Delaware’s reputation as a corporate haven has landed it in hot water with other parts of the US. Texas has said the tiny state must pay back what has taken on abandoned money orders.
Texas led the charge on Thursday as it and 20 other US states declared they were suing Delaware as a disagreement over uncashed money orders reached a fever pitch. Delaware is known for its lax regulations on incorporating companies, and benefits handsomely from abandoned financial property.
Ken Paxton, the attorney general of Texas, said the 21 states involved in the suit were filing a complaint before the US Supreme Court during an official announcement in Washington.
Delaware’s many corporate-friendly statues have encouraged numerous successful companies to incorporate in the state, even if they are headquartered and run from elsewhere. About half of all publicly traded US companies are incorporated in the state, as well as some 60 percent of the Fortune 500 list.
Laws that stipulate unclaimed property must be routed through the state of incorporation if the owner’s address is incomplete have netted Delaware huge profits. About one-third of the state’s income is generated this way, and in this fiscal year alone it is expected to make nearly half a billion dollars (441 million euros) off the system.
Texas: Delaware owes other states $150 million
At the center of the current dispute is the Dallas-based money order firm MoneyGram, which has been funneling unclaimed funds to Delaware. According to Paxton, Delaware owes some $150 million to Texas and the other states in the suit.
“We are committed to get this money for unclaimed MoneyGram checks reverted to the states, claiming what rightfully belongs to our taxpayers,” Paxton said.
This is not the first time Delaware has felt the heat from other parts of the US. In February, neighboring Pennsylvania sued the state for holding onto $10 million in money orders that were initially purchased in Pennsylvania.
The other states joining Texas in the current suit are Arkansas, Alabama, Arizona, Colorado, Florida, Idaho, Indiana, Kansas, Kentucky, Louisiana, Michigan, Montana, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, South Carolina, Utah and West Virginia.
es/kms (AP, Reuters)