A class-action lawsuit was filed in Delaware federal court Friday against the leaders of the Delaware Office of Unclaimed Property.
The memorandum supports a temporary restraining order and preliminary injunction in response to the Office of Unclaimed Property’s reported “escheatment scheme.”
The action was brought on behalf of Jaime Vial and other heirs of a Chilean man who owned stocks in companies incorporated in Delaware such as Citigroup Inc. and Hilton Hotels Corp. The Office of Unclaimed Property eventually seized the property without alerting any of the man’s heirs or lawyers, according to the lawsuit.
Vial contacted the Office of Unclaimed Property requesting the money be returned, legal documents state, and only years later did he receive checks worth over $2.5 million. However, the lawsuit claims that this sum was “grossly inadequate” and failed to take the current values of the stocks into account.
In response, the lawsuit demands that the state return the property to each class action member or put them in the same monetary position they would be if the property hadn’t been seized, including interest and compensation.
The Office of Unclaimed Property did not respond to a request for comment.
What is unclaimed property?
Unclaimed properties are accounts, securities and other finances being held at insurance companies, banks or other corporations that have gone dormant for a specific period of time, according to the Office of Unclaimed Property. This includes things like checking and savings accounts, uncashed payroll checks and stock dividends, unused gift cards and life insurance policies.
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Once the property has been reported and remitted to the state, Delaware will maintain custody of it “in perpetuity” until the rightful owner comes forward and claims it. The laws come from a consumer protection standpoint, according to the office.
However, the lawsuit claims that the Office of Unclaimed Property failed to fulfill this fiduciary duty by not notifying and inadequately compensating those with seized property.
Office of Unclaimed Property Director Brenda Mayrack “sought to maximize the revenue of the program, while reducing the cost of the program by eliminating notice to the owners,” the lawsuit states.
The lawsuit
William W. Palmer, one of the attorneys involved in bringing the lawsuit, said others living abroad have experienced similar problems. He also said an expert declared the Office of Unclaimed Property’s website was “broken and inoperative,” making it difficult or even impossible to discover and claim one’s property.
Palmer said the state has tried to negotiate with him and the others involved in the lawsuit, but that they would be moving forward with the legal action.
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He also said he spoke with a government employee in Delaware, whose deposition was ordered to be sealed.
“This is what government does,” Palmer said. “It tries to exhaust you. It tries to make, tries to impede you, until you finally throw up your hands and give up. And we’re not going to give up.”
This article originally appeared on Delaware News Journal: Why Delaware’s Office of Unclaimed Property is being sued