UNIDENTIFIED PERSON #1: This is PLANET MONEY from NPR.

AUDREY QUINN, HOST:

A few months ago, I heard about a guy who had a small fortune taken from him, Walter Schramm.

KENNY MALONE, HOST:

We got Walter on the phone to ask him about his missing money, and he was angry. But you should know that the angry version of Walter Schramm sounds like this.

WALTER SCHRAMM: It would have been nice, but I guess that's gone.

QUINN: Walter is very chill. And ironically, it's that trait that both brought him a small fortune and cost him it.

MALONE: Here's what happened. Walter is Italian. And in the late '90s, he had the brilliant idea to start a company selling Italian specialty products online, largely to Americans.

SCHRAMM: Like coffee machines, pasta machines, coffee, ice cream makers...

QUINN: At first it seemed like things were going really well, except for that around the same time, another online retailer launched - Amazon. They were bigger and seemed to have endless money. They're not even worried about turning a profit at this point.

MALONE: But this is not where things go south for Walter really. It was unfortunate, sure, but to him, the Amazon thing was just another great investment opportunity.

SCHRAMM: I said, let's set up an account with E-Trade and buy a few Amazon shares for a few thousand dollars.

QUINN: So your thinking was, if we can't beat them, join them.

SCHRAMM: Join them, exactly.

QUINN: And, of course, Walter had a characteristically chill investment strategy. Buy the stock, and then just let it sit. He made a point not to log into the E-Trade account that held his shares.

SCHRAMM: If you believe in a company, you need to buy the stock and let it sit for 20 years. I mean, that's the philosophy of Warren Buffett. Go out and have a walk, enjoy nature, talk to your family, don't worry about the stock market.

MALONE: So Walter does just that. He waits until 2015, about 20 years, to finally cash in his Amazon stock. At that point, the stock he'd bought for around $6,000 should be worth around $100,000. And so after years and years of not looking, Walter finally logs back into his E-Trade account.

QUINN: Do you remember what you saw when you logged in?

SCHRAMM: I saw nothing. The account was empty, so it was a big shock.

MALONE: A very Walter Schramm way of saying he was terrified. He wanted to retire. He was counting on this money, and now it was gone.

QUINN: So Walter calls up E-Trade to say, where are my shares?

MALONE: And E-Trade tells him, yeah, you're going to need to speak to the state of Delaware. That's where E-Trade is incorporated.

QUINN: Walter is like, OK?

MALONE: And E-Trade says, yeah, specifically, you should ask for the Delaware Unclaimed Property Office.

QUINN: Walter calls them up...

SCHRAMM: And finally they explain to me - there's a technical term that I don't remember - that my stock had been...

QUINN: I think it's escheat.

SCHRAMM: Yeah, something - terrible word like that.

MALONE: This terrible, unpronounceable word, it was the first sign that Walter had stumbled onto something huge - an obscure government program that, depending on how you look at it, is either a brilliant way to protect you from greedy corporations or a way for state governments to literally reach into your accounts and take your money.

Hello, and welcome to PLANET MONEY. I'm Kenny Malone.

QUINN: And I'm Audrey Quinn. Our government ends up with a stunning amount of our stuff - stocks, paychecks, bank accounts.

MALONE: Today on the show, how the government gets that stuff, how you can get it back, and why Walter Schramm may never see his Amazon stock again.

(SOUNDBITE OF MUSIC)

UNIDENTIFIED PERSON #2: PLANET MONEY has a newsletter - straight to your inbox. It's just the right amount of economics weekly. Go to npr.org/planetmoneynewsletter.

QUINN: First thing I needed to ask you is, how do you escheat?

JENNIFER BORDEN: Escheat.

QUINN: Can you say it one more time?

BORDEN: Escheat.

QUINN: Escheat.

BORDEN: So my Twitter is @dontgiveescheat.

MALONE: Jennifer Borden runs an escheat law practice - escheat, by the way, E-S-C-H-E-A-T.

QUINN: Are there other escheat puns?

BORDEN: Don't give escheat. Escheat happens. Those are the only two I can come up with off the top of my head.

QUINN: If escheat sounds archaic, that's because it goes back to feudal England. It's essentially the act of the state taking control of property on behalf of its citizens.

MALONE: The concept has been updated pretty dramatically and is now employed in the United States. And the way that this works now is that each state, like each actual state government, has an unclaimed property department because we, the people, are forgetful.

QUINN: Yes. We forget about retirement accounts, insurance policies, safe deposit boxes. When you forget about stuff like that, after a certain amount of time, the state is able to step in, take ownership of your unclaimed stuff and hold onto it until you can come and claim it.

MALONE: Think of it as like a giant state-run lost and found. And this used to be Jennifer Borden's job. She worked at the Massachusetts Division of Unclaimed Property.

QUINN: What's the weirdest thing you've ever seen escheated?

BORDEN: We did one time have escheated guns and blueprints to a bank. Those were from a safe deposit box.

QUINN: I wonder what they were up to.

BORDEN: Yeah, I'm not positive.

MALONE: Every state in the country does some version of escheat. And the way it used to work in the past was the state would take control of your stuff, on your behalf, of course, and then they would take out a newspaper ad saying like, hey, Joe Smith, we have your stuff. Come get it.

QUINN: This is my favorite part of this whole thing because states all over the country still keep these lists of missing stuff, just now with a website, not a newspaper ad. And this brings us to my new favorite party trick, which I'm going to do right now with Kenny.

MALONE: Yes, Audrey has made me to promise not to do this until we were recording. We are now recording. So, OK, what do I do here?

QUINN: What state have you probably spent the most time in in recent years?

MALONE: In recent years? The most time in Florida by far.

QUINN: OK, so I want you to look up lost money Florida.

MALONE: All right, here's Florida's escheating site. I guess it has a better name than I would have thought - floridatreasurehunt.gov.

QUINN: OK, type your name into the little search box.

MALONE: OK. There is a Kenneth D. Malone. That is my old address - like, a pretty old address, though. All right. Property type - vendor checks - reported by National Public Radio.

QUINN: Kenny, you have a missing paycheck.

MALONE: From NPR?

QUINN: Yeah.

MALONE: This is great. I'm 100% taking a vacation if this is enough money. Oh, it's $40, which is fine, which is fine. But, yes, I happen to know, Audrey, that you did this and had much better luck than I did.

QUINN: I found $800.

MALONE: Yes, $800 is good.

QUINN: The point is that you listening at home, you should look yourself up. You may have left behind a paycheck, utility credits, bank account you thought you closed. Your state has stepped in and is holding that money for you.

MALONE: And you could see the argument for why this is a good thing the state does on your behalf. Like, you know, companies don't necessarily have the most incentive to get that money back to you. Like, I love NPR, but you've heard our fund drives. I don't know how hard NPR was going to try to get that check back into my hand. And so what happened in that case instead is that NPR is required to tell the state of Florida Kenny never cashed his check. And then Florida says, great. Cut that check to us. We're going to hold onto the money for him, and now he can file a claim for it.

QUINN: Some version of this happens in every state for all kinds of companies. At the end of the year, companies have to report seemingly abandoned money to the state. The state takes control, boom, the money goes to the financial lost and found.

MALONE: For years, this was a big part of Jennifer Borden's job. She was working for the Massachusetts government trying to connect people with their abandoned stuff, and she loved that. But the more time she spent thinking about escheat as, like, a system, the more she started to notice problems.

BORDEN: Well, the interesting thing about unclaimed property is the states are able to use that - those, the cash or the assets, until such time as the owner comes forward. So it's almost like the state has a little loan they can give themselves of other people's money.

MALONE: And it is a lot of money. States are taking in about $8 billion a year of unclaimed property, and about two-thirds of that money stays unclaimed. So in most states, it just gets folded into the state's budget.

QUINN: Unclaimed property is the fifth largest source of revenue for California. It's the third largest source of revenue for Delaware. Unclaimed property all across the country helps fund public programs, which might seem like a good thing, but it can create some perverse incentives.

BORDEN: Do we do a good job getting money back to people, or do we just let it sit here and we don't have to raise taxes?

QUINN: Yeah, it just seems like a conflict of interest.

BORDEN: Cynically, yes, because if you do your job well, you don't have any money left. If you don't do your job well, the penalty is that you have more money to keep in the state coffers.

MALONE: Now, Jennifer is careful to say the people at unclaimed property offices want to get unclaimed property back to the rightful owners. It is the best part of the job, she says. But maybe there is a systemic problem. Like, this escheat system is supposed to stop companies from turning your forgetfulness into their profit. It's possible states are now just doing a version of that same thing.

QUINN: The amount of unclaimed money states take in every year, it's going up. And states have gotten a lot more aggressive in how they take the money in the first place.

MALONE: The more Jennifer considered all of this, the more she thought, maybe my escheat talents would be better spent elsewhere - she still thinks that escheat is on the whole a great system, but she now helps people and businesses protect their money from escheat.

QUINN: Is there, like, a playbook for states to bring in more unclaimed money?

BORDEN: Sure. So there are a couple of things that cause additional revenue to come in - excuse me - additional unclaimed property to come into a state, which could turn into additional revenue.

QUINN: Jennifer says states are getting looser with their standards about what qualifies as abandoned property.

MALONE: For example, it used to be that an account was deemed abandoned only after a piece of mail was sent to the account holder then got returned by the post office. The person couldn't be reached. But now in a lot of states, property gets labeled abandoned just because a person didn't check into their account or access the account within a certain length of time, which, I don't know, like, that feels like a sneakier kind of standard.

QUINN: Also in a lot of states, the length of time before your account is deemed inactive, it's been shrinking. States are stepping in more quickly to helpfully take a hold of your money.

MALONE: And all of this brings us back to Walter Schramm, the very chill but actually quite mad investor who bought a bunch of Amazon stock back in the '90s.

SCHRAMM: I think it's a mistake to check the stock market. You know, it makes you nervous. You don't sleep well.

QUINN: Walter's very patient investment philosophy - buy stock, then check back in 20 years - he thought he was being a smart investor. The state of Delaware thought he'd forgotten about a stock. They escheated it back in 2008. They hadn't told him.

MALONE: So great. Problem solved. The state of Delaware was holding onto Walter's Amazon stock. No, that is not what happened. See, one of the problems with escheat is that it's not always clear how it would work with different kinds of things people forgot about. So for, like, you know, a check or a bank account that someone forgot, like, that's pretty straightforward. The state can assume control of that money. It was just sitting there. Now it can sit in the state's account.

QUINN: But with abandoned stocks or bonds, the state takes control of your investments. And it doesn't want to become your portfolio manager, so it cashes out your investments - just holds onto that money for you.

MALONE: Obviously, the state cashing out your stocks could work in your favor if the government cashes you out right before your stock takes a dive, or it could totally screw you, which is what happened to Walter.

QUINN: Delaware sold his Amazon shares in 2008, which was before Amazon had become Amazon. Walter got the Delaware Unclaimed Property Office on the phone, and they invited him to file a claim for the 2008 value of his stock.

SCHRAMM: So they're offering me today to give me $8,000 for a stock that is worth way over $100K.

MALONE: $8,000 for stock that was worth $100,000.

QUINN: It's actually now worth even more than that. Walter hasn't checked the Amazon stock price in a while, and it's too depressing.

(SOUNDBITE OF MUSIC)

MALONE: After the break, we call the state of Delaware and ask, does Walter really need to take this escheat?

QUINN: Boo.

MALONE: It's bad. You wrote it, Audrey.

QUINN: (Laughter).

MALONE: It's not a coincidence that Walter's stock was taken by Delaware. That is where two-thirds of all Fortune 500 companies are incorporated, and that's a lot of potentially lost accounts to keep track of.

QUINN: We talked to the person who's in charge of that.

BRENDA MAYRACK: I'm Brenda Mayrack. I am the Delaware State Escheator and director of the Office of Unclaimed Property.

QUINN: After talking to Walter and our escheat lawyer, Jennifer, there were two main things we wanted to ask Brenda about.

MALONE: Yeah, the first was about this idea that unclaimed property has become a huge source of revenue for states. For the last few years, Delaware's general fund has gotten a lot of money from escheat, around $550 million a year.

QUINN: Does your office feel any pressure to make sure that money keeps coming in?

MAYRACK: It is a fairly stable revenue source from year to year, and it has been. I wouldn't say we feel pressure. We really just want to make sure that the process is there.

QUINN: I guess what I'm getting at here is that at a certain point, it kind of just seems like the state is grabbing somebody's money.

MAYRACK: But the alternatives are that the bank or the company keeps the money.

QUINN: Brenda says fundamentally, this is a way to look out for consumers, to safely take forgotten money out of companies' hands and keep it in a place where people can get their money back easily.

MAYRACK: I recommend to everyone that that they should search at least once a year. I typically suggest that people search either on their birthday or when they file their income taxes or maybe at the first of the year.

MALONE: Again, if you take nothing else from this episode, it is that you should go and make sure you've not left abandoned money somewhere that is now in a state coffer. I am $40 of living proof that you should do that. And in that regard, it is a good system. I never would have found that money. It probably never would have found me. On the other hand, escheat clearly has some flaws. We've learned some disconcerting things about this from Walter Schramm's Amazon case.

QUINN: Delaware has made some changes that theoretically would have helped someone like Walter. The state actually does now require a letter to go out to a person before their property gets escheated.

MALONE: But the state still deems a bank account abandoned after five years and investments abandoned after just three years.

QUINN: Why the three years, or why five years? It just - it seems pretty arbitrary.

MAYRACK: It needs to be short enough so that companies aren't actually losing track of people and then basically taking a windfall of that property or benefiting from that property over time. So it's trying to strike a balance.

QUINN: Can I tell you specifically the story that I'm working on?

MAYRACK: OK.

QUINN: So for this piece, I talked to this guy...

MALONE: We figured that Brenda wouldn't be able to talk about individual cases but gave it a shot anyway. Audrey told her about Walter and his Amazon bet.

QUINN: It just doesn't quite make sense to me of why not checking your stock for a few years can carry such a heavy penalty.

MAYRACK: I really can't respond to that. There is no penalty. The company has complied with the law. The state complies with its laws. If a person isn't exercising ownership over their account, they may have passed away. Then what happens? That's why states have unclaimed property laws.

MALONE: As for Walter, here's where his case stands; Walter initially looked for an attorney to help him get the current value of his Amazon stock from Delaware - more than $100,000 - a ton of money, but apparently not enough for a lawyer to take the case on, Walter says.

QUINN: Yeah, I talked to the lawyer for two French investors who lost $13 million from escheat. For cases like that, lawyers are interested. For Walter's, they were not.

MALONE: So for now, Walter is stuck with the original deal from Delaware. The state offered to pay him back the value of his stock from when they cashed it out in 2008, which is about $8,000.

SCHRAMM: I didn't cash that check. I wrote them that I don't accept their offer. I am sure the way Amazon is growing, their stock will be 20, 30 times the value of today in 20 years. So it's going to be a multimillion dollar bet catch (ph) that I'm sure then I'll find a lawyer who is willing to represent my children because it's worth his while.

QUINN: So you're just going to wait until it's worth even more.

SCHRAMM: Yeah, sure. I'm going to wait until this is worth $2, $3, $4, $5 million. So that's the plan.

MALONE: The hope is that at that point it'll be worth it for a lawyer to take on the Schramm descendants' case, and they'll get Delaware to settle, which does happen sometimes.

QUINN: In the meantime, Walter has found a different investing approach. He's bought into Google and Facebook through a firm based in Europe where they do not escheat accounts.

(SOUNDBITE OF MUSIC)

MALONE: If you go to your state's unclaimed property website and get money, we would love to know about that. Take a picture of yourself with, I don't know, your check or something, and then tag us on social media. We are generally @planetmoney on Instagram, Twitter and Facebook.

And if you've got story ideas, you can send those to us by email. We are planetmoney@npr.org. And if you want emails from us, we have a newsletter. You can subscribe at npr.org/planetmoneynewsletter.

Today's show was produced by Alexi Horowitz-Ghazi and Darian Woods with editing from Nick Fountain. Alex Goldmark is our supervising producer. Bryant Urstadt edits the show.

QUINN: Special thanks to David Knott, (ph) Ethan Miller, Bill Palmer (ph) and Wilson Barmeyer (ph).

(SOUNDBITE OF MUSIC)

MALONE: I'm Kenny Malone.

QUINN: I'm Audrey Quinn.

MALONE: This is NPR. Thanks for listening.

(LAUGHTER)

Copyright © 2020 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.