Ruling chastises California on unclaimed property

The San Francisco Chronicle reports:

The state of California, which is holding $5 billion worth of bank accounts, stocks and other property it classifies as abandoned, appears to be violating the owners' rights by seizing and selling their property without notifying them, a federal appeals court says.

The Constitution requires that the government give people notice when it intends to seize their assets, the Ninth U.S. Circuit Court of Appeals in San Francisco said Monday. That requirement is not satisfied, the three-judge panel said, by the state's practice of simply running newspaper ads that declare, "You May Be Owed Money!" and invite people to check a Web site for their names.

The court ordered a U.S. District Court judge in Sacramento to issue an injunction requiring changes in the state's procedures for finding people who the state believes have abandoned their bank accounts or other property. Monday's ruling did not spell out the revisions but suggested that the judge consider supervising the state's compliance, because officials failed to respond to decisions by the court in 2005 and 2006 that found constitutional problems.

The injunction "will require the state to correct the abuses and run a constitutional process," said William Palmer, an attorney who sued the state in 2001 on behalf of five plaintiffs who said their property essentially had been stolen from them. The lawsuit seeks to set up a fund to repay those whose assets were seized improperly.

Government as the big thief.