‘Feudal Lord’: Class Action Lawsuit Alleges Delaware Has Misapplied State’s Unclaimed Property Law

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A proposed class action lawsuit alleges Delaware State Escheator Brenda Mayrack and other officials have grossly misapplied the state’s Unclaimed Property Law, such that Delaware has become “overwhelmingly dependent” on unclaimed property seizures to fund its budget. 

The 24-page complaint explains that Delaware’s Unclaimed Property Law requires banks and other financial entities in possession of “abandoned” property to turn it over to the state’s Department of Finance Office of Unclaimed Property (OUP). The lawsuit alleges Delaware has unconstitutionally removed “virtually every protection and safeguard to citizens” to maximize the seizure and sale of private property, including stock shares, as “revenue.” The filing claims Mayrack; Brian Wishnow, Assistant Director Enforcement of the OUP; and Richard Geisenberger, Delaware Secretary of Finance, have “seized so much private property” that it would be impossible for Delaware to return it to its true owners since there are no financial reserves to account for all the seized assets. 

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“[A]ll of the private funds have been spent as though it were revenue,” the plaintiffs allege, claiming Delaware has unlawfully “seized, sold, and otherwise destroyed” vast amounts of property without notice to the owners. 

According to the filing, Delaware’s Unclaimed Property Law, derived from “feudal concepts,” allows the state to “escheat,” or take ownership over, certain kinds of unclaimed property held by businesses chartered in the state. The law applies if a particular business holding property is not the owner of it, and if there has been no contact with the property’s owner for a specified period of time, the case relays. 

The four plaintiffs, two estate heirs and two individual investors, allege the defendants have misapplied Delaware’s Unclaimed Property Law so that the state, acting as a “feudal lord,” could generate revenue. As the lawsuit tells it, Delaware’s economy is “uniquely dependent” on the state’s unclaimed property system to generate money, to an extent “drastically different” from any other state. 

According to the lawsuit, the Delaware OUP theoretically holds at present more than $7.7 billion in “unclaimed” property, which, to be rightfully considered as such, must belong to someone “lost or unknown” to the state, the suit stresses. However, some of this property, the case says, is owned by President Joe Biden and First Lady Jill Biden, former Delaware Governor Pierre S. DuPont, WNBA basketball player Elena Delle Donne; former University of Delaware football coach Tubby Raymond, and NBC News and Today Show host Hoda Kotb. 

“The stark reality is that virtually none of the private citizens whose property was seized are ‘lost and unknown’ prior to the act of property seizures and like the President of the United States and his wife, are very well known to the State of Delaware,” the filing reads. 

Per the lawsuit, Delaware’s Unclaimed Property Law does not require banks or other financial services institutions holding “abandoned” property worth less than $50 to provide notice to its rightful owner before transferring it to the OUP. Owners of “abandoned” property thus have no way to determine whether they are owed amounts under $50 by the defendants, and no way to protect themselves from state seizures given that they receive no notice of any kind “before their property rights are disturbed,” the case states. 

After property has been transferred to the OUP, the defendants continue to deprive owners of individualized notice, and instead offer only a searchable internet website that property owners can visit should they somehow become aware that their property has been taken, the complaint says. Although property owners, in theory, can submit claim forms in an attempt to have certain types of property returned to them, Mayrack, the lawsuit alleges, has “issued oral instructions to block and to frustrate the claim process,” under the apparent guise of protecting citizens from fraud, per the case. 

Ultimately, it is “difficult or impossible” for property owners to reclaim what belongs to them because the “unsearchable” public website does not offer identifying information to the owner, the filing claims. Moreover, there is “no legal claim process,” and the defendants fail to verify owner information with state databases, the suit contends. 

“The Defendants’ failure and refusal to provide post-deprivation property information, such as its identification (what was taken), value, and the address of the account whether on their website or otherwise, makes it impossible for the owners to determine what property was taken during Defendants’ unnoticed seizure process and for the owner to confirm that the property is theirs and to determine if the claim process is worth their time, effort, and legal expense of filing and perfecting a claim to recover the property stolen by the Defendants.” 

Further still, the OUP may reject a claim if, for instance, the defendants consider a claimant’s documentation to be inadequate “based on the unpublished or verbal claim process.” Since no notice of any kind is given to property owners, leaving many simply unaware that their property has been transferred to the OUP, they are highly unlikely to avail themselves of Delaware’s Unclaimed Property Law procedure, the case contends. 

According to the filing, the plaintiffs received no notice before their stocks were seized and transferred to the OUP. Each plaintiff was subsequently unsuccessful in reobtaining their property through Delaware’s procedures, the case claims. 

“Post seizure, the private property was not restored; instead, Plaintiffs received an arbitrary amount of cash without interest,” the suit says. 

The lawsuit looks to represent all individuals who own purportedly “abandoned” property transferred to the Delaware Office of Unclaimed Property over the past 10 years without notice to the owners. 

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