While not a new case, this litigation is interesting for the fact that it discusses the practice of safety deposit box swaps to transfer assets anonymously, and the holding that there is no requirement that safety deposit boxes contain lawfully obtained property. IOW, under the common law, a safety deposit box can contain stolen items and proceeds of crime.
The litigation involves an action by the family of a woman who stashed $7 million in diamonds in a safety deposit box at the TD Bank in New York City that was looted during a bank heist, to recover the value of the loss property.
The facts are that on August 2015, a company named BAT LLC sued TD Bank, alleging breach of contract and negligence over $7 million worth of diamonds that disappeared.
The diamonds were owned by Abraham Sieger, who assigned them to BAT, which entered into a safety deposit box contract with TD Bank. After the contract was entered into, the diamonds were placed in the safety deposit box for safekeeping.
In August 2012, TD Bank suffered a bank heist. Robbers drilled a hole in the ceiling of the bank vault at TD Bank, crawled through the hole, and opened many of the safety deposit boxes, including the box rented by BAT. The robbers were never identified or located, and the TD Bank did not recover any of the assets stolen during the heist.
The diamonds were initially bought in 2008 by Helen Sieger. Ms. Sieger was indicted and arrested in New York on theft charges for unrelated business activities. She jumped bail and moved to Miami and lived under a fake name.Â While in Miami, she allegedly instructed a Mr. Greisman to open a safety deposit box at the TD Bank and to take possession of the contents of an existing safety deposit box at the same branch. He was to take possession of the unknown contents of the safety deposit box from an unidentified woman.
Allegedly, Mr. Greisman asked his daughter, and her husband, to open the safety deposit box at TD Bank, which they did. Ms. Sieger then asked him to show up at the bank on June 15, 2010 and do a box-swap with the unidentified woman. The box-swap involved asking TD Bank for both parties to access the vault at the same time; asking TD Bank to use its key to open both boxes at the same time; and once TD Bank staff left, the parties swapped the contents of one box for the contents of the other, meaning they placed the wrong box behind the wrong safety deposit box number. No one opened the safety deposit boxes themselves.
Ms. Sieger was later arrested in Miami for unrelated matters, returned to New York, where she died at Rikers Island.
In June 2011, Mr. Greisman and his children, met their lawyer at the TD Bank with a gem appraiser and opened the safety deposit box. The gem appraiser appraised the diamonds in the safety deposit box at $7 million.
A year later, the bank heist occurred and the diamonds disappeared. The plaintiffs sued for the value of the diamonds. TD Bank argued, inter alia, that they were not liable because the contract was fraudulently entered into and the box was used to hold diamonds that were unlawfully obtained and held to defeat claims by authorities. The Court held that there is no implied covenant that a safety deposit box contain lawfully obtained items and, not surprising, no obligation of a customer to disclose the contents of a safety deposit box to a bank. The TD Bank has no knowledge of whether or not the diamonds were unlawfully obtained. Only Mrs. Sieger, now deceased, knew how she came to own $7 million in diamonds, and whether they were a gift, a trade, purchased or borrowed.
The litigation is still ongoing.