PA Treasury sues Delaware over escheat claims
Pennsylvania is accusing Delaware of illegally snagging millions of dollars in unclaimed money orders in a new federal suit.
MoneyGram issued the checks and money orders between 2000 and 2009 worth $10.3 million that were never cashed. The company is incorporated in Delaware, and after a certain period of time, that money is absorbed by the state.
The 23-page suit filed by the Pennsylvania Treasury says state and federal law classifies money orders in such a way that it’s up to each state to regulate where any unclaimed money goes – and Pennsylvania code directs it to their coffers.
In a statement, Delaware Finance Sec. Tom Cook said, “The Department is not going to comment on the merits of Pennsylvania’s claims at this time.”
Delaware state Sen. Bryan Townsend (D-Newark) says he doesn’t think a broad ruling will come down to widely affect the state’s escheat program, but it’s another indication that lawmakers can’t rely on it to balance the budget.
“Delaware policy makers need to be very aware of it and legislators in particular need to understand it more and not just kind of see the money that comes rolling in but actually understand where it’s coming from and how unpredictable it is, and therefore, how we can’t balance our budget on it year in, year out," Townsend said.
Last fiscal year, escheat raked in nearly $515 million for Delaware.
Townsend notes that the fight to protect this money signals something significant.
“This shows how important a revenue source it is to Delaware and how complicated a source it is in terms of all the different kinds of laws that set up the framework and all the different states and companies that have an interest in retaining money as a company or in getting some of the money as another state.”
He says the volatile revenue source should be less relied upon to balance Delaware’s budget and recently passed reforms to the program to make it more corporate friendly.