Between a Box and a Hard Case : Safe Deposit Theft Claims on Rise

Did someone sneak into the vault of Bank of America’s Century City branch, manage to get into the safe deposit boxes of at least three customers, steal hundreds of thousands of dollars in jewelry, cash and gold coins, and, in some cases, substitute fakes--all without the bank’s knowledge?

That is the substance of allegations contained in three separate lawsuits filed in Los Angeles County by former customers of the branch at 1901 Avenue of the Stars, which closed last year.

The bank denies the thefts occurred. But if they did, they would not be unprecedented: Clusters of safe deposit thefts have been reported in recent years.

Just this month, Chicago police reported that at least six customers opened safe deposit boxes at a bank in the Loop to find more than $500,000 in diamonds, jewelry and gold coins missing.

Although rare, such thefts highlight the vulnerability of safe deposit boxes, which consumers have heretofore believed virtually impregnable. According to Bank Security Report, an industry newsletter, a new breed of thieves may be targeting safe deposit boxes.

“Many safe deposit robberies are apparently being perpetrated not by intruders, but by bank customers: renters of safe-deposit boxes who gain access to others’ boxes,” the newsletter reported. And box holders may not learn of a theft for years unless they carefully check the contents periodically.

In Century City, the alleged thefts were uncovered only after the bank, a former Security Pacific National Bank branch, sent notices to the customers to clear out the boxes in preparation for a move to a new branch in the spring of 1995, the customers say.

According to court documents:

* A prominent physician and his business manager say thieves took 270 gold Canadian Maple Leafs and South African Krugerrands worth $107,000. Thirty of the coins were replaced with counterfeits, according to court documents.

* A San Fernando Valley woman who had been placing cash in a safe deposit box toward her retirement since 1993 opened it in March 1995 to find that $175,000 was missing.

* A Bel-Air woman says 16 pieces of jewelry worth about $250,000 were removed from her safe deposit box between September 1992 and September 1993.

The victims say they reported the alleged thefts to police and the FBI, as well as to the bank. Neither the police nor FBI said they have records of any formal investigations into the complaints.

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As for the bank, the alleged victims say bank executives have stonewalled them at every turn, refusing to turn over internal investigative reports and, in one case, refusing even to answer legal questionnaires, according to court records.

For its part, the bank said: “We have three lawsuits pending relating to claims of items allegedly missing from safe deposit boxes at the Century City branch. We’ve investigated all three claims and have concluded that they are without merit.

“We therefore intend to proceed with our defense of the lawsuits, and we believe that we will prevail,” said spokesman Peter Magnani.

The people who say they suffered losses aren’t taking the bank’s explanation at face value.

A. Richard Grossman, a physician after whom two Southern California burn centers are named, is half-owner of the gold coins.

“The coins had been inviolate for years,” he said. “When I first heard about it, I felt sad and thought, ‘It’s not right.’ But then I thought about it, and I got pissed.”

Thieves opened plastic vials containing some of Grossman’s gold coins, replaced the middle coins in a stack with counterfeits, then put genuine coins at each end so that a casual inspection would not show them missing, Grossman’s suit alleges.

Grossman and his business manager, Eugene Kaufman, who owns the other half of the coins, flatly denied any attempt to defraud the bank through a false claim.

Meanwhile, Carole Cramer, 66, of Bel-Air says she first noticed missing jewelry from her box in 1992, according to court documents.

At the time, she assumed she had simply forgotten to replace the jewelry in her box, and thought it had been stolen from her home, she said in an interview. She even called police and hired a private investigator, who turned up no evidence of a home burglary, she said.

Several months later, she discovered other missing items and complained to the bank’s customer service manager, Bruce Baker. “I said . . . I know specifically that there’s a piece I know is missing. He said . . . [the bank would] do an internal investigation, but nothing came of it.”

Cramer sued the bank in September 1995 and is now in court seeking to compel Bank of America to answer legal questionnaires about the alleged thefts.

In its response to Cramer’s suit, the bank argued that the jewelry was not stolen. “Assuming . . . the subject jewelry was placed in the subject box, it is more likely than not that Cramer removed the subject jewelry from the subject box herself and failed to return it to the subject box,” the bank said in its trial brief.

In the third case, Mara Gudis, a San Fernando Valley woman in her 60s, says she discovered that $175,000 in cash was missing from her box when she answered a bank notice to clean it out in March 1995, her suit alleges.

“She was extremely distressed at what happened,” said her lawyer, Ronald A. Rale. “Imagine having your nest egg taken from you.” Again, the bank said there is no evidence of a theft.

Safe deposit box thefts have been in the news in recent years. Earlier this month, at least six customers of Firstar Bank in downtown Chicago discovered missing diamonds, gold coins and other jewelry valued at more than $500,000, police said.

In that case, there was no sign of forcible entry into the boxes, leading police to believe that bank insiders may have been involved. FBI and Chicago police are investigating the reported thefts.

“It has to be one of three things: either the [perpetrator] was a customer who was very good at picking [locks] and did it all himself, or he had help [from an employee] . . . or there was bank management who broke rules at the bank, allowing him more leeway than he should have had,” said Chicago police Sgt. Michael Siciliano.

In 1994, a New York City jeweler reportedly lost more than $115,000 in cash and jewels from a safe deposit box at a Manhattan branch of Republic National Bank of New York.

Five or six other customers subsequently reported losses from safe deposit boxes the same day, said Phillip Burgess, a bank spokesman. Burgess said the alleged thefts are still under investigation.

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Still, law enforcement officials say safe deposit box thefts are rare. Security in most bank vaults is tight: Two keys are required to open safe deposit boxes, and visitors must sign in. The vaults are sometimes monitored by video cameras or guards.

As a result, it’s often difficult for victims to prove a theft occurred, or even to prove that items supposedly stolen were ever put in the box in the first place. And police are often skeptical of theft reports.

“It’s been my experience that [safe deposit theft reports] are [often] made by people who are confused or elderly, who . . . have forgotten they’ve removed the property” from the box, said LAPD Det. Aubrey Ginsberg of the West Los Angeles division.

In some cases, individuals who suffer thefts are loathe to go to authorities, fearing a phone call from the IRS wanting to know what was being hidden.

But observers say the risk to consumers, though small, is nevertheless real. Unlike deposits, items in safe deposit boxes are not insured by the federal government, and private homeowners insurance usually limits losses from safe deposit box thefts.

And only a couple of banks offer supplementary insurance on box contents. In the spring of 1995, New York-based Chemical Bank was one of the first to begin offering $10,000 worth of coverage to its safe deposit box customers for $25 a year.

The insurance is available only in New York state. “We thought it filled a void in the marketplace,” said Charlotte Gilbert-Biro, a spokeswoman for Chase Manhattan Bank, which took over Chemical Bank in July. “It’s easy, quick and inexpensive compared with riders to regular insurance policies.”

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One problem for consumers is that thefts can go undetected for months. Bank Security Report details one new method thieves are using to gain access to safe deposit boxes.

The thieves rent their own safe deposit box. Later, acting in pairs, they gain access to the vault to open the box. One distracts a guard long enough to make a wax impression of a master key and return it, which can take just a few seconds. With the duplicate, they can later enter the vault and access other boxes if left alone and unguarded.

“In some cases, there is no visible evidence that locks have been tampered with, which means that months or even years can go by before the crime is detected and also means that the existence of a crime comes down to the word of the bank against the word of the customer,” the newsletter reports.

Perhaps because safe deposit thefts are rare, police and FBI officials in Los Angeles seem unclear about who has responsibility for investigating theft reports.

When asked who has jurisdiction over such thefts, LAPD detectives say the local office of the FBI does, while FBI investigators point to the police.

Robert Mack, supervisory special agent in the bank robbery squad of the FBI’s Los Angeles office, later acknowledged that federal jurisdiction applies to safe deposit thefts that occur during the course of a burglary or robbery.

Any other safe deposit box theft would fall within the purview of the police, he added.

But detectives in the West L.A. division of the LAPD, whose jurisdiction includes Century City, denied they would investigate such thefts. “We don’t handle it,” said Det. Patrick Anguiano, coordinator of the division’s burglary unit. “It’s not our jurisdiction.’

In most cases, police said they would refer alleged victims back to the bank.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

How Safe Is Safe?

Depositors at most banks can count on federal insurance to bail them out in the event the bank loses your funds. But when it comes to safe deposit boxes, you’re on your own, experts say. Some questions and answers from Mark Hersh, an assistant vice president in charge of fee-based services at Wells Fargo Bank:

Why don’t banks insure the contents of safe deposit boxes?

In order to provide insurance, we would need to inventory the contents of boxes. And we don’t do that. We tell customers that we’re in the business of providing a secure place to put your goods. If you are concerned with the security ... we recommend that you go to your private insurer and insure those contents.

What are some of the common risks associated with safe deposit box contents? We cannot guard against every possibility of loss. We live in California, and things happen: floods, fires, etc. We offer no warranty that everything is going to be perfect all the time.

How secure are the boxes? We have very strict internal policies as to access. You must sign up with a signature card.... When you come back, we verify your I.D. against your entrance ticket.... You can’t get into a box without someone escorting you into the vault.... Each box has two locks: A customer has a key and we have a key.... And the vault is closed and locked at night.

What federal regulations govern safe deposit boxes?

Federal regulations regarding vaults and security devices ... are specifically designed for protecting cash, not necessarily safe deposit boxes.

--PATRIC LEE