FILE – The FBI seal is pictured in Omaha, Neb., Aug. 10, 2022. (AP Photo/Charlie Neibergall, File)
Gold coins can sink with a merchant ship or disappear with pirates. But Los Angeles retiree Don Mellein lost his treasure a different way. FBI agents cracked open his safe-deposit box in March 2021 and took everything without evidence he had done anything wrong.
Mellein was not alone. The FBI searched boxes belonging to hundreds of innocent bystanders during a weeklong raid of US Private Vaults in Beverly Hills. Agents then seized more than $85 million in cash and tens of millions of dollars’ worth of precious metals, jewelry, and other valuables. Mellein’s belongings included cash, a gold bar, and 110 gold coins purchased largely with the proceeds from the sale of his Malibu home in 2002.
US Private Vaults later pleaded guilty to conspiracy to launder drug money, but this crime had nothing to do with Mellein, a retired public servant. So when he hired an attorney to help get his property back, the FBI relented.
This is when an unjust situation got worse. Agents returned the cash and gold bar but denied having anything else. The one-ounce American Eagle and Canadian Maple Leaf coins had vanished like the crown jewels of Ireland.
Mellein demanded to see video of agents searching his box, but no recording exists. The FBI turned off its cameras at some point during the raid and stopped making detailedlogs. In its rush to search every box, agents started using vague terms like “miscellaneous general items” to catalogue the haul.
Good luck tracing anything in such a broad category back to the proper owner.
The truth is the FBI had no intention of returning seized items. A law enforcement maneuver called “civil forfeiture” allows the government to take and keep property without an arrest or conviction. Mere speculation of a link to criminal activity is often enough.
About 93% of the time when the FBI and other U.S. Department of Justice agencies pursue civil forfeiture, they do not have to prove anything by any standard. Property owners fail to navigate the complex administrative process and lose their assets by default. Once the process ends, participating agencies keep 100% of the proceeds for themselves.
It works like robbery on the high seas.
Mellein fought back with litigation, which partially succeeded. After he filed his complaint, the FBI “found” 47 of his coins. The rest, valued at more than $120,000, remain missing. They were either lost or stolen. Yet the FBI investigated itself and found no culpability, leaving Mellein with no choice but to sue a second time. Our public interest law firm, the Institute for Justice, represents him in the latest suit, filed Sept. 22, 2023.
Civil forfeiture is loaded with constitutional problems, including lack of due process and perverse financial incentives, which turn crimefighters into fundraisers. But Mellein’s saga highlights something else: The gross lack of police accountability.
Federal agencies must track seized property and publish reports. But they use aggregated data in broad categories, making it nearly impossible for concerned citizens to identify meaningful trends or specific abuses. Many states require even less transparency. California tracks only five key details about seized property and provides almost no information about how agencies spend their proceeds.
Nationwide, many agencies work in near total darkness. They can self-fund through aggressive enforcement with little fear of public exposure. Agencies in 30 states face no regular independent audits to ensure integrity. California agencies face the potential of audits, but the law does not require it.
The system all but ensures sloppiness, mismanagement and even criminality.
A sheriff’s office employee in Albany County, New York, was arrested in February on suspicion of embezzling $68,000 from the civil forfeiture kitty to cover his gambling debts. A South Carolina police chief transferred $80,000 in civil forfeiture proceeds to his personal bank account in 2020. And $150,000 disappeared in Pennsylvania.
These cases involve civil forfeiture proceeds already in the books. Nobody knows how often officers slip cash and other assets into their pockets during searches when nobody is looking.
This may or may not have happened at US Private Vaults. Mellein’s demand remains the same either way: He wants his coins back or just compensation. Pirates would refuse. But the FBI should follow a higher code.
Joe Gay is an attorney and Daryl James is a writer at the Institute for Justice in Arlington, Virginia.
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