If all this is true, the only thing I can think of is to have the seed encrypted with symmetric key pgp. They have stolen his pgp private key and have had access to his vault.
Discussion
Since you mention “has access to his vault”: has he said anything about what kind of location the cold wallet was stored at?
No, but the only possible option is to have the seed encrypted on your own computer or server. There is no other way.
If you follow the precaution of saving the seed in physical format, be it paper, metal or whatever, and you do not save it in digital format, it is impossible for it to be stolen unless they execute an attack against your person or find the physical key.
Yeah, that’s why I think this is so weird. I would never in my life think that Luke would store his seed on any computer with online connectivity at all. So the only alternative has to be a physical break-in, either at his house or some other location he trusted.