Arkansas, 28 other states will make argument before U.S. Supreme Court seeking $250M in unclaimed money

Arkansas seeks unclaimed $650,000

Arkansas Attorney General Leslie Rutledge addresses the media during a press conference about an upcoming argument before the United States Supreme Court on Tuesday, Sept. 27, 2022...(Arkansas Democrat-Gazette/Stephen Swofford)

The U.S. Supreme Court will hear oral arguments Monday for a case where Arkansas and 28 other states will try to take back $250 million in unclaimed money from the state of Delaware.

In 2016, Arkansas sued Delaware claiming it worked with the payment transfer company MoneyGram Inc., to route unclaimed money orders or checks into Delaware's coffers. Arkansas, along with attorneys general representing 28 other states, argues the unclaimed funds should go to the states where they originate instead of Delaware, where MoneyGram is incorporated.

Arkansas Attorney General Leslie Rutledge said the lawsuit was to "protect our assets, particularly from another state." Rutledge said Delaware used the unclaimed assets to help fund its budget.

Rutledge met with reporters Tuesday to preview the argument Arkansas Solicitor General Nicholas Bronni will present Oct. 3 in front of the U.S. Supreme Court.

Under federal law, unclaimed money orders are to be returned to states where they originated but checks don't have to be, Rutledge said.

"Delaware colluded with MoneyGram to ensure that money orders that were re-branded as official checks were returned to one state in particular -- the state of Delaware," Rutledge said.

At dispute is the difference between a money order and a check. MoneyGram offers transfer services for both money orders and official checks.

Under the Federal Disposition Act, states are "entitled to the proceeds" of unclaimed money orders and traveler checks that originated in their state. Delaware asked MoneyGram to turn over unclaimed official checks to Delaware, where the company is incorporated, according to Rutledge.

In June, the Supreme Court appointed U.S. Circuit Judge Pierre Leval as a special master in the case. Leval recommended the U.S. Supreme Court rule in favor of the 29-state coalition led by Arkansas. Leval said Delaware improperly received more than $200 million from unclaimed funds from MoneyGram.

State Auditor Andrea Lea discovered that unclaimed property from Arkansans was being held in Delaware, Rutledge said.

"I am proud the AG's office joined us in this fight for Arkansas' money," Lea said in a statement. "We look forward to this 7-year-long issue concluding with a favorable opinion from the Supreme Court."

The U.S. Constitution gives the U.S. Supreme Court original jurisdiction to hear cases between states. In legal disputes between states, the Supreme Court may appoint a special master to gather facts for the case, said Dylan Jacobs, deputy solicitor general.

"MoneyGram is not a party in this case nor will the outcome have any financial impact on MoneyGram," a spokesperson for MoneyGram said in a statement. "MoneyGram takes no position on which party should win or what the Court should decide, but the Company does have an interest in the law being clear and not being subjected to multiple, conflicting state claims for the same property.

The case will be among the first argued in front of new Associate Supreme Court Justice Ketanji Brown Jackson, whom President Joe Biden nominated to the court in February.

Arkansas could receive $650,000 if the U.S. Supreme Court rules in its favor, according to a June news release from the attorney general's office. The coalition of 29 states suing Delaware is led by Arkansas along with attorneys general from California, Texas and Wisconsin.

Other states in the coalition are Alabama, Arizona, Colorado, Florida, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Montana, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, Oregon, South Carolina, Utah, Virginia, Washington, West Virginia and Wyoming.