21 States Sue Delaware Over Unclaimed Property

Twenty-one states, led by Texas and Arkansas, have filed a lawsuit against Delaware at the U.S. Supreme Court, invoking original jurisdiction for disputes between the states. The States are seeking more than $150 million in "official checks" from Delaware, part of the ongoing dispute over the MoneyGram checks.

On May 26, Delaware had filed its own action at the Supreme Court for a resolution of the Pennsylvania v. Delaware and MoneyGram and Wisconsin v. Delaware cases. In remarks to the media, Delaware's Secretary of Finance Tom Cook questioned why the States in the current filing did not intervene in that case.

The underlying dispute is whether the MoneyGram official checks qualify for treatment as money orders under the Disposition of Abandoned Money Orders and Traveler's Checks Act. The Federal Disposition Act changes the reporting priority rules for a limited subset of unclaimed properties. Instead of reporting to the state of incorporation under the second priority rule, the checks are reported to the state in which they were sold. Delaware says that the official checks sold by Delaware do not qualify for the exemptions under the Federal Disposition Act and thus are properly reportable under the standard unclaimed property reporting rules.

Texas Attorney General Ken Paxton says that if all the states joined in the lawsuit, Delaware could end up owing approximately $400 million to its sister states.

In 2015, Delaware brought in $514 million in unclaimed property "revenue" with similar expectations for fiscal year 2016.

See Also:
Delaware Pushes Audit Revenue to Next Year
Supreme Court Denies Petition in Taylor Case
Nine Year Unclaimed Property Audit Leads to Federal Lawsuit