US Supreme Court Agrees to Hear MoneyGram Dispute

US Supreme CourtToday, the United States Supreme Court issued orders on many cases, including Delaware v. Pennsylvania and Wisconsin and Arkansas v. Delaware. These two cases are both related to MoneyGram issued "official checks" that were reported to Delaware. The other states claim that these are "money orders" and under federal law, should be reported to the state where the transaction occurred. The two separate cases were consolidated in today's orders. The states have thirty days to file answers to the complaints and counterclaims.

After Texas v. New Jersey, Congress acted to expressly change the reporting priority for money orders. While other property is reported first to the state of the owner's residence and then to the holder's state of incorporation, money orders with unknown owners are reported to the state of transaction. MoneyGram was the subject of a multi-state audit conducted by Treasury Services Group. The auditor and the states determined that the "official checks" were in fact money orders and demanded payment by MoneyGram. MoneyGram countered that the money had already been paid to Delaware, pursuant to instructions from that state. MoneyGram insisted that the states resolve the conflict with Delaware and that it would act accordingly in the future.

Several projections have estimated the amount in controversy to exceed $200 million for participating states and $400 million for all states and reporting jurisdictions.

Unclaimed property is the third largest source of revenue for Delaware. If it loses this case, Delaware could see an entire year's worth of unclaimed property "revenue" wiped out, severely damaging the state's budget. The state is already facing a shortfall of $167 million for next year's budget. While this case is not likely to be resolved before the next budget cycle, it is a sign that Delaware may be in serious trouble and cannot continue to rely on unclaimed property to shore up its budget process. In addition to the current MoneyGram case, there are a series lawsuits challenging the state's audit process and the state's collection processes.

See Also:
Supreme Court Denies Petition in Taylor Case
Can Delaware Even Enforce a Summons?
What Does Temple-Inland Mean for Unclaimed Property Holders?