Multistate unclaimed property settlement in MoneyGram case

Officials representing 30 states have agreed to a settlement with Delaware for more than $190 million in unclaimed assets representing MoneyGram unclaimed official checks previously held by Delaware. The settlement ends a lengthy challenge over which state has the right to claim the funds representing owner-unknown unclaimed funds representing MoneyGram financial instruments.

Typically, owner-unknown property is reportable to the state of incorporation of the company in possession of the property. While Delaware took this position, 30 other states argued that the rule does not apply to money orders and similar written instruments, such as MoneyGram financial instruments under dispute. Instead, these states argued that they are governed by the Federal Disposition Act (Act) and are therefore reportable to the state in which the financial instrument was sold and not to the state of incorporation of the issuing entity. In 2023, the U.S. Supreme Court handed down a unanimous decision that agreeing with the states’ position that dormant owner-unknown MoneyGram financial instruments are governed by the Act and should not have been reported to MoneyGram’s state of incorporation, Delaware.

Under the terms of the settlement, Delaware will transfer more than $102 million of the property that MoneyGram reported to Delaware from 2011 to 2017 to the participating states, based on the financial instruments’ place of purchase. The settlement also included approximately $89 million, alongside accrued interest, residing in a litigation escrow account to which MoneyGram contributed from 2018 to 2022. This amount is scheduled for distribution amongst all 50 states, again in accordance with the place of purchase.

Along with the funds, the participating states will also assume the responsibility to return any property received under the terms of the settlement or from the escrow account to owners, including paying any claims for the property.

The states that were part of the case in the Supreme Court against Delaware were Alabama, Arizona, Arkansas, California, Colorado, Florida, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Montana, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

State unclaimed property statutes and reporting requirement can be complex under the best of circumstances. However, the exceptions to the standard rules, such as when the Federal Disposition Act will apply, can make them even more confusing to follow. Companies who have questions about the MoneyGram case and how it may impact them, or with questions regarding the application of unclaimed property laws and regulations, are encouraged to reach out to a Baker Tilly unclaimed property specialist.