By CoinWeek ….
Civil forfeiture is a controversial tactic of government and law enforcement agencies. Your property can be taken without criminal charges levied against you, and it’s up to the Government to decide when (or if) you get it back.
But two people in the Los Angeles area–people who might be considered typical bullion customers and investors in precious metals–are fighting back against this policy in a court of law, with the help of a lawsuit filed by the non-profit Institute for Justice.
Don Mellein, a 79-year-old retiree, and Jeni Pearsons are accusing the FBI (Federal Bureau of Investigation) of losing or stealing their gold and silver coins after the business where they stored the precious metal was raided on March 22, 2021. Neither were accused of any crime.
U.S. Private Vaults, based in Beverly Hills, California, had been under investigation by the FBI for knowingly renting safe deposit boxes to certain customers who then used the boxes to store illegal drugs. The warrant authorizing the raid focused on the company itself and explicitly excluded the seizure of boxes belonging to private customers. The FBI assured the issuing judge that any property taken from uninvolved customers would be held merely for “safekeeping” until such time that the agency could properly return it to the rightful owners. Drugs were indeed found – along with cash, firearms, gold, silver, jewelry, and other valuables.
All told, around 1,400 customers of U.S Private Vaults had their property seized. These customers (including Mellein and Pearsons) all received the same form letter informing them about the civil forfeiture of their property.
After several months passed and their property had not been returned to them, Robert Frommer, a senior attorney with the Institute for Justice, filed a lawsuit against the Government of behalf of seven of these customers (Ms. Pearsons was among them). The court found in their favor, and even certified the case as a class action in October 2021, saying that the Government had violated the customers’ rights under the Fourth Amendment and the Due Process Clause. The FBI agreed to return the property.
But at least two customers, Mellein and Pearsons, didn’t get everything back.While Pearsons had been a party to the original lawsuit, Mellein had spent $40,000 on a private attorney to try to retrieve the cash and 110 gold coins he stored at U.S. Private Vaults. Ultimately, he received his cash back but none of the gold was returned. When Mellein complained, the FBI said that there was no record of the gold coins having been confiscated from his safe deposit box. Making matters worse, the FBI had originally stated that they would make a video record of all the contents of each deposit box they seized during the raid, but when pressed on this in court the agency said that no such video footage had been made because they were “in a hurry” to process the large amount of property seized.
So Mellein sued again; this time, he was given 47 of his 110 gold coins back. But in order to have any hope of seeing the remaining 63 again, the Government told him that he would have to dismiss his lawsuit against them and file a regular claim with the FBI. In March 2023, after Mellein filed a claim for the rest of his gold, the FBI not only said that it could not locate his coins but that they had also done nothing wrong in the entire process.
For her part, Pearsons and her husband are still missing about $20,000 in silver and $2,000 in cash.
The Institute for Justice filed their lawsuit on behalf of Pearsons and Mellein on Friday, September 22, 2023. Based out of Arlington, Virginia, the Institute is a libertarian 501(c)(3) non-profit law firm that works in the interest of the general public. It seeks to defend the Constitutional liberties of American citizens and has pursued many cases that challenge the constitutionality of civil forfeiture laws. The Institute has received donations from individuals and groups across the political spectrum, from Charles Koch to the Bill and Melinda Gates Foundation. It was founded in 1991 by William “Chip” Mellor, Chairman and General Counsel, and has won four cases brought before the Supreme Court.
As for U.S. Private Vaults, the company and its owners, Mark Paul and Michael Poliak, plead guilty on March 2, 2022 to a single charge of money laundering in a deal to get all other charges dropped. The company has been dissolved.
CoinWeek will follow the lawsuit as it progresses and provide updates when able.
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