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State can’t keep interest earned on unclaimed property

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The 7th Circuit Court of Appeals agreed Thursday with an Indiana woman acting as guardian for a relative that the state can’t retain the interest earned on unclaimed property once the owner files a valid claim to the property. Katherine Cerajeski argued that action by the state is a taking that violates the takings clause in the Constitution because the owner is paid nothing for his lost interest.

Cerajeski’s ward had a small, interest-bearing bank account, of which the value is considered property in Indiana. She learned about the bank account in 2011; it had been considered abandoned in 2006. She filed this lawsuit, seeking a declaration that she is entitled on behalf of her ward to the interest. The District Court dismissed her lawsuit, Katherine Cerajeski, guardian for Walter Cerajeski v. Greg Zoeller, Attorney General of the State of Indiana, et al., 12-3766, that challenged part of the Indiana Unclaimed Property Act.

Under Indiana statute, property owners have 25 years to claim property.

Judge Richard Posner, writing for the court, held that interest on interest-bearing unclaimed property is unclaimed property too, so the owner can claim it upon proving title.

“There is no basis for the state’s confiscating the interest in Cerajeski’s account. There is no articulated basis for fixing a 25-year term for escheat of principal and only 3 years for escheat of interest—a period so short as to present a serious question whether it is consistent with the requirement in the Fourteenth Amendment that property not be taken without due process of law, implying adequate notice and opportunity to contest.”

“And so if before then the state takes either principal or interest it must render just compensation to the owner if as in this case the owner’s identity is known. The state can charge a fee for custodianship and for searching for the owner, but the interest on the principal in a bank account is not a fee for those services.”

The case is remanded for further proceedings, including a determination of the compensation to Cerajeski when she files her claim.

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  1. I just wanted to point out that Congressman Jim Sensenbrenner, Senator Feinstein, former Senate majority leader Bill Frist, and former attorney general John Ashcroft are responsible for this rubbish. We need to keep a eye on these corrupt, arrogant, and incompetent fools.

  2. Well I guess our politicians have decided to give these idiot federal prosecutors unlimited power. Now if I guy bounces a fifty-dollar check, the U.S. attorney can intentionally wait for twenty-five years or so and have the check swabbed for DNA and file charges. These power hungry federal prosecutors now have unlimited power to mess with people. we can thank Wisconsin's Jim Sensenbrenner and Diane Feinstein, John Achcroft and Bill Frist for this one. Way to go, idiots.

  3. I wonder if the USSR had electronic voting machines that changed the ballot after it was cast? Oh well, at least we have a free media serving as vicious watchdog and exposing all of the rot in the system! (Insert rimshot)

  4. Jose, you are assuming those in power do not wish to be totalitarian. My experience has convinced me otherwise. Constitutionalists are nearly as rare as hens teeth among the powerbrokers "managing" us for The Glorious State. Oh, and your point is dead on, el correcta mundo. Keep the Founders’ (1791 & 1851) vision alive, my friend, even if most all others, and especially the ruling junta, chase only power and money (i.e. mammon)

  5. Hypocrisy in high places, absolute immunity handed out like Halloween treats (it is the stuff of which tyranny is made) and the belief that government agents are above the constitutions and cannot be held responsible for mere citizen is killing, perhaps has killed, The Republic. And yet those same power drunk statists just reel on down the hallway toward bureaucratic fascism.

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