Time to find safe deposit box alternative
In the early 1980s, when Philip Poniz moved to N.J. from Colorado, he needed a well-protected place to stash his collection of rare watches. He had been gathering unusual pieces since he was a teenager in 1960s Poland. His hobby became his profession, and by the time of his relocation, Poniz was an internationally known expert in the history and restoration of high-end timepieces.
The vault at his neighborhood bank seemed an ideal place for his collection. In 1983, he signed a one-page lease agreement with First National State Bank of Edison in Highland Park, New Jersey, for a safe-deposit box.
Over the next few decades, the bank changed hands many times. First National became First Union, which was sold to Wachovia, which was then bought by Wells Fargo. But its vault remained the same. A foot-thick steel door sheltered cabinets filled with hundreds of stacked metal boxes, each protected by two keys. The bank kept one; the customer held the other. Both were required to open a box.
In 1998, Poniz rented several boxes and stored in them various items related to his work. Then, on April 7, 2014, he lifted the thin metal lid. Box 105 was empty.
“I thought my heart would fail,” Poniz said. He paused in his retelling of the memory. At age 67, he has a strong Polish accent and speaks English carefully. “I was devastated,” he said. “I had never known that one can have a feeling like that.”
There are an estimated 25 million safe deposit boxes in America, and they operate in a legal gray zone within the highly regulated banking industry. There are no federal laws governing the boxes; no rules require banks to compensate customers if their property is stolen or destroyed.
Every year, a few hundred customers report to the authorities that valuable items have disappeared from their safe deposit boxes. Sometimes the fault lies with the customer. People remove items and then forget having done so. But even when a bank is clearly at fault, customers rarely recover more than a small fraction of what they’ve lost — if they recover anything at all.
In the days after Poniz found his box empty, he began piecing together what had happened: Wells Fargo had apparently tried to evict another customer for not keeping up with payments, and bank employees had mistakenly removed his box instead. After drilling No. 105 open, the bank shipped its contents to a storage facility in North Carolina. After Poniz discovered the loss, Wells Fargo sent back everything it had in storage, but some items had vanished.
In a six-page report filed with the Highland Park Police, Poniz described the watches, coins, documents and other items that were gone. Using auction records and sales reports, he estimated that their combined value was more than $10 million.
Banks increasingly regard safe deposit boxes as more of a headache than they’re worth. They’re expensive to build, complicated to maintain and not very lucrative. The four largest U.S. banks — JPMorgan Chase, Bank of America, Wells Fargo and Citigroup — rarely install them in new branches
In Maryland, a large bank closed several branches and lost track of hundreds of safe deposit boxes, according to a lawsuit filed by a customer who said he lost gold and gems valued at $500,000. In California, a Wells Fargo customer said the bank accidentally rerented her box; the diamond necklace and other jewels she had in it were never found. No regulator formally tallies customer losses in safe deposit boxes.
The Office of the Comptroller of the Currency, the banking industry’s main federal overseer, said it had no grounds to get involved. “No provision of federal banking law expressly regulates safe deposit boxes,” said Bryan Hubbard, an agency spokesman.
And the scant protections offered by state laws are often simply ignored — as Poniz discovered when he began searching for the missing contents of his empty box.
John North, a lawyer representing Wells Fargo, said at a court hearing last year. “The underlying dispute is: Was everything returned or not?”
That isn’t really in dispute. When Wells Fargo employees opened Poniz’s box, they created an inventory that included 92 watches. When workers at the bank’s storage facility in North Carolina counted the items, they listed only 85. Also missing were dozens of rare coins, photographs and family documents.
New Jersey law requires a bank to bring in an independent notary when it opens and empties a safe-deposit box, and to place the box’s contents in a sealed package signed by the notary. The disappearance of the coins and watches suggests Wells Fargo didn’t follow that law.
Poniz hired lawyers. One of them, Kerry Gotlib, said he pressed the bank to find the missing items. It couldn’t. He asked for a financial settlement; the bank said no. Poniz sued in New Jersey’s Superior Court. Wells Fargo sought to move the case into arbitration. For nearly two years, the two sides battled over that request, until a judge ruled in November 2018 that the case should remain in court.
The watches that vanished were the most visually striking in his collection, Poniz said. The highlight was a rare 19th-century pocket watch, whose face concealed a pop-up bird, that twittered and sang. Such “singing bird” watches rarely come to market. One of the last, in 1999, was sold at auction for $772,500 to the Patek Philippe Museum in Geneva.
He considered the trove to be his retirement fund.
“My impression about safe deposit boxes was that it was like you were putting things in Fort Knox,” he said. “Nothing could happen to it.” He doesn’t think that anymore.