Jan 30, 2008 5:16 pm US/Pacific
Call Kurtis: Unclaimed Property
SACRAMENTO (CBS13) ―
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Call Kurtis, CBS 13, KOVR, Kurtis Ming
Attorneys for California's controller are in court trying to head off a ruling that could cost the state millions of dollars. It all stems from the state's handling of billions of dollars in unclaimed property, taken from taxpayers without notice.
There are several things going on there, and they're resurfacing as California faces a monstrous hole in its budget, a hole that could get still bigger based on a confidential memo we've obtained.
The focus today was the federal courthouse in San Jose. But the issues have been described by countless property owners.
Property owner, Susan Lund says she thinks they just want to keep their money.
"In our case, they took 200 shares of GE stock, and sold it. We've been at the same address for 34-years, but they couldn't find us."
All feel victimized by the state's seizure of their private property. Property they were often unaware the state even had.
State controller John Chiang inherited the unclaimed property mess, and has made a public show of trying to fix it, until today.
This morning's hearing was scheduled because earlier this month a federal judge ruled the state acted improperly in handling the unclaimed property of several people who sued former controller Steve Westley.
Legal experts say the state is worried those people will be allowed retroactive interest on their property, and that could open a floodgate for millions of dollars in new interest claims at a time the state is already hemorrhaging cash.
Sacramento attorney William Palmer brought that suit.
"He's already ruled that it's illegal, that it's unconstitutional for the state to take this interest. And remember, we're talking large amounts of money, in excess of a billion dollars, probably much more than that."
"We asked the controller's office for a comment on what's going on today, and to tell us what impact they think the state's budget shortfall might have on their efforts to clean up the unclaimed property program. They refused until after a ruling on today's hearing, because of this."
This November e-mail is also part of today's court action, the controller and attorney general's office say it should never have been released because of attorney-client privilege.
It outlines some of the nuts and bolts of the controller's plan to contact owners of unclaimed property whom the state has never notified.
The memo says that's more than 6-million people! It then goes on to talk about how contacting all those people could create a "significant backlog" dealing with their claims.
It also points out 68-new employees hired to help find the owners of unclaimed property are temporary, and will only be able to "process and pay the fast-track claims", those with no complications.
The memo concludes the tightening budget makes further money to handle additional claims unlikely, and the backlog quote: "could linger for years." An internal document e-mail outlining the operations of the State Controller's unclaimed property reorganization plan is at the center of controversy.
Following a 'Call Kurtis' report on the document Wednesday night, the controller's attorneys are moving to seal the document, making it unavailable to anyone else.
To see this entire document, click on the link in the right-hand column under 'related links.'
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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