Texas AG Ken Paxton unveils 21-state lawsuit accusing Delaware of swiping $400M in unclaimed checks

Dallas Morning News – by Todd J Gillman

WASHINGTON — Attorney General Ken Paxton today accused the state of Delaware of swiping up to $400 million in unclaimed checks that rightfully belong to Texas and the 48 other states.

Texas’ share, he said, would be about $10 million.  

For the last four or five years, Paxton said, announcing a lawsuit against Delaware that was filed directly at the U.S. Supreme Court, Delaware has been requiring financial institutions incorporated under its laws — in particular MoneyGram – to turn over unclaimed funds only to Delaware.

But under a 1974 federal law, Paxton asserted, such funds belong to the state in which a transaction originated. MoneyGram lets people pay a fee to purchase a check they can send to someone else.

“The state of Delaware elected to begin playing by a different set of rules,” Paxton said, calling the practice both illegal and unfair. “Delaware has our money.”

He cited an audit released in February 2015 that found that Delaware had claimed more than $150 million in unclaimed checks that originated in 20 other states. Extrapolating to  the whole country, he said, the tally could be $400 million.

At issue are “official checks” such as money orders, for which a customer pays a fee, not ordinary checks drawn on a personal checking account.

The U.S. Supreme Court has original jurisdiction to hear disputes between states. Paxton is leading a 21-state legal coalition  with his counterpart in Arkansas, Leslie Rutledge, who announced the effort in Little Rock.

The states in the coalition are: Arkansas, Texas, Alabama, Arizona, Colorado, Florida, Idaho, Indiana, Kansas, Kentucky, Louisiana, Michigan, Montana, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, South Carolina, Utah, West Virginia.

On other topics, Paxton declined to criticize Gov. Greg Abbott for dropping a lawsuit against Trump University when he was attorney general. Presumptive GOP presidential nominee Donald Trump’s real estate school faces fraud allegations in federal court in California.

“That was up to him,” Paxton said. “He did a great job as attorney general. He’s doing a great job as governor.”


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