The state must stop embezzling unclaimed money
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 — and maybe you? That’s happening and it’s disgraceful.
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 percent.
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Company Institute, an association of investment funds, says on its website: “Though [unclaimed property] laws were originally enacted with the purpose of turning individuals’ lost property over to the state to enable the state to use its extensive resources (for example, tax records and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.”
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.
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.
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.
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.
Unclaimed property totals $776 million belonging to 1.4 million owners. Most unclaimed property is not being returned. Yet the program inexplicably escapes scrutiny. (See statistics here.)
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.
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.
Ron Lizzi is an author who lives in Bethany.
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