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Special master: Kansas should recover unclaimed checks from Delaware

Release Date: Jul 27, 2021

TOPEKA – (July 27, 2021) – A special master has issued an interim report recommending the U.S. Supreme Court grant partial summary judgment in favor of Kansas and other states seeking to recover unclaimed checks from Delaware, Kansas Attorney General Derek Schmidt said today.

Kansas and 29 other states sued Delaware in 2016 in an ongoing dispute over unclaimed “official checks,” which are similar instruments to money orders, issued by MoneyGram, a payment system business incorporated in Delaware. 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.

Kansas and the other plaintiff states allege that instead of sending the value of those uncashed checks as unclaimed property to the states where they were purchased, MoneyGram, at the direction of Delaware, has been turning over all of the abandoned funds to the Delaware unclaimed property system. It is believed that $1.78 million in these uncashed official checks were purchased in Kansas.

Kansas and the other states contend that the funds are subject to rules established by the federal Disposition of Abandoned Money Orders and Traveler’s Checks Act. The special master last week stated in an interim report that he had rejected Delaware’s arguments regarding the nature of the checks in question, finding that Kansas had sufficiently referenced such “similar instruments” when establishing its unclaimed property laws.

“We are encouraged by the special master’s interim report rejecting Delaware’s claims and practices,” Schmidt said. “We remain hopeful that we will receive a favorable final ruling and succeed in getting money returned to Kansans.”

The recommendation of the special master now goes to the U.S. Supreme Court for approval. If approved, the special master would then determine each state’s claims related to damages and any other forms of relief. Funds recovered by Kansas would be deposited in the state’s unclaimed property program administered by the state treasurer, who then would seek to return it to its rightful owners.

A copy of the special master’s interim report in the dispute can be found at https://bit.ly/3zCfMpX.

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