Auditor Lea seeks $151-million in lost bonds

State judge slows, but does not stop effort to claim funds

Maylon Rice
Maylon Rice

State Auditor Andrea Lea with her attorneys may not have cleared the first legal hurdle well, but she is still in the race to secure "lost bonds" for the state's benefit.

The stake in the court's decision is thought to be $151 million in "lost or abandoned" federally-backed bonds, some apparently left over from the World War II era.

This past week, many eyes were on a lawsuit brought by the state Auditor's office to a state court to clear up any legal challenges to the state of Arkansas, through the Auditor's office, claiming ownership of these lost bonds.

The outcome is still not clear, but the lawsuit has interested legal scholars from both the state and federal level. It also has, perhaps, caused the U.S. Treasury to try to evoke a legal rule, known as escheatment, to stop Arkansas from claiming these bonds.

The state judge hearing the matter, The Honorable Alice Gray of the Pulaski County Circuit Court, said at first blush that Auditor Lee is not entitled to claim the federal bonds.

But Gray still has questions posed in open court and her preliminary ruling. The judge's questions, which are found in her 16-page decision, may cause more legal wrangling in the weeks ahead.

Lea and her legal staff are mum, right now, on the judge's ruling.

One of the major duties of the state Auditor's office is to annually publish a list of unclaimed property. That list of over $220 million includes a wide-ranging litany of financial instruments, bank accounts, stock dividends, even unpaid wages and utility deposits. Other items held by the state include such collectibles as coins, jewelry, baseball cards and stamp collections, often left behind in safe deposit boxes in the state.

All of these items, at one time, belonged to the citizens of Arkansas.

But where are these citizens now?

That's the challenge Auditor Lea and her staff face.

Previous state auditors, over the last decade, have tried through publications, electronic media and press releases to return this property to its rightful owners.

Among the estimated $220 million in unclaimed property that Lea and her staff oversee, is the $151 million (or more) in federally back bonds.

There was, at last count, according to some court records made available this past week, more than 1,000 federally backed bonds. These bonds never expire or lose their value.

Let me repeat that: These federally backed bonds never expire or lose their value.

Lea and the Arkansas legislature, following the lead of other states, passed a law on abandoned bonds and funds. The new law says a lost bond in the receivership of the Auditor's office for seven years and unclaimed will be considered the property of the state.

But each and every year efforts are made to reunite these items with their rightful owners. Auditor Lea vows to continue this practice.

Over the last few decades that unclaimed property list has come to include millions and millions in "lost" federally backed funds.

Lea, a veteran politician from Russellville, in this her first term as state auditor, has performed well.

Never doubt Auditor Lea's work ethic or her ability to be on task to find these lost owners or return the items if the owners are found.

If not found, she is a fiscally conservative-enough public servant willing to convert these lost items to benefit the state of Arkansas.

Future court rulings, hopefully, will clarify these unanswered questions about the future of more than $151 million to the state's future.

-- Maylon Rice is a former journalist who worked for several northwest Arkansas publications. He can be reached via email at [email protected]. The opinions expressed are those of the author.

Editorial on 08/26/2015