Attorney alleges use of Unclaimed Property Fund is illegal

OKLAHOMA CITY — An Oklahoma City attorney claims the state is essentially operating a Ponzi scheme by routinely raiding its Unclaimed Property Fund and using money that belongs to its citizens to fund state government operations.

Attorney Jerry Fent alleges in a lawsuit filed Monday in Oklahoma County District Court that transfers from the Unclaimed Property Fund maintained by the state treasurer's office are illegal.

The Legislature routinely takes money from the fund to help balance the state budget, including about $50 million to help close a budget hole this year.

Treasurer's office spokesman Tim Allen said he had not seen the lawsuit and declined comment on the specifics of it.

Allen confirmed the fund has a current balance of about $90 million with outstanding liabilities of about $550 million.

AP • Published: June 22, 2015

Getting money back from state can be difficult

Article posted in the Lancaster, PA newspaper. 

...stacks of paperwork or the two years of frustration and expense...put into getting back what was already rightfully theirs.

When the state receives hundreds of millions of dollars in "unclaimed" property each year, the money is promptly put into the general fund, Historically, only about half the account holders will successfully claim their money, allowing the government to have a cash flow of unclaimed money to use.

Read more

PA tripled its collection of unclaimed money in 2015

Pa couldn't balance its budget, so it just changed the law to shorten dormancy periods and allow more of its citizens money to be abandoned to the State.  Even worse, by law, the state  It is not obligated to pay out dividends or interest accrued during the time it holds the assets.

It took in $625 million this fiscal year, which is nearly 3 times the previous years rake.  

The State declares this action a consumer protection law.  Then they go ahead and use $625 million interest free for perpetuity.  

You can read more here:

http://lancasteronline.com/news/local/state-balances-budget-on-unclaimed-property/article_6474842a-033e-11e5-bcb0-0f5ba23d2daf.html

State of TX is holding massive sums of unclaimed property

One in four Texans has unclaimed property from forgotten bank accounts, uncashed checks, security deposits and utility refunds. There is currently about $3.4 billion in property that has not been claimed, and approximately $586 million in shared property that has been partially claimed and paid to some of the owners. It’s never too late to make a claim.

CA Unclaimed property policy has conflict, needs improvement, state report says

California’s potential liability for unclaimed property currently exceeds $7 billion. However, state officials estimate the actual liability is around $850 million because some of the assets are untraceable or because the owners may have died or moved to another state, reducing the likelihood of a claim being filed, the report stated.

Read the full article at the link below - 

http://www.latimes.com/local/political/la-me-ln-unclaimed-property-program-has-conflict-needs-improvement-state-report-says-20150210-story.html

Unclaimed property tops $677 million

LAS VEGAS BUSINESS PRESS

Clark County residents looking for a little extra holiday cash might try checking the state treasurer’s website for unclaimed property.

A SmartAsset.com study shows there is just more than $677 million being held for Clark County residents. That’s the sixth-highest total for any county in the United States.

Unclaimed property includes various categories of assets, from orphaned 401(k) accounts to payroll checks that never found their way to the rightful owner.

Legally, the state must try to reunite residents with their property. But when the trail is cold, states rely on residents to help out by checking for their property.

Los Angeles leads the nation with $3.887 billion in unclaimed property, SmartAsset.com said. Three other counties — New York County; Cook County (Chicago); and Harris County (Houston) — topped $1 billion.

http://www.reviewjournal.com/business/business-press/unclaimed-property-tops-677-million

Change in policy on unclaimed property

"Both state insurance regulators and corporate treasurers “are moving away” from enforcement actions against insurers, i.e., imposing huge fines and dictates on use of the Social Security Death Master File (DMF), on unclaimed property issues, a lawyer and former insurance commissioner says...

That period, dating from 2009, saw enforcement actions by state insurance regulators based on allegations that use of the DMF “asymmetrically,” that is, its use by insurers only to determine if someone has died in order to end payments under guaranty riders in variable annuity contracts constitutes a deceptive practices and mandates that insurers use the DMF frequently to determine whether a policyholder has died."

Read the entire article here:

http://www.lifehealthpro.com/2014/10/21/change-in-policy-on-unclaimed-property

Key Florida court decision on unclaimed property

A ruling by a three-judge panel in Florida’s First District Court of Appeal held that Florida’s unclaimed property law does not make life insurance proceeds due and payable at the time of the insured’s death.

Without getting too deep into the ruling, why is it ok for an insurance company to sell a life insurance policy and then have no obligation to check if the policy holder is deceased and the policy payable to the beneficiary. 

hile the State just wants to have the policy escheated, so the money can be used to fund the general budget; at least with the money at the State, the beneficiaries stand a chance to claim the assets.  Especially with firms like Fletcher actively locating these people and advocating on their behalf.

You can read more by clicking the link below - 

Florida Court Decision

As unclaimed funds returned, less goes to N.Y. budget.

The state Comptroller's Office returned $422 million to claimants in the fiscal year that ended in March, a state record, data show. But as more money went to people who had unclaimed funds, less went to the state's budget, a drop of $187 million in the 2013-14 fiscal year.

The state had estimated it would receive $650 million from the fund last year, but got $528 million; it estimates $665 million from the fund in the current fiscal year.

You can read more about it by checking out this article by Joseph Specter in the Poughkeepsie Journal.

Toto, I've a feeling we're not in Kansas any more...

This one is a little tricky to wrap your head around; NAUPA (the National Association of Unclaimed Property Administrators), which is really just an organization of the collective departments of each State Government that takes custody of abandoned/unclaimed property, has prepared formal comments meant influence the Uniform Law Commission, who is responsible for drafting the new Unclaimed Property Act.

If you break down the comments, there are really some questionable policies being set forth by the State Governments with the overt goal of expanding their ability to take custody of an ever growing body of citizens' money, while holding that information as secret as possible.  They hide their true ambitions with some clever wording.

Some major question marks:

#6 - Maintain the states' ability to utilize contract examiners and compensate them on a pay for performance basis. 

#26 -  Include the “Kansas Provision” covering unredeemed U.S. Savings Bonds.  They want to take ownership of private citizens savings bond.  Yes, they claim you can always assert a claim but then they recommend #29.

#29 - Expand confidentiality  of owner records and holder information in the possession of the State.

#30 - Reduce abandonment periods  and include an acceleration of the presumption of abandonment where the owner is deceased  or where a dormancy charge  has been imposed.

You can read all the comments here:

NAUPA Comments

$213,000 unclaimed recovery for one man

This gentleman left his old friends documents in a box for over a decade unaware that he was in fact the beneficiary of a fortune left behind.

Only by seeking professional assistance was he informed of his inheritance.

You can read more about his story by clicking the link below:

$213,000

Another example of aggressive unclaimed property legislation

By revising and expanding the scope of its unclaimed property statute, the State of Pennsylvania is solidifying its ability to collect and use an ever expanding amount of its citizens assets.

Reduced dormancy periods to 3 years is unfortunately the new normal, but most concerning here is the 3 year dormancy placed on retirement accounts.  By definition a retirement account is supposed to remain untouched for many years so that it may grow; now the Pennsylvania Treasury will lawfully be able to take custody of retirement accounts after 3 years, sell the investments and spend that money.  In the rare instance that the account is claimed, they will only be responsible for the amount of the sale.  Read more by clicking the link below:

Expansive Change

Revising the Uniform Unclaimed Property Law

The Uniform Law Commission is drafting a revised version of the uniform unclaimed property law.  

It is shocking, but not surprising that State governments organized under the National Association of Unclaimed Property Administrators have drafted a lengthy and detailed memo to the law commission in support of paying private third party companies a percentage of any money they can collect on behalf of the State and bring it into the unclaimed property coffers.  This aggressive policy so obviously incentivizes the collection of as much of the citizens private funds as possible under the most liberal interpretation of the statute.  

The irony is that the State governments will explicitly state that they do not advise citizens to work with private third party companies to assist them in recovering unclaimed money from the State, while at the same time employing the very same tactic to take the money in the first place.

You can read their argument by clicking the link below:

In support of private auditors.

Delaware collects more than $600 million a year in unclaimed property.

http://www.mondaq.com/unitedstates/x/323918/tax+authorities/Delaware+Unclaimed+Property+Voluntary+Disclosure+Program+Extended+to+September+30