The State of California turned their unclaimed property program into a $5.1 billion slush fund. Over the years, and through multiple budget crises, California reduced the holding period for unclaimed property from 15 years down to three. Desperate to pay for their political largesse, Californian legislators even pushed to reduce the holding time for rightful owners to claim their property down to only 1 year.
They stopped sending notices to the rightful owners too. In an internal memo obtained by ABC News, the lawyer for California's Bureau of Unclaimed Property objected to efforts to find the owners because "It could well result in additional claims of monies that would otherwise flow into the general fund."
Yes, you've got it right. While most states keep unclaimed property in a special trust fund, California puts the money into the general fund to spend as fast as they can.
Despite court injunctions and class action lawsuits, California's Bureau of Unclaimed Property continues making up any excuse they can to steal citizen's private property.
San Francisco resident Carla Ruff's safe-deposit box was drilled, seized, and turned over to the state of California, marked "owner unknown."
"I was appalled," Ruff said. "I felt violated."
Unknown? Carla's name was right on documents in the box at the Noe Valley Bank of America location. So was her address -- a house about six blocks from the bank. Carla had a checking account at the bank, too -- still does -- and receives regular statements. Plus, she has receipts showing she's the kind of person who paid her box rental fee. And yet, she says nobody ever notified her.
"They are zealously uncovering accounts that are not unclaimed," Ruff said.
To make matters worse, Ruff discovered the loss when she went to her box to retrieve important paperwork she needed because her husband was dying. Those papers had been shredded.
And that's not all. Her great-grandmother's precious natural pearls and other jewelry had been auctioned off. They were sold for just $1,800, even though they were appraised for $82,500.
"These things were things that she gave to me," Ruff said. "I valued them because I loved her."
Bank of America told ABC News it deeply regrets the situation and appreciates the difficulty of what Mrs. Ruff was going through. The bank has reached a settlement with Ruff and continues to update its unclaimed property procedures as laws change.
That's right. The State of California's desperate criminal government robbed this woman blind and sold off assets for mere pennies. And this was hardly an isolated incident.
Ruff is not alone. Attorney Bill Palmer represents her and countless other citizens in a class action lawsuit against the state of California.
"They figured the safety-deposit box was safer than keeping it under the mattress," Palmer said. "In the case of a lot of citizens, they were wrong, weren't they?"
California law used to say property was unclaimed if the rightful owner had had no contact with the business for 15 years. But during various state budget crises, the waiting period was reduced to seven years, and then five, and then three. Legislators even tried for one year. Why? Because the state wanted to use that free money.
"That's absolutely correct," said California State Controller John Chiang, who inherited the situation when he came into office. "What we've done here over the last two decades has been dead wrong. We've kept the property and not provided owners with the opportunities -- the best opportunities -- to get their property back."
Chiang now faces the daunting task of returning $5.1 billion worth of unclaimed property to people. Some states keep their unclaimed property in a special trust fund and only tap into the interest they earn on it. But California dumps the money into the general fund -- and spends it.
"It's supposed to be segregated and protected," Palmer said. "California has taken all of that $5.1 billion and has used it as a massive loan."
It's not only safe deposit boxes they burglarize either. The California government blatantly steals all sorts of stuff.
A British man went to retire and discovered the $4 million in U.S. stock he had been counting on had been seized and sold for $200,000 years earlier -- even though he was in touch with the company about other matters.
A Sacramento family lost out on railroad land rights their ancestors had owned for generations -- also sold off as unclaimed property.
"If I had hung onto it, I would be a millionaire, multimillionaire," said John Whitley. "But that didn't happen because we didn't get to hold it."
Reform? Yeah, riiiiiight ... We all know how the government reform game works. Some folks are made to feel better at the expense of others, provided the amount of loot kept by the Ruling Class never gets seriously diminished.
California's unclaimed property program was so out of control that, last year, the courts issued injunctions barring the state from seizing any more property until it made reforms. Since then, Chiang has taken several steps to try to clean up the program.
For example, the state now sends notices alerting citizens about unclaimed property before it is handed over to the state -- the only state to do so. Once unclaimed property is delivered to the state, it is now held for several months while the state tries to contact the owners, rather than it being immediately sold off or destroyed.
Which raises the question, in the Internet era, is anybody really lost anymore? California and other states are just beginning to make use of modern databases that can find most anyone in minutes. Unfortunately, California only uses those databases to search after it has already seized a citizen's property.
If California does get better at locating people, that could present another challenge. Remember, right now, the state spends the money.
"It's like the last guy in line at a pizza parlor," Palmer criticized. "There is only so much pizza. At the end, when I get up to the counter to claim my pizza, there may be no pizza for me."
California's fiscal problems are legendary and once again in the news, so it's reasonable to question whether the state can afford to repay its citizens if a bunch of them surface at once.
California isn't the only state engaging in the outright theft of personal property. With the states sitting on more than $32 billion worth of unclaimed property, you can expect more of them to "aggressively seize property that isn't really unclaimed and then use the money -- your money -- to balance their budgets" in this Era of Unsustainable Government Debt.
In Delaware, unclaimed property is the third largest source of state revenue. Idaho recently passed an unprecedented law that says the state gets to keep unclaimed property permanently if the rightful owners don't claim it within 10 short years. And all 50 states pay private contractors 10 to 12 percent commissions to locate and seize accounts for them. It's an inherent conflict of interest: the more rightful owners are found, the less money the contractors make.
It's amazing how little coverage there is of this government "escheat you" scandal. I found next to nothing searching Google. Robert Blumen at the Mises Institute is surprised by the lack of coverage too.
What surprises me about these seizures is the scale and how under-reported it is. This is the first article that I have seen on this topic, compared to dozens of pieces and several books on civil asset forfeiture. This phenomenon is probably at least as large as CAF — Jarret Wollstein cites a number in the low single-digit billions for asset forfeiture (which may be an annual number) compared to the $32 billion (which may be a multi-year aggregate) appearing in the ABC news story. In comparison, looting of safe deposit boxes requires even less due process than asset forfeiture, which at least requires that the property be accused of a crime, and can be fought in court.
But in reality, it's no surprise at all. Modern journalism is a relic of the Progressive Era, when "scientific," "objective" journalism merged the press and the state. Remember too that, progressivism was, and is, about expanding government power. Ever since, American journalism has been mostly about promoting government and disseminating its "official story."
Having too much coverage of California and other states seizing unclaimed property in order to cover reckless government budgets, would defeat the mainstream media's purpose. They're not a "watchdog." Your assets are not safe. As Murray Rothbard famously declared, "the State is a gang of thieves writ large."