Unclaimed property spat worth $20M

A spat over unclaimed property between Delaware and other states could mandate a $20 million check for the Pennsylvania Treasury.

In total, 30 states will argue in front of the Supreme Court on Monday against Delaware keeping $400 million in unclaimed property from uncashed MoneyGram checks that were purchased outside Delaware.

“We’re pleased that so many other states have adopted our position and followed our lead,” Pennsylvania Treasurer Stacy Garrity said in a press release. “I’m optimistic that the Supreme Court will make the right decision to return these funds to Pennsylvania and the other states so that we can work to return the money to the real owners of this unclaimed property – hardworking taxpayers across Pennsylvania and the nation.”

The disagreement stems from whether “official checks” are money orders. Under federal law, uncashed money orders should revert to the state where they were purchased. Delaware, despite the requests of Pennsylvania’s treasurer, has refused to take an official position on whether the checks are money orders.

A 1972 Supreme Court ruling, Pennsylvania v. New York, says unclaimed property without a clear owner should revert to the state wherever the holding company was incorporated. Delaware’s status as a magnet for business incorporation has meant that unclaimed property is a significant revenue source — a case background from the Pennsylvania Treasury noted Delaware gets $500 million in unclaimed property annually, about 10% of its state budget.

In comparison, Pennsylvania receives $350 million in unclaimed property on average, with $200 million going into the state budget.

Pennsylvania’s interest in the unclaimed money orders dates to 2014, when the treasury asked a third-party auditor for a compliance audit of MoneyGram. After some wrangling over the nature of the funds and more information, Pennsylvania filed a complaint in February 2016. Another 29 states filed similar complaints against Delaware.

“Delaware has an aggressive, well-documented history of demanding unclaimed funds and then using those funds to cover a substantial portion of its state budget,” Garrity said. “These MoneyGram checks were claimed and received by Delaware and are rightfully due to other states, where the original owners will have a chance to reclaim their property.”  

The Pennsylvania Treasury holds more than $4 billion in unclaimed property and regularly holds auctions to make room for new items. The property comes from abandoned safe deposit boxes, forgotten bank accounts, college dorms, nursing homes, and police evidence rooms.

Residents can search for unclaimed property that may belong to them on the Treasury website.

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