State legislators last year imposed a $1,000 cap on fees companies can charge to help recover unclaimed property from the state, such as bank accounts, utility deposits, and money left over from land sold for unpaid taxes.

State Sen. Josh Stein, D-Wake, former deputy attorney general for consumer protection, was one of the sponsors of the law at the request of state Treasurer Janet Cowell. Cowell manages the state’s Escheat Fund, which collects and holds unclaimed property from residents.

“The purpose of the bill was to protect property owners from abusive property finders who find money for people that’s rightfully theirs at no cost whatsoever,” Stein said.

But companies that seek out hard-to-find owners of abandoned property — and charge for their services — are seeing red. Officials at the Jupiter, Fla.-based Equity Solutions of the Carolinas, say the new law could put them out of business. The firm has hired a lobbyist, New Bern attorney James Norment, to push for the law to be changed. It also is seeking a ruling from the treasurer’s office about whether the law applies to agreements that Equity Solutions entered into before the law passed.

Louisiana, Texas, and Georgia limit the fees that property finders can charge. The Federal Trade Commission, which administers a database of consumer complaints, has seen complaints about such businesses rise.

“This is an important step in protecting consumers, especially the elderly who are targeted by these companies, from high-pressure and deceptive solicitation tactics,” Cowell said.

Equity Solutions has a different view. It purchases the rights to the surplus money, recovers it, and then pays most of the funds to the former owners, taking a portion of the proceeds as a fee for its recovery costs. “When the cap was put on the fees, it shut [recoveries] down,” Norment said. “You can’t perform a service for that fee. They [the General Assembly] have essentially regulated it out of existence.”

The treasurer’s office has told county clerks holding money left over from land sold for back taxes that money shouldn’t be sent to Equity Solutions for pending claims.
Some of Equity Solutions’ clients said the company’s fees are too high.

“I think they were charging more than they should charge,” said Marvin Wiggs of Fresno, Calif., who had agreed to pay the company 30 percent of funds left over from land sold for back taxes.

The state gets about $100 million in unclaimed property a year and pays out about $39 million in claims. North Carolina doesn’t limit how long people have to reclaim their property. In 2007, the fund had $686 million, but that dropped to about $470 million in June. Legislators have drained the Escheat Fund to offset rising college costs, and investments that former state Treasurer Richard Moore made to firms whose employees donated money to his campaigns haven’t done well.

Norment said the 2009 law was passed in part to keep money in the Escheat Fund, which he called a slush fund the General Assembly uses to help balance the budget.

“The policy seems to be on the surface to protect people from unfair and deceptive trade practices, but I don’t think that’s the case,” Norment said.

Equity Solutions charges fees of up to about 40 percent. Bruce Cohen, vice president of Equity Solutions, said expenses to recover money left over after land is sold for back taxes, including legal expenses and genealogical searches, average $3,246, more than three times the new cap on fees.

“What I find offensive is how they come up with the $1,000 figure,” Cohen said. “Have they done any research? Just a lawyer alone costs $1,000.”

Cohen said Equity Solutions finds some people who are owed money from land sold for unpaid taxes and aren’t on the state’s list of unclaimed property holders.

“It takes guys like me to figure it out, “ Cohen said. “We’re a collection agency that works backwards. I find the money first and then find the people it belongs to.”

Heather Franco, a spokeswoman for Cowell, said money left over after land is sold for back taxes is deposited with a county clerk of court and reported to the unclaimed property program after a year if no one tries to claim it.

But Marvin Owens of Duncan, S.C., said he never saw the name of a family business on the state website of unclaimed property after land his business owned was sold for back taxes. He and his wife learned they could get money back only after Equity Solutions contacted them.

“They (government employees) never notified us after the sale that there were excess funds,” Owens said.

Another person Equity Solutions tracked down was Leith Murray of Brooklyn, N.Y., whose great-grandfather, James Greenlee, died in 1921 in Burke County. Land Greenlee had owned was sold for back taxes this year, but more than $36,000 was left. The money has not been collected by Equity Solutions because of questions about its business practices.

“They had the date of my mother’s death,” Murray said. “I didn’t even remember it myself. To me it’s found money. Something I never knew I had.”

Sarah Okeson is a contributor to Carolina Journal.