The article misstated the address of a federal government Web site that can help people figure out whether they or their relatives hold a mature U.S. savings bond. The site is TreasuryDirect.gov.
WWII's Unclaimed Treasure
Thursday, October 8, 2009
Nearly 70 years ago, the federal government began issuing hundreds of billions of dollars in savings bonds to finance the greatest war effort in the nation's history, with no less than President Franklin D. Roosevelt, who summoned patriotic Americans to "one great partnership," buying the very first.
But the bonds came with a catch: They wouldn't be paid off for 40 years, an unusually long time. As the decades passed after World War II, $16.7 billion worth of bond certificates were either forgotten in dusty attics or thrown out in the trash.
That treasure has remained unclaimed. But now, someone is stepping forward: the states.
A half-dozen state governments have filed a lawsuit against the federal government to get that money. They say the Treasury Department has done nothing to find the original bondholders or their descendants -- not even sending out a letter when it came time for the government to repay the bonds. Moreover, the states say they have laws that empower them to take for themselves whatever goes unclaimed, which would be a welcome infusion of cash at a time of economic distress.
The Treasury has decided to fight back, seeking to keep the states' hands out of its pockets. Oral arguments are expected to begin in the coming weeks in U.S. District Court in New Jersey, where the lawsuit was originally filed.
"It's daunting," said Randall Berger, a partner at Kirby McInerney who is representing the states in the suit. "But the states are doing it because they need the money and because they have these statutes that clearly lay out what happens . . . to unclaimed property."
Spokesmen for the Treasury and the U.S. attorney's office, which represents the department, declined to comment.
The case will largely turn on the issue of where the boundaries are between federal and state power, say lawyers for the states. If the court rules in favor of the U.S. government, the Treasury could keep money it owes to ordinary Americans. But if the states win, they could continue to tap unclaimed U.S. bonds in the future, in effect establishing a new stream of funding from Washington.
Some states, such as California and New York, stand to reap as much as $1.6 billion, according to figures compiled by the states based on federal data. Virginia and Maryland could get more than $300 million each, while the District could get as much as $81 million. The states that have joined the lawsuit are Kentucky, Missouri, Montana, New Jersey, North Carolina, and Oklahoma. More haven't joined because they do not know about it, Berger said.
When the savings bonds were first sold in 1941, the government stressed the patriotic duty of citizens to support the war effort. The Treasury produced radio musicals urging listeners to buy war bonds while broadcast networks enlisted top celebrities to make a similar pitch. Newspaper carriers volunteered to sell bonds along their routes. Well after World War II, the Treasury continued to issue the bonds, though their maturity was reduced to 30 years in 1965.
Because many of the bonds may have been lost over the decades, state officials said they expect that a substantial chunk of the unclaimed money may end up in their coffers if they win the lawsuit. The Treasury kept a list of the original addresses of the bondholders but never tried to contact them, according to court documents filed by the states. But the agency has set up a Web site, TreasuryDirect.gov, to help people figure out whether they or their relatives hold a bond. In many cases, original bondholders died and their rights passed to relatives.
State governments employ staff members who are responsible for matching unclaimed property -- everything from land to checking accounts -- with the rightful owners. But state officials wouldn't purse the bondholders before the federal government provided the unclaimed proceeds. The Treasury balked. A lawsuit was filed in 2004 to settle the matter and, after a lengthy exchange of motions, is now seeing the inside of a courtroom.