Unclaimed Property: $275,000 Vanishes From Retirees Account, Transferred To The State Of California

WINTERS (CBS13) — The discovery was a shock. Eugene and Ann Breznock's investments, worth $275,000 in their June Charles Schwab statement, gone, replaced with a column of zeros.

"It's just pure theft!" Eugene Breznock said.

Because the Winters couple didn't touch their account for three years, or have any contact with Charles Schwab, the state required Schwab to transfer their investments to the state's Unclaimed Property program for safe keeping.

But now Eugen can't get his property back because the assets are labeled "incomplete" on the state's website.

The state blames Schwab, saying they submitted the transfer with "errors." When Eugene reached out to Schwab, he says they directed him back to the state.

"I can't tell you how many nights I've been awake thinking of what a rotten this system this was and how long it's gonna take me to get back to be able to use my funds for the needs that I need it for," Breznock said.

"This is unconstitutional stealing," said attorney William Palmer, who has been fighting the Unclaimed Property program in court for more than two decades — all the way up to the Supreme Court.

Palmer argues the law has been twisted from its original purpose: to protect property when people become lost and unknown.

The Breznocks have lived in the same house for more than 30 years.

"They don't know where their client is? Pick up the phone and call them!" Palmer said.

Palmer said the program has turned into California's fifth-largest revenue stream, with $9 billion in so-called unclaimed property used to help balance the state budget.

In 2015, the Legislative Analyst Office warned the revenue "creates an incentive for the state to reunite less property with owners."

"It's a runaway government program," said Palmer, "It's off the rails."

Celebrities with unclaimed property include Elon Musk, Kanye West and even former governor Arnold Schwarzenegger - begging the question, are they really lost?

The State Controller's Office, which runs the program, declined our request for an interview but insists the program is "to protect consumers" and that "it prevents businesses with unclaimed property from keeping your money and using it as business income."

Schwab wouldn't talk specifics of the Breznock's case but says, "We take our legal obligations seriously" and only sends assets to the state "after making multiple attempts to contact the client to claim the assets."

Eugene denies getting any notifications, but once we got involved he was able to claim all his property from a program he calls a disgrace.

"That they take money from people as old as we are that we have saved and sweated blood for? I mean that's a lot of nerve!" Breznock said.

As of Monday night, the state has returned $50,000 in cash, but the stock is still in process of getting transferred back to the Breznocks.

The state says it has six months to return the property. Both Schwab and the state insist they sent warning letters. Eugene says he never received them.

The full statement from Charles Schwab is below:

"While we cannot comment publicly on the details of any client matter, state law requires Schwab, or any financial intermediary, to turn over any assets to the State of California that have been unclaimed by clients after an extended period of time, and after making multiple attempts to contact the client to claim the assets - this is known as "escheating" assets. Once the assets are escheated, they are in the possession of California, and are no longer at Schwab. We take our legal obligations seriously and fully comply with state escheatment requirements"