Palo Alto Weekly

News - February 12, 2010

Menlo Park man's valuables returned — after 11 years

State's lost-and-found holding $5 billion in 'dormant' property

by Sue Dremann

When Victor Lee went to the Chase Bank on Hamilton Avenue in Palo Alto last month, he expected the valuables in his safe-deposit box were safe and readily available. But Lee got a surprise: His safe-deposit box was gone and there was no record the bank ever had it. Gone were his mother's diamond earrings and the gold coins he had collected, along with other belongings.

"There was no record. It was gone. I was never notified of anything. There was no record of the account -- no name, address, Social Security number," the architect said.

Lee, and thousands of unsuspecting people like him, didn't realize the bank won't keep inactive accounts open in perpetuity. The years might pass quickly for busy account holders, but at the banks, the clock is ticking. In 2001, three years after Lee locked his box for safekeeping, the bank turned his valuables over to the state.

The status? "Abandoned."

Since 1959, a law requires businesses to send the content of dormant accounts from banks, to avoid being drawn down by service fees and charges, according to Garin Casaleggio, a spokesman for the California State Controller.

Before the state controller changed the law, the controller was prohibited from sending notices to owners that their property had been sent to the state and was available to be claimed.

Neglected checking and savings accounts, IRAs and retirement plans, certificates of deposit (CDs) and safe-deposit boxes are turned over to the state after three years, according to the controller's website. Some forms of valuables can be taken within a year.

In Lee's case, the box hadn't been accessed since 1998. He opened the account at Great Western Bank, which was sold to Washington Mutual and recently was sold to JP Morgan Chase, he said.

Tom Kelly, a spokesman for Chase Bank, said account records are generally kept for seven years, so it isn't unusual that records of Lee's account would be expunged.

But 2007 reforms by current State Controller John Chiang have added more consumer protections, Casaleggio said.

If the owner has other active accounts, banks can't close the dormant account. This was done largely to protect safe-deposit boxes from coming to the state if the owner had an active checking or savings account. The State Controller's Office can now contact owners to let them know their property is about to be taken by the state, something not permitted for 20 years.

In Lee's case, the box hadn't been accessed since 1998. He opened the account at Great Western Bank, which was sold to Washington Mutual and recently was sold to JP Morgan Chase, he said.

Tom Kelly, a spokesman for Chase Bank, said account records are generally kept for seven years, so it isn't unusual that records of Lee's account would be expunged.

But 2007 reforms by current State Controller John Chiang have added more consumer protections, Casaleggio said.

If the owner has other active accounts, banks can't close the dormant account. This was done largely to protect IRAs and time deposit accounts that continue to accrue interest, he said. The State Controller's Office can now contact owners to let them know their property is about to be taken by the state, something not permitted for 20 years.

Since 2007, approximately 3.2 million notices have been sent 1.27 million warning owners their property was about to be sent to the state and 1.89 million notifying owners their property is in possession of the state, according to the controller's office.

Property seized isn't only from banks. Property can include everything from refunds from electric companies to insurance and wages, he said.

The state currently has more than $5 billion in unclaimed property and 8 million accounts.

Chiang's office has sought legislation to lengthen the dormancy period to five years. He is pursuing restoration of interest paid on claims, imposition of strict penalties on institutions that fail to notify customers of unclaimed property they are holding and allowance of the state to keep property having no commercial value for seven years instead of 18 months, so owners can claim family heirlooms such as photos.

Legislation to require banks to tell customers of the three-year dormancy rule when they open accounts was vetoed by Gov. Arnold Schwarzenegger.

The state keeps all seized possessions in a vault in Sacramento, but at some point, it can be sold. Proceeds from auctioned property are converted into cash and if a claimant comes forward, they are reimbursed. Since Chiang took office in 2006, no auctions have taken place, Casaleggio said.

The average "payout" in terms of property value is $1,000, according to Casaleggio. Last fiscal year, from July 1, 2008, to June 30, 2009, the state received $488.6 million and returned 215,000 properties worth $209 million, he said.

To keep accounts from being sent to the state, Casaleggio suggested going into the bank once a year to keep the account active. If bank notices have stopped coming, a customer should contact the institution to let them know he or she wants to keep the account active.

Lee said he went online to http://scoweb.sco.ca.gov/UCP/ to begin the process of getting his belongings back, which can take up to 180 days. (Residents can also call 800-992-4647, Casaleggio said.)

Lee filed a notarized claim. After about a month, the state found the contents of his box, but officials said they did not know what was in it.

Lee waited.

Earlier this week, after several anxious days he received a parcel containing all of his valuables. He laughed when asked if he would trust ever having a safe-deposit box again.

"I think so, but I think I have to remember to use it again occasionally," he said.

Staff Writer Sue Dremann can be e-mailed at sdremann@paweekly.com.

Comments

Posted by rem, a resident of Adobe-Meadows
on Feb 12, 2010 at 10:36 am

People wonder why California is a "joke".

If I am paying a MONTHLY fee for a "save deposit" box, by my definition and other states definition THAT IS AN ACTIVE ACCOUNT.

If Lee has been paying a monthly fee since 1998, this might be an interesting court case especially if it becomes a class action!!!!!


Posted by John, a resident of Barron Park
on Feb 12, 2010 at 11:15 am

Note that the link mentioned in the above story (scoweb.sco.ca.gov/UCP) contains a form to easily make an inquiry over the Web to discover if the Comptroller is holding any of your property. Try it. You may be surprised.


Posted by jerryl, a resident of Adobe-Meadows
on Feb 12, 2010 at 4:37 pm

Since when is a Safe Deposit box "an account".
I knew about this dormant account law and have had to write letters several times to keep certain long term savings accounts active. But never in my wildest dreams did I ever think they could do it for Safety Deposit boxes which, by their very nature are meant for long term storage of "stuff".

I thought this law was an outrage the first time I heard of it and now it is hard to think of a term to describe it.


Posted by heirloom not in box, a resident of Midtown
on Feb 13, 2010 at 3:18 pm

There have been other stories recently about people going to their boxes and finding them empty or finding stuff missing. So I went to our safety deposit box to check since we hadn't been there in a long time.

The most valuable thing was not there -- the thing that would be easiest to sell, too -- and it was listed on our list of things we put there, but what proof do we have? Everything else was there. I've been looking all over the house, hoping we somehow brought it home, and although it's a slim, slim chance, I suppose it's possible.

The big question these things bring up is: how safe really are safety deposit boxes?


Posted by victor h lee, a resident of Menlo Park
on Feb 13, 2010 at 4:53 pm

the article was incorrect in the website i went to claim the valuables...it was www.claimit.ca.gov. which is the state controller's website. it is possible there were other items in my box, but i really can't recall everything that may have been there.


Posted by Cieboy, a resident of Barron Park
on Feb 14, 2010 at 10:52 am

I worked in insurance finance and there were stiff rules about making at least three attempts to track down owners of uncashed claim checks before being sent to the state Sounds strange there would be a law against doing this. Sounds like the state is more interested in generating revenue.


Posted by S.F&*%$'d, a resident of Another Palo Alto neighborhood
on Feb 14, 2010 at 2:47 pm

Cieboy,
So, tell me this. I reached a final settlement with my insurance company for a large disaster loss. The settlement for the final amount was less than 25% of the remaining loss, but like many people, I was worn down by their tactics and just wanted to be done. Twenty-five percent is better than zero.

A third party mediated the settlement. Then the insurance company sent me a release that they said I had to sign in order to get the agreed settlement. Okay, but unfortunately, the cover letter mentioned an entirely different matter. The lawyers for the company claimed it was a "mistake" and that the release had nothing to do with that other matter mentioned in the cover letter, but my own lawyer ($3,000 in legal fees later to evaluate the lengthy release) said it did.

So I asked the insurance company to send a letter stating that the release was unrelated, but they would not. The insurance company's lawyer did call and tell me more than once that my check for $39,000 was in her desk, I just needed to sign that release.

(This was during Quackenbush's tenure; no help from the DOI available.) Question: would that check have gone to the state as "unclaimed"? Or, let me restate that, did the insurer have any duty to hand that settlement over to the state, since I didn't (couldn't) claim it?


Posted by Taken Advantage Of, a resident of Gunn High School
on Feb 16, 2010 at 1:51 pm

So after claiming my safety deposit box contents and paying the back yearly rentals on it to the bank, I find out that ALL my items were NOT in the bag. The bank had stored my items at the bottom of their vault for the past four 1/2 years. Due to my illness, I was unable to go in, lost track of the billings last sent out back then... but I was thinking my items were safe. After I contacted the bank telling them I was coming in, they immediately wrote to the State saying they had my safety box contents- covering themselves..they told the state they could not get ahold of me, which is nonsense, I have lived at the same address for over 26 years, am listed in the phone book as well. When confronted with the mystery disappearance of my items, I was given a blank stare. I need to have this investigated as I would like my items back, obviously. But how to prove that said items were in my box??? Only the tissue paper remained that they were wrapped in. (Why would I store tissue paper in my box if it were not to secure my objects??!!!!!) I noted that on the receipt that I had to sign to receive my other items.


Posted by heart broken, a resident of Barron Park
on Mar 29, 2010 at 8:02 am

Anyone who has had a similar problem and have been able to find their valuables please email me new2usa@hotmail.com The Hamilton branch has lost the content of my safe deposit box without any records.


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