and Michael Storc after $2,000 in cash went missing from their box. The FBI agreed to pay Jeni and Michael the full value of the misplaced property to settle that case as well.
Discovery also revealed the shocking lack of internal accountability at the FBI. The FBI agent in charge of the raid testified that nobody from the FBI had asked her about any missing property. The agents who initially searched Don’s box were not even told by their superiors that any coins had gone missing until they were called for deposition. Although the FBI conceded that it wrongly left hundreds of thousands of dollars in valuable property unsecured, apparently the FBI did not conduct any internal investigation into what happened to Don and other hapless box holders whose property went missing.
Even after the 9th U.S. Circuit Court of Appeals found that the raid at US Private Vaults violated the Fourth Amendment, the lead FBI agent and lead prosecutor who oversaw the raid and investigation remain at their posts without any public reprimand.
“We’re pleased that the FBI has made Don, Jeni, and Michael whole for losing their property,” said IJ Senior Attorney Robert Frommer. “But the FBI’s misconduct at US Private Vaults is a shameful chapter in the Bureau’s history, one for which it needs to be called to account. To be clear, the FBI lied to a judge about its plans, violated the express terms of a warrant, and lost people’s retirement savings while trying to forfeit over $100 million in cash, gold, and jewels from hundreds of innocent folks. Congress should call on Director Wray and other senior officials to testify and explain how they will ensure that the FBI never tries something like this again.”
Jeni, Michael, and Don are also represented by local counsel Nilay Vora and Jeff Atteberry of the Vora Law Firm, P.C.