In Perpetuity is a Bitch

Posted May 3rd, 2008 by Joe Kaiser

Curiously, though all county treasurers received this email, only one provided a copy, and trust me, it wasn't Darryl Pheasant.

Dear Rob,

As mentioned in an earlier post, some three million dollars has escheated to county expense funds in the last five to 10 years.

Though the record is incomplete, we have confirmation from Washington State county treasurers that no less than three million has gone unclaimed and now belongs to those counties through escheatment.

But, things aren’t always as they seem, are they?


Who’s escheating who?

Several months ago, on a hunch, I decided there had to be more to the story and got to work, pouring over the docs, the regs, and the statutes.

And, sure enough, by the end of the day, I’d found something.

Turns out in 2004, language was added to the overage statutes that, in my mind at least, confirmed what I’d maintained all along . . . that three million dollars is not, never was, and never can be the county’s money.


New Language

What was added?

Here’s the old statute . . .

In the event no claim for the excess is received by the county treasurer within three years after the date of the sale he or she shall at expiration of the three year period deposit such excess in the current expense fund of the county. — RCW 84.64.080, Pre June 10, 2004

And the new . . .

In the event no claim for the excess is received by the county treasurer within three years after the date of the sale he or she shall at expiration of the three year period deposit such excess in the current expense fund of the county which shall extinguish all claims by any owner to the excess funds. — RCW 84.64.080, Post June 10, 2004

Added is the very last part of the sentence, “. . . which shall extinguish all claims by any owner to the excess funds.”

If these funds escheated to the county, as we’ve been told for years, why is that new language even needed?

I’ll tell you why.


Use v. Own

Escheatment, it turns out, is a very big deal.

Our money can’t magically turn into some government agency’s money by accident, or without a good reason. And, equally important, it can’t happen without language in the law that clearly establishes the escheatment claims of the agency.

Does the statute, “at expiration of the three year period [the county treasurer shall] deposit such excess in the current expense fund” even address the ownership of those funds?

Of course not.

It merely says the county may USE the funds, much like the state uses unclaimed funds, but as to ownership, there is NO change.

None.

Moving funds from one account to another, as the law provides, IS NOT ESCHEATING, and WA state county treasurers know this. That’s precisely why, in 2004, the language, “forever extinguish,” was added to the law.


Denied claim

So what about pre June, 2004 overages?

They’re still owned by the folks who lost their properties to tax foreclosure. Yes, all three million dollars.

But, not according to Pierce County Deputy Prosecutor Bob Dick.

We recently submitted a claim to Pierce County for a pre 2004 overage and received the following response . . .

This is in response to your client’s claim for the surplus proceeds from tax foreclosure on real property that was sold on December 6, 2002. According to RCW 84.64.080, after three years from the date of sale any owner loses the right to claim the excess funds. Therefore, we are denying your claim. — Mas Jones
Pierce County Budget and Finance

That’s what the law says?

Hardly.


The Association

Of course, I’m not an attorney and my opinion doesn’t count all that much in these matters. I’m looking at things as a layman. Still, my gut tells me the fix is in.

And then I received records from one of the last counties to respond to my public records request.

I’d asked the state’s county treasurers for all records relating to discussions with other county treasurers about tax sale overages, and there it was, an email from Grant County Treasurer Darryl Pheasant to the “Association,” the group of all 39 county treasurers.

Curiously, though all county treasurers received this email, only one provided a copy, and trust me, it wasn’t Darryl Pheasant.

Subject: Fw: excess proceeds

I have been talking to Judith in the Unclaimed Property Section and this is their take on Foreclosure Surplus Overage that I do not agree with. I was believing as an Association that we believed that after 3 years the monies go into the Current Expense fund and were no longer recoverable. Is that also how you interpreted it or am I way off base?

> Mr. Pheasant,
>
> I have attached our UCP Audit Team Manager's response to an inquiry
> regarding excess proceeds from foreclosure.
>
> [excess proceeds.doc]
>
> Please contact me if you have further questions.

> Judith Hauge
> (360) 664-2202


Six requests

What?

Apparently, Darryl disagrees with the State of Washington’s take on how excess funds should be handled.

And how are they to be handled?

It took us months and at least six separate requests to get a copy of the Department of Revenue’s Unclaimed Property Section document, “excessproceeds.doc” from Grant County. Six!

What was Darryl hiding?

A lot.


In Perpetuity

Patrick Tate, Audit Manager of the Unclaimed Property Section of the Washington State Department of Revenue, one would think, knows how those funds are to be handled. It’s his job to know.

And, according to the Department of Revenue, those excess funds DO NOT ESCHEAT TO THE COUNTY.

They never did.

Mr. Tate is quite clear about it, saying . . .

. . . RCW 84.64.080 does not extinguish the claim of an owner in excess proceeds . . .

In the third year, the county may move the money to its current expense account subject to the future claim of an owner . . .

The excess proceeds can be transferred to the expense fund, but the county would remain liable to pay owners in perpetuity . . . — Patrick Tate
Audit Manager, UPC, Dept. of Rev.


The smoking gun

Did he really just say “in perpetuity?”

You’re damn right he did.

The smoking gun?

excessproceeds.doc. (click link).

And Pierce County’s assertion my claim should be denied because the three years in which to claim it lapsed?

100% not true.


foreclosure scam

Here’s Mr. Tate, returning medals to Rosalynn Summers . . .

It’s clear, even though all county treasurers in this state know the overage funds they’re holding from pre June, 2004 tax sales are still owed to the folks losing their properties, at least one, Pierce County, chooses to pretend it does not.

I suspect the response from all other counties today to any claims against these overage will result in the same “sorry, you’re too late,” denial.

And that’s at least three million dollars of equities stripped from Washington State property owners.

There’s your next foreclosure scam, Rob, and btw, this one’s actually real.

And Mallia Marie’s $162k?

She’s assigned it to me, and I think it’s time I go get it for her. Don’t you?

In the arena,

Joe Kaiser


8 Responses to: “In Perpetuity is a Bitch”

  1. Loya responds:
    Posted: May 3rd, 2008 at 5:29 pm

    Wow……..that’s all I can say……wow………………………

  2. BikerJim responds:
    Posted: May 3rd, 2008 at 7:00 pm

    Joe,

    All I can say is “WOW”.

    As a former govt. employee, I can attest to seeing some ‘abuse of power’, or ‘made up power’ before, and it never surprises me.

    However, never to this extent.

    Sounds to me like the real foreclosure scammers are the counties that have blatantly ignored the rules.

    Go get em!

    By the way, I am posting a link/banner in the next few days on all websites, to help direct more traffic here…….this thing needs a bigger spotlight.

    Keep your head up,
    BikerJim

  3. Joe Kaiser responds:
    Posted: May 3rd, 2008 at 7:11 pm

    Jim, thanks for getting the word out.

    You’re right, it’s time everyone learns of this story because I don’t think I’m the first or last investor who will have to experience this sort of nonsense.

  4. Loya responds:
    Posted: May 3rd, 2008 at 9:30 pm

    ok…….I can say more now……. How about “fraud, deceit,cover-up, disregard for the law and…………………….County Scam……

    All protected by our AG Office……………………………………….

  5. Drew Hitt responds:
    Posted: May 4th, 2008 at 4:11 pm

    Joe,

    Sounds like with that breakthrough that you’re going to be busy with assignments. Just reading that makes me think outside the box and see the opportunity for some more business. This sure is going to make a great 20/20 or Dateline NBC. Hello Mr. AG, my name is Chris Hansen…..
    “To catch a ring leader of a government scam.” Tonight at 10!

  6. Leon responds:
    Posted: May 4th, 2008 at 8:27 pm

    It sure quacks like a scam…I mean a duck.

  7. Bruce responds:
    Posted: May 4th, 2008 at 9:27 pm

    SIMPLY AMAZING!!!!!!!!!!!!!…..makes you wonder if anyone honest is guarding the cookie jar, doesn’t it?….Joe, you should try and interest the major daily paper in your area in this growing expose.

    YOU are not the one they should be going after, they should have a Federal Prosecutor looking into state agencies and state officials mishandling citizens funds. …and then LYING about it.

  8. SpyBoy responds:
    Posted: August 19th, 2009 at 8:52 am

    Greetings,

    Well, here we are shortly over a year from the last posted comment on this thread, and, well, to what use has this information been applied ?

    Not being one in a position to reveal intimate details, but being one who has been researching, paying attention, and keeping my eyes and ears open, I have a suspicion ( well, I\’ll commit and say I actually have a prediction ) that the Pierce County, WA, and Mr Darryl Pheasant, is going to fiscally regret the fact that their obstinate attitude ( I\’ll not say greed, since I do not know the intentions or motivations of any of the players ) and stonewalling attempts actually created the opportunity and circumstance whereby this information was revealed.

    The fact that it has been revealed ( THANKS JOE !!! ) is creating the situation whereby Pierce County, and likely counties across the country, are going to
    \" suffer \" the fiscally devastating loss ( at this point in time, with all of the other drains on local budgets ) of even the use of such funds. Why ? How ?

    Because there are many ( many, MANY ) out there in \" suzy cream-cheese / joe six-pack land \", being in dire financial circumstance by virtue of being screwed, yet again, by \" Government \" ( big and small, national, state and local ), and yet again especially by private corporate / public service quasi-partnership and joint venture plutocracy type government operations. A few of those people, I\’m sure, are willing to learn to be able, to use the information made known here to do good by doing good, specifically by functioning ( in one or more of various capacities ) to connect those individuals entitled to those escheated funds ( surplus proceeds, excess proceeds, overages, etc. ), and assisting those individuals with submitting a claim to recover those funds, from holding those funds.

    Gotta go; maybe I\’ll spend an hour bird-dogging on the laptop, I\’ll bet I can find, in one hour, a dozen or more potentially very rewarding opportunities.

    Hey, I\’ll bet that if someone with an entreprenurial spirit, an independent personality, the ability to communicate effectively and efficiently ( orally and in writing ), organizational skills, and discipline, could make this the foundation of their very own \" 4 Hour Work-Week \" ( author Tim Ferris ).

    Counties in every State are likely to fell the effects, to one degree or another, and can specifically point to the WA Attorney General ( and cronies ), Pierce County ( and cronies, and Daryl Pheasant ), and, one again, you Joe, thanks.

    Keep On Keeping On,
    SpyBoy


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