LITTLE ROCK, Ark. (AP) - Arkansas Auditor Andrea Lea is asking a judge to allow the state to cash unclaimed savings bonds it holds, with the money being deposited in the state treasury.
The Arkansas Democrat-Gazette reported Saturday (https://bit.ly/1Pdkqhd ) that Lea filed for a declaratory judgment in Pulaski County Circuit Court to cash an estimated $151 million in savings bonds found in unclaimed safe deposit boxes.
The money - after attorneys take their 10 percent share - would become a part of the unclaimed-property trust fund, which pays into the state’s general fund, but the owner of the bonds or their heirs could still claim the money and the state would have to repay it.
The request comes after legislation by state Sen. Jake Files, R-Fort Smith, passed this year giving the state legal title - rather than just custody - of the bonds.
Unclaimed money would “go back into the treasury for the benefit of all Arkansans,” Files said. “On the flip side, it gives the auditor the ability to try to get that money in the rightful hands of those who it belongs to.”
In 2004, New Jersey, North Carolina, Montana, Kentucky, Oklahoma, Missouri and Pennsylvania claimed custody of $1.6 billion in bonds originally held by residents within their states and sued the U.S. Department of the Treasury.
However, the 3rd U.S. Circuit Court of Appeals eventually ruled that the states did not have access to the money even if they possessed the bonds, writing that they lacked the power to force the federal government to comply with state unclaimed-property laws.
The Federal Code of Regulations states that “savings bonds are not transferable and are payable only to the owners named on the bonds,” and lists no provisions for states taking custody or title of the bonds.
According to Lea’s fling, the federal government has the names and addresses of the original owners of the bonds, but doesn’t attempt to find heirs.
“The state is responsible to hold the money forever,” Lea said. “If the great-grandchild of that person comes back to claim it, we have to have it for them.”
Arkansas Attorney General Leslie Rutledge is not representing the state, as Files’ legislation allows for outside counsel, which would receive 10 percent of the value of the bonds if a judge allows the state to cash them.
Rutledge spokesman Judd Deere referred questions to Lea and Files.
“It is a little different, a little more specialized issue,” Files said. “So we just wanted to create some flexibility so it wouldn’t be just be limited to the attorney general.”
Information from: Arkansas Democrat-Gazette, https://www.arkansasonline.com
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