2016 News Releases

AG Schmidt: Kansas sues Delaware, MoneyGram for $1.78 million in uncashed checks

Release Date: Jun 09, 2016

TOPEKA – (June 9, 2016) – Kansas today filed an original action in the U.S. Supreme Court alleging the State of Delaware and MoneyGram have failed to comply with federal law in returning to other states unclaimed property in the form of uncashed checks, Kansas Attorney General Derek Schmidt said.

MoneyGram, which is incorporated in Delaware, offers a service of issuing “official checks,” which work similarly to money orders. But unlike a money order, MoneyGram merely backs the “official check” and pays the check amount only upon presentment. When an “official check” is never presented for payment, MoneyGram doesn’t release the money it collected for the “official check.” Thus, MoneyGram accumulates hundreds of millions of dollars each year in unclaimed funds when these checks are not presented. It is believed that $1.78 million in these uncashed checks were purchased in Kansas.

The complaint alleges that MoneyGram – at the direction of the State of Delaware – has been improperly remitting these funds as unclaimed property to the State of Delaware instead of returning the funds to the states where the checks were purchased. Under the Disposition of Abandoned Money Orders and Traveler’s Checks Act, 12 U.S.C. § 2501(3), “the States wherein the purchasers of money orders and traveler's checks reside should, as a matter of equity among the several States, be entitled to the proceeds of such instruments in the event of abandonment.”

“Delaware has wrongly claimed monies that properly belong to Kansans, and those funds should be handled under the Kansas unclaimed property law,” Schmidt said. “The law is clear that Delaware has acted improperly and we will fight on behalf of Kansans to get this money back so our state treasurer can return it to its rightful owners.”

State Treasurer Ron Estes said he supports Schmidt’s filing of this lawsuit.

“These money orders were purchased in Kansas, and when they are returned to this office it’ll be easier for Kansans who purchased them to find them,” Estes said. “Our Unclaimed Property Program has returned $100 million of property since the beginning of my term in office. Litigation like this gives us the opportunity to expand our efforts and fulfill our responsibilities.”

Under the U.S. Constitution, lawsuits between states originate before the U.S. Supreme Court. The lawsuit was filed today by Kansas and 20 other states. The States are asking the Court to declare that the Disposition of Abandoned Money Orders and Traveler’s Checks Act applies to these “official checks” and that MoneyGram and the State of Delaware violated the law by failing to return these funds to the states where the checks were purchased.

A copy of the filing is available here: http://1.usa.gov/1PMgokP .

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