Beverly Hills store admits to using safe deposit boxes to launder drug money
The company that ran a Beverly Hills store that rented out safe deposit boxes has agreed to plead guilty to conspiring with customers to launder drug money.
Under the plea deal with U.S. Private Vaults Inc., the U.S. attorney’s office in Los Angeles agreed not to file criminal charges against the company’s two owners. That decision ran counter to a recent Department of Justice policy requiring prosecutors to be more aggressive about holding individuals accountable for corporate wrongdoing.
The company admitted that it recruited drug traffickers as customers and used the illicit proceeds to run the business. It also acknowledged that people at the company sold cocaine, arranged drug deals at the store and instructed customers how to structure cash transactions to dodge currency reporting requirements.
Thom Mrozek, a spokesman for the U.S. attorney’s office, declined to comment on the deal, which was signed in November and filed in court on Wednesday.
The government will be hard-pressed to collect any fines that might be levied at sentencing; U.S. Private Vaults has virtually no assets, according to Michael Singer, the Nevada attorney who negotiated the deal for the company.
The U.S. Private Vaults store on Olympic Boulevard was put out of business in March 2021, when federal agents executing a search warrant hauled away all of its safe deposit boxes, along with at least $86 million in cash and millions of dollars more in jewelry and valuables that customers stashed inside them.
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The FBI’s attempt to confiscate tens of millions of dollars from Beverly Hills safe deposit boxes draws resistance and charges of government misconduct.
Assistant U.S. Atty. Andrew Brown, who is leading the investigation, has branded most of the store’s roughly 800 customers as “criminals” in court papers. But the government has charged no customer with any crime.
The judge who approved the search warrant explicitly barred the government from conducting any “criminal search or seizure of the contents of the safety deposit boxes,” ordering agents instead to identify the owners and return their belongings.
Yet the FBI and U.S. attorney’s office have sought to confiscate the contents of 369 of the boxes that were seized, alleging that the money, precious metals, watches and other goods that they contained were the fruit of unspecified criminal activity.
After a slew of lawsuits accusing prosecutors of trampling on the rights of box holders, the government has returned tens of millions of dollars in cash and valuables to customers who said they were falsely accused of wrongdoing.
Some said they were suspicious of the U.S. banking system and preferred to keep their savings in cash and safely lock it away.
Other customers were state-licensed marijuana dealers with limited access to banks. To justify search warrants and forfeiture cases against box holders, prosecutors have relied heavily on dog alerts to the scent of marijuana on much of the seized cash, a method widely discredited by experts in narcotics evidence who say most of the region’s currency has traces of pot odor.
FBI wants to keep fortune in cash, gold, jewels from Beverly Hills raid. Is it abuse of power?
Customers of U.S. Private Vaults are suing the FBI over its attempt to confiscate gold and silver, jewelry and $86 million in cash from safe deposit boxes.
The owners of U.S. Private Vaults are Mark Paul and Michael Poliak. Each owned half of the company, and they were its only two directors, according to Singer.
Paul’s attorney, Sara L. Caplan, declined to comment. Mark Werksman, who represents Poliak, said his client was “a legitimate and successful businessman who invested in USPV because he thought it was a lawful business that was properly run and catered to a legitimate clientele.”
Poliak and his daughter, Gabrielle Poliak, contested the government’s attempted forfeiture last year of $1.5 million in cash found in a box of theirs at the store. They agreed in November to let the government confiscate the money, but neither admitted nor denied prosecutors’ allegation that the money was proceeds from drug trafficking or fraud.
In court papers filed last year to support a search warrant application, the government alleged that Michael Poliak was engaged in healthcare fraud and COVID-19 relief loan fraud, but he was never charged with either crime.
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Lawyers for box holders have denounced the U.S. Private Vaults operation as a “money grab.” They suggested the most revealing part of the plea deal was the agreement by U.S. Private Vaults to drop its June 2021 objection to prosecutors’ pursuit of forfeiture on 369 safe deposit boxes, a waiver that could make it easier for the government to confiscate the contents.
Benjamin Gluck, an attorney who has recovered more than $25 million for box holders, said the deal exposed “the constitutional and moral bankruptcy of the U.S. attorney’s office by showing that they’re willing to give immunity to an admitted criminal so long as he doesn’t interfere with their illegal scheme to seize money from innocent box holders.”
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