Kansas gets U.S. to redeem abandoned savings bonds

1/16/2014

WICHITA (AP) — After a 14-year battle, Kansas officials have persuaded the federal government to redeem almost $862,000 in abandoned U.S. savings bonds and are seeking about $151 million more.

WICHITA (AP) — After a 14-year battle, Kansas officials have persuaded the federal government to redeem almost $862,000 in abandoned U.S. savings bonds and are seeking about $151 million more.

The redemption marks the first time that any state has been able to get the U.S. Treasury to cash out abandoned bonds, said Brett Milbourn, a private lawyer representing the state treasurer's office.

The 1,447 redeemed bonds include some that date back to World War I and had gone unclaimed for at least eight years, , The Wichita Eagle reported. The bonds — the newest that were redeemed had been purchased in January 1974 — were recovered from abandoned safe-deposit boxes once rented by Kansas residents.

Until now, the government has refused to redeem the bonds without approval from the original owner or legitimate heir, state Treasurer Ron Estes said.

The bonds had reached final maturity and were no longer drawing interest, he said, sitting in a safe at the treasurer's office with other unclaimed property.

In addition to trying to contact the owners through their last known addresses and maintaining an unclaimed property database on the Internet, the state treasurer's office also has advertised in newspapers across the state.

It is estimated that the federal government has sold roughly $16 billion in bonds that have matured and are unclaimed. Of that, about $151 million in bonds belong to people whose last known address was in Kansas.

The only bonds redeemed so far are those for which the state possessed the actual paper bonds.

While the state isn't allowed to spend the money from redeemed, unclaimed bonds — the money is held in a special account in case the owner shows up — it can invest the money and send the earnings into the general fund.

The unclaimed property fund is now at $260 million, which generates $7 million to $8 million a year for the state's budget, Estes said.

That means the state could bring in an additional $3.5 million to $4 million a year if Estes can persuade the federal government to redeem the $151 million.

The effort to redeem unclaimed bonds started in 2000 when Tim Shallenburger was state treasurer. Treasurers Lynn Jenkins and Dennis McKinney continued efforts to redeem the bonds.

The treasurer's office filed a first-of-its-kind action in the U.S. Court of Federal Claims in December, appealing the U.S. Treasury's decision not to allow the state to redeem the missing bonds. A response is expected in February.

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