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Man sues state over unclaimed-money fund; says he should be paid interest on his money
By adamg on Fri, 01/12/2024 - 4:46pm
A western-Massachusetts man today sued state Treasurer Deborah Goldberg in federal court because, he says, the state is violating his constitutional rights by not paying him any interest on the less than $100 he says he discovered he had sitting in the state Unclaimed Property fund.
It costs $402 to file a federal lawsuit, and lawyers in Boston and Chicago don't come cheap, so Thomas Narrigan of Longmeadow is hoping to become lead plaintiff in a class action over the $3-billion fund, according to his complaint, filed today in US District Court in Boston - which promptly transferred the case to US District Court in Springfield.
Narrigan says the way people get their money back from the fund without any interest violates provisions of the Fifth Amendment and a similar part of the state constitution banning the government "taking" of "private property for public purposes without "just compensation to the property owner."
He says all that money held by the state by people who somehow forgot they were owed money by banks or other institutions doesn't just sit in a giant vault somewhere, the state uses it - and interest it makes by investing it - on various state programs, thus depriving the forgetful owners of the "time value" of the money, that is, the money they themselves could have earned if they'd invested it themselves.
At a minimum, just compensation requires that the owners of unclaimed property are entitled to receive back from the state the “time-value” of their property for as long as the property is in the control of the Commonwealth and used by the Commonwealth for governmental or public purposes.
Narrigan is seeking an order making the state stop depriving people of "just compensation," payment of said compensation to himself and other people who have gotten money from the fund and attorneys' fees.
In addition to a Boston attorney, Narrigan is represented by Terry Rose Saunders and Arthur Susman, two Chicago lawyers who won a similar lawsuit over Illinois's unclaimed-property fund in 2021.
Neighborhoods:
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| Attachment | Size |
|---|---|
 Complete complaint | 231.32 KB |
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Comments
Geesh
Strikes me as an extremely frivolous case.
a) The stories I know of related to money in those accounts is that the State did people a favor by identifying the funds, advertising them, and providing a fairly safe way for owners/heirs to claim them. Leaving them abandoned in banks just leaves them scattered and abandoned. Maybe there are cases where the state "took" the funds from someone who didn't want/intend it, but I imagine most of the accounts in the Unclaimed Property fund were truly lost/abandoned.
b) $100 over the past 10 or so years would have yielded.... just about $0 in interest at the .001% rates we've mostly had since 2008. Not to mention that the institution and State had some carrying and processing costs, and then the state spends money on advertising to find the owners. Humbug on this guy and extra humbug for wasting the court's time.
Mostly agree
On (a), it's surprisingly easy for money to end up in Unclaimed Property. Banks will automatically close accounts for inactivity after 3 years (including an account set up for a child), and checks that fail to reach their destination and get deposited will often end up there as well. It can take a while to find out you have missing money, and then it's a Whole Process to get it back.
But (b) is a very strong point.
But thats not the result of
But thats not the result of state action. If the banks of their own volition choose to close a bank account and the state takes receivership of that money for holding purpose that doesn't give rise to his claim that the state took his money. His claim would be against the bank
I believe they're required to do this
by some sort of federal regulation.
state laws
The escheatment rules are governed by each state. So how and when banks are required to turn over these funds to the state are governed by state requirements. I do believe the bank is required to try and contact you before turning over the funds.
Banks giving away money
Banks are extremely eager to get rid of money. Two separate banks threatened to give my money to the state because I hadn't made a deposit or withdrawal in one year to the day. So what? I was SAVING it. I thought that was the point, but I guess not. I am exploring other options because this is unacceptable Perhaps they should send a yearly recertification form or something along those lines instead of just automatically setting a process in motion to dump the money.
just following the rules of that state
The notice you got that they would turn over your funds should have had a way for you to reply and start the clock running again. Brokerage accounts and bank accounts will have similar rules. I guess you could move to another state that has a longer period. Most states have a 3 year dormancy law (MA included).
Incidentally
if you're looking for a way to avoid this, you can set up a recurring bill pay that just moves a small amount of money to or from the account. -.-
I'm surprised they don't pay
I'm surprised they don't pay interest on missing money less than $100. https://malegislature.gov/Laws/GeneralLaws/PartII/TitleII/Chapter200A/Se... says they do pay interest.
That said, class action lawsuits are a horrible waste of money and time, and only serve to enrich lawyers without helping the plaintiff or encouraging responsible behavior or policies.
Looks like there may be a threshold
Thanks for finding this. So this lawsuit is an attempt to move that threshold and require interest payment on smaller amounts (under $100). Since they do pay interest on higher amounts.
I see the lawyers scrambling
I see the lawyers scrambling to cover the loopholes in the age of "Go to our website" and the USPS taking mail and stuffing it in the back room. And most of all Federal Express sliding down the slippery slope of doctoring up your tracking number travel history to cover their ass. Yeah. That's how it it is working in a law firm these days. Got news for ya and exposing the truth of how the way it works.
What does this guy think the state is doing with the money?
What does this guy think the state is doing with this money? Lending it at double digit interest?
"over 3 billion dollars in
"over 3 billion dollars in unclaimed money" At 3% That's 90 million dollars in interest per year. does that all go towards the "find mass money" ads and nothing else? Is it all just sitting in one bank account earning interest or being invested into some mutual funds? how much is the management fee? Somebody is making millions on the interest.
Or not?
Citation very much needed.
Trying to get state policy changed.
This lawsuit is not about this one guy's interest. This is an attempt to get the state policy changed, so that they will pay interest on unclaimed funds in the future. It was done successfully in Illinois.
It is very easy for people to lose track of funds in accounts and have them get sent to the state (the dormancy time on accounts is pretty short). This frequently happens with estates, where heirs don't know about some funds. It is also common with dividends, insurance payouts, retirement accounts, and checks that you may not have received because you are no longer at a given address.
The state is in effect borrowing your money while you don't know about it. They are holding billions in unclaimed funds. It makes sense for them to pay interest on it.
"borrowing your money"
Okay then ...
I assume that you are aware of two things, and will account for these "business" expenses:
1. interest rates have been extremely low in recent times
2. administering the program costs money
The state has made a lot of money on this fund
2-3 percent interest on $3 billlion adds up. I hope you are not suggesting that it costs $60-90 million a year to administer this program. Because if you are that is shit all stupid.
2-3% interest
When, aside from the last year or two, has any bank account gotten 2-3% interest? Even certificates of deposit were only running 0.5% pre-pandemic.
Yes, that was the standard in the 1980s, but this isn't the 1980s.
The admin costs for that program likely ran in the red for a couple of decades of fractional interest rates on bank accounts.
You only pay out when the money is claimed
Most of this money never gets claimed and sits there for year and years. I am seeing stories about unclaimed money in state coffers dating back to the 50's. The state only pays out the interest (and the principle for that matter) when the money is claimed. The trail can get cold and muddy very quickly - people dying without heirs, a generation or two passes with no claim being made, people simply not bothering because they know the money is an insignificant amount, etc. So the cost analysis for this is still on the side of the state (regardless of the admin fees).
Citation?
Citation?
Note that "has made a lot of money" is very different from "could have made a lot of money under some scenario that may or may not work".
When the Constitution was
When the Constitution was written the Gentry intentionally left legal loopholes open to explore and challenge. Especially when the almighty dollar is wanted.
Representative government
When the Constitution was written it was expected that the citizens would elect representatives that would constantly be changing laws (including amendments) to reflect the desires of the people, whatever that happens to be at the time.
I dunno...
On the one hand, there may be interest due. On the other hand, the state did the guy (all of us) the favor of giving us a nudge to check to see if there is unclaimed money for us.
What's that saying, "No good deed goes unpunished."
"Gee, thanks for telling me you have money for me that I had no idea about, wasn't missing or even thinking about, but now that you bring it to my attention, I want the interest on it."
How about this hypothetical:
"Hi mister. I found your wallet and am bringing it to you."
Man looks through the wallet and sees all his credit cards, license, etc. inside, but no cash.
"Where's the cash? I had $37 dollars in there. I'm going to sue you for stealing it!"
In turn ...
The state should deliver him an invoice for a management fee comparable to what we pay for our investment accounts/401k's for tracking his assets over a period of time.
Ideally, this would result in him owing the state money but I'm just petty that way.