Note: This original episode ran in 2020.Walter Schramm did everything right as an investor — at least according to the philosophy of Warren Buffett. So how come he lost a small fortune?In this episode, we look into an obscure government program that slurps up forgotten money. We hunt for money we might have left vulnerable and we try to figure out how it got there in the first place so we can tell you where to find the money you've misplaced too.Find more Planet Money: Facebook / Instagram / TikTok / Our weekly Newsletter.Listen free at these links: Apple Podcasts, Spotify, the NPR app or anywhere you get podcasts.Help support Planet Money and hear our bonus episodes by subscribing to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoney.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy
Chapter 1: What is the story behind Walter Schramm's missing fortune?
A few months ago, I heard about a guy who had a small fortune taken from him, Walter Schramm.
We got Walter on the phone to ask him about his missing money, and he was angry. But you should know that the angry version of Walter Schramm sounds like this.
It would have been nice, but I guess that's gone.
Walter is very chill. And ironically, it's that trait that both brought him a small fortune and cost him it.
Here's what happened. Walter is Italian, and in the late 90s, he had the brilliant idea to start a company selling Italian specialty products online largely to Americans.
like coffee machines, pasta machines, coffee, ice cream makers.
At first, it seemed like things were going really well. Except for that, around the same time, another online retailer launched. Amazon. Amazon. They were bigger, seemed to have endless money. They're not even worried about turning a profit at this point.
But this is not where things go south for Walter, really. It was unfortunate, sure, but to him, the Amazon thing was just another great investment opportunity.
I said, let's set up an account with E-Trade and buy a few Amazon shares for a few thousand dollars.
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Chapter 2: How did Walter Schramm's investment strategy lead to a shocking discovery?
If you believe in a company, you need to buy the stock and let it sit for 20 years. I mean, that's the philosophy of Warren Buffett. Go out and have a walk, enjoy nature, talk to your family. Don't worry about the stock market.
So Walter does just that. He waits until 2015, about 20 years, to finally cash in his Amazon stock. At that point, the stock he'd bought for around $6,000 should be worth around $100,000. And so after years and years of not looking, Walter finally logs back into his E-Trade account.
Do you remember what you saw when you logged in?
I saw nothing. The account was empty. So it was a big shock.
A very Walter Schramm way of saying he was terrified. He wanted to retire. He was counting on this money and now it was gone.
So Walter calls up E-Trade to say, where are my shares?
And E-Trade tells him, yeah, you're going to need to speak to the state of Delaware. That's where E-Trade is incorporated.
Walter is like, okay.
And E-Trade says, yeah, specifically you should ask for the Delaware Unclaimed Property Office.
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Chapter 3: What is escheat and how does it affect unclaimed property?
And finally they explained to me, there's a technical term that I don't remember, that my stock had been.
I think it's S-Eat.
Yeah, something, terrible word like that, yeah.
This terrible, unpronounceable word. It was the first sign that Walter had stumbled onto something huge. An obscure government program that depending on how you look at it, is either a brilliant way to protect you from greedy corporations or a way for state governments to literally reach into your accounts and take your money. Hello and welcome to Planet Money. I'm Kenny Malone.
And I'm Audrey Quinn. Our government ends up with a stunning amount of our stuff. Stocks, paychecks, bank accounts.
Today on the show, we bring you a classic episode from 2020, one that is, in hindsight, a kind of bit of a public service. It's about how the government gets this stuff, this unclaimed property, how you can get it back, and why Walter Schramm may never see his stock again.
First thing I needed to ask you is how do you say escheat? Escheat. Can you say it one more time? Escheat.
Escheat. So my Twitter is don't give escheat.
Jennifer Borden runs an escheat law practice. Escheat, by the way, E-S-C-H-E-A-T.
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Chapter 4: How can you find and claim your unclaimed property?
Every state in the country does some version of a sheet. And the way it used to work in the past was the state would take control of your stuff on your behalf, of course. And then they would take out a newspaper ad saying like, hey, Joe Smith, we have your stuff. Come get it.
This is my favorite part of this whole thing. Because states all over the country still keep these lists of missing stuff, just now with a website, not a newspaper ad. And this brings us to my new favorite party trick, which I'm going to do right now with Kenny.
Yes, Audrey has made me promise not to do this until we are recording. We are now recording. So, okay, what do I do here?
What state have you probably spent the most time in in recent years?
In recent years, the most time in Florida, by far.
Okay, so I want you to look up Lost Money, Florida.
All right, here's Florida's sheeting site, I guess. It has a better name than I would have thought. FloridaTreasureHunt.gov.
Okay, type your name into the little search box.
Okay. There is a Kenneth D. Malone. That is my old address. Like a pretty old address, though. All right. Property type. Vendor checks. Reported by National Public Radio.
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Chapter 5: Why do states hold onto unclaimed property and how does it benefit them?
And so what happened in that case instead is that NPR is required to tell the state of Florida, Kenny never cashed his check. And then Florida says, great, cut that check to us. We're going to hold on to the money for him. And now he can file a claim for it.
Some version of this happens in every state for all kinds of companies. At the end of the year, companies have to report seemingly abandoned money to the state. The state takes control. Boom, the money goes to the financial lost and found.
For years, this was a big part of Jennifer Borden's job. She was working for the Massachusetts government trying to connect people with their abandoned stuff. And she loved that. But the more time she spent thinking about as she has like a system, the more she started to notice problems.
Well, the interesting thing about unclaimed property is the states are able to use that property. the cash or the assets until such time as the owner comes forward. So it's almost like the state has a little loan they can give themselves of other people's money.
And it is a lot of money. States are taking in about $8 billion a year of unclaimed property. And about two-thirds of that money stays unclaimed. So in most states, it just gets folded into the state's budget.
Unclaimed property is the fifth largest source of revenue for California. It's the third largest source of revenue for Delaware. Unclaimed property all across the country helps fund public programs, which might seem like a good thing, but it can create some perverse incentives.
Do we do a good job getting money back to people, or do we just let it sit here and we don't have to raise taxes?
Yeah, it just seems like a conflict of interest.
Cynically, yes, because if you do your job well, you don't have any money left. If you don't do your job well, the penalty is that you have more money to keep in the state coffers.
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