Every year, the state of Connecticut sweeps up millions of dollars in uncashed checks, forgotten insurance policies and long-ignored investments with the promise of seeing those assets safely returned to their owners.

But a state program that was created to return so-called unclaimed property is operating in ways that can make it nearly impossible for people to learn the government owes them money.

From the 2000 to 2021 fiscal years, the Connecticut Treasurer’s office collected more than $2.3 billion through that program. Yet it returned less than 37% of that amount to its owners, according to an analysis by the CT Mirror.

There are clear incentives for politicians to keep the money: Most of the unclaimed cash goes into the general fund, making it easier to balance the state budget. And part of it also goes to the Citizens’ Election Fund, the public financing apparatus for political campaigns.

While other states such as Rhode Island take a more aggressive approach to returning taxpayers’ money, the Connecticut Treasurer’s office barely markets its program.

As a result, the burden falls to individuals and organizations to seek out their own cash. That task is made even more difficult by the fact that the state effectively hides any unclaimed assets valued at less than $50.

The Mirror requested data through the state’s Freedom of Information Act in an effort to understand how much unclaimed property the state accumulated in recent decades and how much of that money remains shielded from the public. But simply obtaining an up-to-date list of all the people, businesses and groups that are owed money through the program was a challenge.

The treasurer’s office said its computer system generates a full list only once every two years, and it charged the CT Mirror $200 for a 300,000-page PDF file that contained data that was more than five years old. That format makes it nearly impossible for an average citizen to search all of the unclaimed property on their own, and it took The Mirror months to convert the data into a searchable list.

After analyzing the data, The Mirror found that more than $40 million of unclaimed property collected through 2015 was valued at less than $50. All of that money is currently concealed from public view when people search ctbiglist.com. The CT Mirror is making it available for the first time here.

The amount collected and returned to citizens varies by year. Between July 2020 and June 2021, for example, the state acquired more than $151 million from various financial assets, but the treasurer’s office returned less than a quarter of that amount to its owners. It was the worst return rate in more than a decade for the program, which effectively serves as a giant lost-and-found department for the financial world.

The rest of the money commandeered by the treasurer was quickly spent. Every penny that isn’t immediately returned to its owner is either funneled into the state budget or redirected to the Citizens Election Fund, a special account that politicians can tap to pay for their election campaigns.

But that doesn’t absolve the state of those debts. And, according to the treasurer’s most recent estimate, the state now owes more than $1.1 billion to nearly 2 million residents, businesses and other groups.

Shielding money from the public

Connecticut’s unclaimed property program enables the state treasurer to seize cash, checks, bonds, stocks, deposits, dividends and insurance proceeds.

Banks, utilities, insurance companies and other businesses are all required to turn over those assets to the state if they lose track of the individual or entity the money belongs to for more than three to five years.

That happens often. People move and forget to update their contact information with a bank, or they are unaware they are listed as a beneficiary on an insurance policy.
Every state in the country has a similar system that collects the remnants of people’s financial lives. Those programs were set up in the 1900s — including Connecticut’s, which got its start in the 1930s.

The Connecticut treasurer’s office is largely operating the way it did in past decades, when it advertised its list of unclaimed property intermittently in local newspapers.
The treasurer currently relies on an online tool called the CT Big List, where people can search their names for free to find out if the state swept up any of their assets. But even that has a major loophole built into the system by state law.

Anyone with an uncashed check, forgotten savings account or uncollected security deposit worth less than $50 won’t find their money listed there. Yet nowhere on the state website is that fact mentioned.

It’s obstacles like that, critics argue, that have contributed to the program’s record over the past two decades.

Rep. Vincent Candelora, the Republican Minority Leader in the Connecticut House, said he wrongly assumed that all of the assets the state swept up were viewable on the treasurer’s website. The fact that they aren’t, he said, is problematic and raises questions about whether the unclaimed property program is being operated primarily as a public service or a revenue generator for the state.

“I think we need to have openness and transparency,” he said. “I assumed the CT Big list included all of the money in the state’s possession.”

Technological upgrades

Connecticut Treasurer Shawn Wooden, who was elected to office in 2018, declined through his spokesman to be interviewed for this story. Instead, his staff answered a long list of questions via email about how the program currently operates.

The reason the treasurer’s office returned so little money in the most recent fiscal year, they said, was because of the “unprecedented conditions” brought on by the COVID-19 pandemic.

At that time, the program still required paperwork for everything. People seeking to retrieve their money submitted claims using hand-written forms. And they had to mail in paper copies of their driver’s license, social security numbers and other personal information to prove they were the rightful owner of the missing assets.

That made it difficult for the two dozen state employees who regularly manage the unclaimed property program to do their job last year. Not all of them could be in the office at once because of the public health restrictions during the pandemic. And they couldn’t take the paperwork — and the sensitive information it contained — home with them.

That meant anyone who attempted to reclaim their missing money last year was stuck in line.

The treasurer’s office said those problems were fixed following upgrades to its computer systems and public website in early 2021.

Those improvements now enable people, for the first time, to file a claim online, submit the necessary paperwork over the internet and check on their request through the website. Those upgrades, the treasurer’s office said, are expected to make the process more “user-friendly” and should increase the amount of money that is returned each year.

But the changes won’t fix other fundamental issues with the program, like the millions of dollars in smaller assets that are still not listed on the state website.

The treasurer’s office said state law requires it to hide all of the unclaimed property valued at less than $50 from public view. They argued that other states do the same thing by only advertising assets above a set price, and they emphasized that Connecticut residents can still claim those small-dollar assets by calling a phone number maintained by the treasurer’s office.

But there is no way for residents to know if the state owes them such a small sum.
The treasurer’s office claims it doesn’t have the power to close the loophole on its own. To do that, it would require the Connecticut legislature to pass a new law.
That could be a difficult sell. There is a big incentive for the state’s leaders to embrace the status quo.

A ‘record of accomplishments’

Anyone who is listed as the owner of unclaimed property can ask for their money back at any point, even if the state took control of their assets years or decades ago.

But the cash that remains in the state’s possession doesn’t just sit idle, waiting for people to come and collect. It’s redirected for other purposes.

Connecticut legislators use some of that money to help pad the state’s general fund each year. Over the past two decades, state lawmakers redirected more than $1 billion from the unclaimed property program to help supplement that annual budget. It provided a $98 million cushion for lawmakers during the last legislative session alone.

That use of the money could make it difficult to rally political support behind reforms to the program. The more people who are able to recover their checks, deposits and insurance payouts from the treasurer, the less money state lawmakers will have to spend each year.

In its most recent annual reports, the Connecticut Treasurer’s Office listed the money it shifted from the unclaimed property fund to the state legislature’s general fund as one of its “record of accomplishments.” Provided CT Treasurer’s Office.

The treasurer’s office said it is proud of its record when it comes to reuniting people and businesses with their unclaimed property, but that’s not the statistic it chose to highlight in its most recent annual reports. On the treasurer’s single-page “record of accomplishments,” the only mention of the unclaimed property program is the millions of dollars it provided to state lawmakers.

The money the treasurer’s office spends to operate the unclaimed property program raises questions about its priorities, as well.

Over the past five years, the treasurer spent roughly $4.9 million to audit banks, utilities, insurance companies and other financial institutions in order to force them to turn over an additional $50 million in unclaimed property to the state.

But over that same time period, the office spent less than $26,000 to advertise the program and its website to let Connecticut residents know the state might be in possession of their money.

State lawmakers did away with advertising the list of unclaimed property in newspapers in 2016, but the legislature left it up to the treasurer to decide how much to spend on marketing on Facebook, Google, television and other digital media to get the word out.

Meanwhile, other efforts to reform and improve the program have fallen by the wayside.

Mary Mushinsky, one of the longest-serving state lawmakers in Connecticut, said the reason the legislature hasn’t taken a hard look at the unclaimed property program is because very few people are actually advocating for changes to the program.

“It doesn’t have a built-in constituency,” said Mushinsky, D-Wallingford. “There isn’t a single organized group complaining that they didn’t get their money back.”

Several years ago, Mushinsky ran into her own difficulties trying to retrieve money from the unclaimed property program. The state, she learned, had swept up her $50 refund from a local utility company, but after numerous attempts, she was unable to provide enough documentation to the treasurer to regain possession of her cash.

So, after growing tired of trying to jump through the hoops, she eventually gave up.

There could be a lot of people who are completely unaware that the state owes them money, Mushinsky said. But there are likely many other people, like her, who stopped trying to regain control of their money after several failed attempts.

The program comes off as “hugely and unnecessarily complex,” she said.

‘For the greater good’

Connecticut isn’t the only state that dips into its unclaimed property fund to help cover government spending. Many other states use the programs to help fill in yearly budget gaps, too.

But Connecticut has a unique use for the money that other states don’t: political campaigns. Since 2006, the leftover cash from the unclaimed property program has served as the financial backbone for Connecticut’s public campaign finance system.

Candidates for the legislature, governor and state treasurer have all relied on money collected through the unclaimed property program to fund their runs for office over the past 16 years.

In all, roughly $219 million from the unclaimed property program was spent on the grants that are handed out to political candidates to finance their campaigns.

Tapping that source of money allowed lawmakers to argue in past legislative hearings that Connecticut’s public campaign finance system is not funded by state tax revenue — at least not technically.

Former Treasurer Denise Nappier, right, and former Gov. Dannel P. Malloy, left. mark pazniokas / ctmirror.org

Denise Nappier, who served as Connecticut’s treasurer from 1999 to 2019, testified during some of the same legislative hearings and emphasized that using the unclaimed property to bankroll the campaign finance system was a proper use for the money.

One of the major goals of the unclaimed property program, she said, was to use the leftover cash in the fund “for the greater good.” It’s meant to turn what would have been private profits for banks and insurance companies into a public benefit, she explained.

“The right of the owner to claim those funds never waivers and remains in effect forever,” Nappier said. “It is a system that works, both for claimants, who sometimes come forward years later, staking their claim to assets they lost or inherited, and for the general public.”

In other states, a ‘proactive’ approach

A number of other states moved to modernize their unclaimed property programs in recent years in an attempt to boost the amount of money they are returning to people’s bank accounts.

Illinois, Louisiana, Delaware, Wisconsin, North Carolina and Rhode Island, for instance, have all taken on the burden of locating owners of unclaimed property and automatically mailing checks to those people.

To do that, those states enabled officials to cross-check their lists of unclaimed property with the most recent tax records, social security information and other government data. And many of those systems are already showing results.

Rhode Island, for example, started automatically issuing checks to the owners of unclaimed property in 2017 after its Treasurer Seth Magaziner asked his state legislature to change the law. The setup allowed anyone with unclaimed property valued at less than $2,500 to immediately get their cash. It also informed people with assets above that amount about how to contact the Treasurer’s office to get their money.

Since then, Magaziner’s office has been able to “proactively” pay out $10.5 million to more than 70,000 individuals. And those numbers are likely to grow even larger in the coming years now that Rhode Island also made the program applicable to businesses and nonprofits.

Meanwhile in Connecticut, the treasurer’s office hasn’t even been successful in returning money to the governor and his family. According to the data obtained by the CT Mirror, Gov. Ned Lamont and his wife, Annie, are owed somewhere around $15,000 from insurance policies and other assets that the state took control of in the past.

The governor’s office did not respond to questions about the money the Lamonts are owed or whether they had ever attempted to reclaim that cash.

But it’s not just the Lamonts who could stand to benefit from enhancements to the state’s unclaimed property program. Local governments — and their taxpayers — could also stand to gain.

California, for example, established a special initiative in 2020 to automatically return unclaimed property that belongs to its towns, cities and other municipalities. Over the past year and half, the program has been able to return more than $4.7 million to local governments throughout the state.

That entire effort, according to the California Controller’s office, is only expected to cost the state around $72,000 per year to operate. Yet nothing like that exists in Connecticut.

The Connecticut treasurer’s office said it previously sent out notifications to cities and towns informing them about unclaimed property, but it did away with that practice sometime around 2018.

The office said many municipalities did not follow through by submitting a notarized request to reclaim their money. And other cities and towns could not come up with the evidence the program requires to finalize their claims.

Wooden’s staff also said it proactively contacts some unclaimed property owners by mailing postcards to them if their tax information is included in the data the state collects from financial institutions. Over the past five years, the treasurer’s office sent out 51,000 postcards.

But, again, those efforts did not include anyone with unclaimed property valued at less than $50. And that process still required every person who received a postcard to follow up with the Connecticut treasurer and prove that the assets belonged to them.

The Connecticut treasurer’s office voiced apprehension about other states that now send checks directly to individuals and businesses.

Some of those states, it said, reported that a significant number of the checks they sent out were later returned uncashed. The office also argued that the hurdles it makes everyone jump through before releasing their money help to deter fraud.

“Our office’s documentation requirements are designed to balance the goal of reuniting rightful owners with their property against the necessity of ensuring that claims are properly paid,” they said.

It’s unclear how Connecticut’s rate of return stacks up to the programs in other states. The CT Mirror reached out to the National Association of Unclaimed Property Administrators, which the Connecticut Treasurer’s office belongs to, but the group did not respond to emailed questions. 

‘Grossly inefficient’

There have been attempts to change Connecticut’s unclaimed property program in recent years, but those efforts gained little attention and ultimately went nowhere in the state’s Democratic-controlled legislature.

Ron Lizzi, a resident of the small town of Bethany, was the primary driver behind those proposals. Even though he lives in Connecticut, Lizzi has positioned himself as an unofficial watchdog on unclaimed property programs throughout the United States.

He was introduced to the programs several years ago, and he said he quickly went down a “rabbit hole.” He became obsessed with the way states collect unclaimed checks, security deposits and insurance proceeds, and he was troubled by the laws and systems that prevent more of that money from being returned.

That obsession led Lizzi to help uncover a scandal of sorts in Colorado earlier this year. He alerted a news reporter about numerous search terms that seemed to be blocked from that state’s online database of unclaimed property.

The story that followed out of the CBS News affiliate in Denver led the Colorado Treasurer’s office to admit their website was blocking a long list of words, like city, county, college and hospital, from being searched.

That made it impossible for some unclaimed property to be seen by the public, including the names of nearly 100 individuals who were owed money. Colorado leaders called the findings “shady” and some called for an investigation into the blocked terms.

Ron Lizzi, a resident of Bethany, testified in front of the Connecticut legislature in recent years in support of changes to the state’s unclaimed property program.

Lizzi’s efforts to shine light on the unclaimed property program in Connecticut have been less effective, however. He has pushed the Connecticut legislature repeatedly since 2018 to pass a bill that would again require the Treasurer to notify cities and towns when the state is holding money that belongs to them.

Those bills were supported by the Connecticut Conference of Municipalities and Connecticut Council of Small Towns, which argued that any money returned to their members would lessen the need to raise local property taxes.

“Requiring 169 towns to periodically review this database is grossly inefficient,” the groups told state lawmakers. “Instead, the state has an obligation to proactively provide this information, clearly and without confusion, to its rightful owners.”
But those pleas went unheeded. The treasurer’s office told lawmakers that sending letters to municipalities was unnecessary because the towns and cities should already have been notified by their banks, insurance companies and other financial institutions before the state took possession of the assets.

Responses like that have led Lizzi to believe the real purpose of Connecticut’s unclaimed property program is to rake in as much cash as possible.

“This poor performance is not a bug, but a feature,” he said. The only reason people aren’t demanding reforms to the program, he argued, is because most people don’t even know it exists.

The entire system needs an overhaul to bring it into the 21st century, in Lizzi’s opinion. But improving the program could present financial risks for the state in the short term.

Millions of creditors

Connecticut’s unclaimed property fund has historically been a profit-maker, but it might not take much to transform it into a financial loser for the state.

Connecticut leaders effectively took out a loan when they repeatedly used the leftover cash from the unclaimed property program to finance political campaigns and supplement their annual budget. And there are now nearly 2 million individual creditors who could demand that money back.

Between 2010 and 2021, the total amount of money the state owes through the unclaimed property program more than doubled.

It’s unlikely that every person included on the list of unclaimed property will be able to retrieve that money. Some of the assets, for instance, may not have enough personal information available to find the owners. Others are so old it is unlikely that someone would come forward to claim them.

Even so, the Connecticut treasurer’s office reported in June 2020 that there is a “reasonable possibility” that up to $698 million will need to be repaid to the owners of that unclaimed property in the future. That is roughly the same amount of unclaimed property the state swept up over the most recent five year period.

The treasurer’s office said it is not concerned about that potential liability because it leans on the state’s roughly $20 billion general fund to pay each claim as it comes in.

But that doesn’t mean the liability can’t make the state legislature’s job more difficult. If a large number of people ask for their money back in a short period of time, the program could run a deficit over several years.

The stream of money would reverse. Instead of the treasurer sending extra revenue to the general fund, lawmakers would need to shell out taxpayer money to the treasurer’s office to help them repay the claims.

If that were to happen, lawmakers could also be required to find another source of cash to bankroll the state’s public campaign finance system — at least temporarily.

That loss, according to state law, would need to be filled by more than $12 million in corporate tax revenue.

Andrew joined CT Mirror as an investigative reporter in July 2021. Prior to moving to Connecticut, Andrew was a reporter at newspapers in North Dakota, West Virginia and most recently South Carolina. He’s covered business, utilities, environmental issues, the opioid crisis, local government and two state legislatures. Do you have a story tip? Reach Andrew at 843-592-9958

Kasturi Pananjady

Kasturi was CT Mirror’s data reporter. She is a May 2020 graduate of the Columbia Journalism School’s master’s program in data journalism and holds a degree in comparative literature from Brown University, where she was editor-in-chief of the student newspaper. Prior to joining CT Mirror, Kasturi interned for publications in India.