State must stop embezzling unclaimed money

Transcription

1 State must stop embezzling unclaimed money Supporting Documentation By Ron Lizzi May 28, 2018 Should the state seize money belonging to girl scouts, without their knowledge, and give it to politicians to fund their campaigns? What about money from animal shelters, volunteer fire departments, the Red Cross, or other charities? How about all of those plus countless businesses and individuals maybe you? That s happening and it s disgraceful HOUSATONIC GIRL SCOUT 516 MERRITT ST BRIDGEPORT CT HOUSATONIC GIRL SCOUT COU 169 JACKMAN AVE FAIRFIELD CT HOUSATONIC GIRL SCOUT COU 87 WASHINGTON AVE BRIDGEPORT CT HOUSATONIC GIRL SCOUT COU 712 FAIRVIEW AVE BRIDGEPORT CT HOUSATONIC GIRL SCOUT COU NCIL 244 SHERIDAN ST TROOP 89 BRIDGEPORT CT HOUSATONIC GIRL SCOUT COU NCIL 123 WOODRIDGE AVE FAIRFIELD CT NEW HAVEN 2006 SHELTER 81 FOURNIER ST NEW HAVEN CT NEW HAVEN ANIMAL SHELTER 81 FOUNIER ST ATT:HOLLY MILLE NEW HAVEN CT NEW HAVEN ANIMAL SHELTER 81 FOURNIER ST NEW HAVEN CT BURLINGTON VOL FIRE DEP PO BOX WETHERSFIELD CT BURLINGTON VOL FIRE DEP PO BOX WETHERSFIELD CT BURLINGTON VOL FIRE DEP PO BOX WETHERSFIELD CT BURLINGTON VOL FIRE DEP PO BOX WETHERSFIELD CT BURLINGTON VOL FIRE DEP PO BOX WETHERSFIELD CT BURLINGTON VOL FIRE DEP PO BOX WETHERSFIELD CT BURLINGTON VOL FIRE DEP PO BOX WETHERSFIELD CT BURLINGTON VOL FIRE DEP PO BOX WETHERSFIELD CT Page 1 of 8

2 BURLINGTON VOL FIRE DEP PO BOX WETHERSFIELD CT BURLINGTON VOL FIRE DEP PO BOX WETHERSFIELD CT BURLINGTON VOL FIRE DEP PO BOX WETHERSFIELD CT BURLINGTON VOL FIRE DEP PO BOX WETHERSFIELD CT RED CROSS AMERICAN WHITNEY AVE NEW HAVEN CT RED CROSS CROSS FA CAROL A PETTIT 209 FARMINGTON CT RED CROSS HOUSING 117 DADDARIO RD MIDDLETOWN CT RED CROSS MID FAIRFIELD COUNTY 36 CHURCH LN WESTPORT CT AMER RED CROSS GRTR HARFORD PROCESSING CENTER 1 PLYMOUTH PLACE MILFORD CT AMERICAN RED CROSS 21 PROSPECT STREET UNIT TORRINGTON CT AMERICAN RED CROSS 55 FARMINGTON AVE HARTFORD CT AMERICAN RED CROSS 209 FARMINGTON AVE FARMINGTON CT AMERICAN RED CROSS 209 FARMINGTON AVE FARMINGTON CT AMERICAN RED CROSS 209 FARMINGTON AVE FARMINGTON CT AMERICAN RED CROSS CHARTER OAK CHAPTER OF CT PO BOX 5067 HARTFORD CT AMERICAN RED CROSS WESTEN CONNECTICUT CHAPTER 2 TERRACE PLACE DANBURY CT AMERICAN RED CROSS 209 FARMINGTON AVE FARMINGTON CT AMERICAN RED CROSS UNKNOWN UNKNOWN AMERICAN RED CROSS CLINTON VOLUNTEER FIRE DEPT 35 EAST MAIN ST CLINTON CT AMERICAN RED CROSS DEE LENARDO 26 GREENVILLE AVE JERSEY CITY NJ AMERICAN RED CROSS CT 209 FARMINGTON AVE FARMINGTON CT AMERICAN RED CROSS SO CENTRAL CT 158 BROOKLAWN AVE BRIDGEPORT CT AMERICAN RED CROSS SOUTH CENTRAL CT 703 WHITNEY AVENUE NEW HAVEN CT AMERICAN RED CROSS THE UNKNOWN UNKNOWN Page 2 of 8

3 Connecticut finances campaigns through its Citizens Election Fund. That is primarily funded through the collection of over $100 million in unclaimed property annually. These assets include dormant bank accounts, securities, uncashed checks, and insurance proceeds. The state should set that lost money aside and actively seek the rightful owners it often has their correct names and addresses. Instead, the state contacts no one and wrongly treats the money like tax revenue. Most of it is deposited in the General Fund, the state s bank account, while $11 million goes into the Citizens Election Fund annually. The state s token effort to return unclaimed property consists mainly of ctbiglist.com, where people may seek and claim their property. However, many people don t know about ctbiglist.com. And the website s woefully inadequate search capability can make finding property difficult or impossible. While the state claims that its primary objective is to reunite rightful owners or heirs with their unclaimed property, it has a disincentive to do so because it s spending the money. Hence its passive approach to returning property fails miserably. In the last three fiscal years, the state collected $388 million while returning $160 million, only 41%. The [Citizens Election Fund], which was created pursuant to section of the Connecticut General Statutes, is a non-lapsing account within the General Fund. It is comprised primarily of funds derived from the sale of abandoned or unclaimed property in the state s custody (escheats) pursuant to section 3-69a of the Connecticut General Statutes. For the Fiscal Year ended June 30, 2017, the Unclaimed Property Division: Returned $41 million to 16,670 rightful owners; Received over $129 million in unclaimed property, of which $88 million was voluntarily reported by financial institutions and other businesses, $29 million resulted from the sale of securities, and $12 million resulted from examination of company records; Deposited a net $71 million into the General Fund; Contributed $11.4 million to the Citizens' Election Fund; Maintains a website with $809 million in escheated property for 1.5 million rightful owners as of June 30, For the Fiscal Year ended June 30, 2016, the Unclaimed Property Division: Page 3 of 8

4 Returned $58 million to 15,758 rightful owners; Received $111 million in unclaimed property, of which $86 million was voluntarily reported by financial institutions and other businesses, $18 million resulted from the sale of securities, and $7 million resulted from examination of company records; Deposited a net $37 million into the General Fund; Contributed $11.3 million to the Citizens' Election Fund; Maintains a website with $802 million in escheated property for 1.5 million rightful owners as of June 30, For the Fiscal Year ended June 30, 2015, the Unclaimed Property Division: Returned $61 million to 17,888 rightful owners; Received $148 million in unclaimed property, of which $79 million was voluntarily reported by financial institutions and other businesses, $42 million resulted from the sale of securities, and $27 million resulted from examination of company records; Deposited a net $69 million into the General Fund; Contributed $11.2 million to the Citizens' Election Fund; Maintains a website with $710 million in escheated property for 1.3 million rightful owners as of June 30, The Unclaimed Property Division is responsible for safeguarding assets turned over to the Office of the Treasurer in accordance with state law, until the rightful owners are located. The primary objective of the unclaimed property program is to reunite rightful owners or heirs with their unclaimed property, which is remitted to the Office of the Treasurer by business entities after the business loses contact with a customer for a period of three to five years. Unclaimed assets include, but are not limited to: savings or checking accounts, uncashed checks, matured certificates of deposit, stocks, bonds or mutual funds, travelers' checks or money orders, and proceeds from life insurance policies. These assets are held in the custody of the Treasurer until claimants come forward or are located. Efforts to locate the owners of abandoned property include a website ( a phone number to call ( , Monday through Friday between 8 AM and 5 PM Eastern Time) and the biennial publication listing abandoned property reported and transferred to the Treasurer. Page 4 of 8

5 The Investment Company Institute, an association of investment funds, says on its website: Though [unclaimed property] laws were originally enacted with the purpose of turning individuals lost property over to the state to enable the state to use its extensive resources (for example, tax records and property records) to find lost owners and reunite them with their property, today these laws serve as a huge source of revenue for cash-strapped states Why are states allowed to claim mutual fund accounts? Under federal law, mutual fund companies and broker-dealers have a duty to search for a shareholder (or owner of a brokerage account) if first-class mail sent to the shareholder is returned as undeliverable. U.S. Securities and Exchange Commission (SEC) rules require that the fund attempt to find a valid address for the owner using at least two national databases that meet certain requirements. If the owner cannot be found after a period of time specified by the law of the state where the account owner resides (according to the account documents), the account must be turned over to that state. Though these state laws were originally enacted with the purpose of turning individuals lost property over to the state to enable the state to use its extensive resources (for example, tax records and property records) to find lost owners and reunite them with their property, today these laws serve as a huge source of revenue for cash-strapped states. Unfortunately, once the states receive the property, they do not necessarily look widely for owners of the property. Instead, they might publish lists of lost owners in a newspaper or host a booth at a state fair, which the owner may never see. From the state s perspective, unclaimed money makes an ideal revenue source. Tax people and they complain. Take unclaimed money without the owners knowledge and there are no complaints. Imagine that you found a wallet with money and an ID. You would be ethically and legally obligated to return it. Page 5 of 8

6 Every state has laws requiring the return of money or property if it is possible to identify the owner. As a result, if you find a wallet full of cash and an ID, you cannot legally pocket the cash because the owner is recognizable. Suppose that instead of doing so, you merely advertised your find in the newspaper or on Craigslist, inviting the owner to contact you. But you considered it unlikely that the owner would see the ad, and so you deposited the money, which you called income, in your checking account and spent it. That s larceny. By the state s own definition, you re required to take reasonable measures to restore the [lost] property. Yet the state is essentially doing what would be illegal for you. Entrusted with this money, so that it may be returned, the state embezzles most of it instead. Sec. 53a-119. Larceny defined. A person commits larceny when, with intent to deprive another of property or to appropriate the same to himself or a third person, he wrongfully takes, obtains or withholds such property from an owner. Larceny includes, but is not limited to: (1) Embezzlement. A person commits embezzlement when he wrongfully appropriates to himself or to another property of another in his care or custody. (4) Acquiring property lost, mislaid or delivered by mistake. A person who comes into control of property of another that he knows to have been lost, mislaid, or delivered under a mistake as to the nature or amount of the property or the identity of the recipient is guilty of larceny if, with purpose to deprive the owner thereof, he fails to take reasonable measures to restore the property to a person entitled to it. The state maintains that it s holding the money and that it will pay owners whenever they come forward. But that s the typical embezzler s defense. Page 6 of 8

7 The Connecticut Treasury is holding hundreds of millions of dollars, waiting to be claimed by those who may have forgotten about it. If you confronted someone who was embezzling money from your organization, what would that person say? Oh, I just borrowed the money to pay some bills. I planned to return it. See, I have an IOU here. I ll write a check now. The Office of the State Treasurer periodically touts the unclaimed property program as a public service. Press releases brag that the program returns millions of dollars to owners and makes good use of the unreturned millions, saving taxpayers money. Sadly, Connecticut s news organizations have failed to challenge this spin. Treasurer Nappier stated, Thanks to a robust stock market, the values of unclaimed securities were nearly double the expected amount. That extra revenue will be deposited into the State s General Fund at just the right time, where it will be put to good use until the rightful owners step forward to claim their share. The Treasury had anticipated that the sale of unclaimed securities would yield $16 million, but actual sales during the fiscal year generated $29 million. Nappier added, Every dollar received in unclaimed property is one less dollar from our taxpayers, because the proceeds from unclaimed property help to pay for State programs impacting public health, public safety, education and consumer protection. Also during the 2017 fiscal year, which ended June 30, the Treasury returned $41 million in unclaimed property to 16,670 rightful owners. Unclaimed property totals $776 million belonging to 1.4 million owners. Most unclaimed property is not being returned. Yet the program inexplicably escapes scrutiny. Page 7 of 8

8 # Owners Total Value 1,427,886 $775,974, Politicians who enact laws governing unclaimed property receive campaign funding from it. So does the state treasurer, whose job it is to return the property to its rightful owners. These are obvious conflicts of interest. The Citizens' Election Program (The "Program") is a voluntary program which provides full public financing to qualified candidates for Statewide offices and the General Assembly. Worse still, millions of dollars are wasted on campaigns that hardly interest the public. For example, if the state treasurer were appointed by the governor instead of elected, would voters care? The state s embezzlement of unclaimed money to fund campaigns and state programs is unethical and must stop. The state should do what s right: find the owners and return their money. Page 8 of 8