TOPEKA — A federal judge issued a ruling in support of longstanding claims the state of Kansas should take possession of about $150 million in unredeemed, matured U.S. Savings Bonds to improve prospects of identifying the rightful owner, officials said Friday.
Off and on for more than 15 years, Kansas officials have argued the U.S. Department of Treasury should work with the state to identify and return proceeds from matured bonds bought by people with last known addresses in the state. Kansas’ legal counsel asserted the state owned the bonds, despite not possessing the bond certificates issued decades ago by the Treasury Department.
U.S. Court of Federal Claims Judge Elaine Kaplan’s ruling Tuesday affirmed Kansas’ position on ownership of the so-called “absent” bonds, but stopped short of declaring Kansas could redeem the bonds.
Based on a lawsuit filed in 2015 and endorsed by a handful of other states, Kaplan found the treasury department in breach of contract for refusing to recognize Kansas’ ownership of the bonds.
“The court concludes that the (federal) government’s arguments lack merit, and that the undisputed facts entitle Kansas to summary judgment with respect to its ownership of the absent bonds,” she said in the ruling.
However, the judge noted further court action was necessary because “it is neither necessary nor appropriate for the court to determine at this stage in the proceedings whether Kansas is entitled to redeem the bonds.” In other words, the latest twist in the case only allowed Kansas to secure from the treasury department information necessary to make a request to redeem the bonds.
The treasury department’s attorneys had sought dismissal of the suit filed by then-Kansas Treasurer Ron Estes, who is now serving in the U.S. House.
“We wholeheartedly agree that the states are best equipped to reunite citizens with missing or unclaimed property,” said Jake LaTurner, who replaced Estes as state treasurer in Kansas. “Kansas is leading the effort with many other states to hold the U.S. treasury accountable. Not only is this a victory for the bond owners in Kansas, but for bond owners across the country.”
The core of the state’s legal claim has been the federal government failed to take meaningful action to locate and repay owners of more than $20 billion in bonds bought decades ago and no longer earning interest for the purchasers. By default, Kansas’ attorneys asserted, the opportunity to unify bond owners with the payment should involve state officials dedicated to working with unclaimed private property.
In many cases, the original bond holder died without a legal heir or without a will.
Under Kansas law, unclaimed bond proceeds could be swept into the state’s general treasury if the rightful owner wasn’t located within one year.
In 2013, the federal treasury department paid Kansas more than $800,000 for savings bonds in possession of the state treasurer’s office. The department opposed requests for payment to the state of at least $150 million in bonds not in the state’s possession.