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Cory Demands B of A Repay $30.7 Million

April 02, 1985|CARL INGRAM | Times Staff Writer

SACRAMENTO — State Controller Kenneth Cory on Monday demanded that Bank of America immediately pay $30.7 million that he said is owed to customers whose inactive accounts "were cannibalized by the bank."

Cory made the demand in a motion filed at Sacramento Superior Court in his 10-year-long legal effort to require the world's largest commercial bank to restore funds to depositors whose dormant accounts were wiped out or severely depleted by illegal service charges. In addition, the bank failed to pay interest on the accounts.

Since legal action against the bank in 1975, two trial courts and the 3rd District Court of Appeal have ruled against the financial institution, according to a motion filed on Cory's behalf by Deputy Atty. Gen. Yeoryios C. Apallas.

"The time has come for Bank of America to stop playing games with its depositors' money and to return to them what three courts of this state have determined to be their due--at least $30,722,636," Apallas said.

Called a Down Payment

Outside court, Apallas said the sum represented a "down payment" on approximately $90 million that he maintains is owed to customers and the state by the bank. However, the bank disputes the $60-million difference and that issue is in separate litigation with no resolution expected soon.

Thomas Montgomery, an assistant general counsel for the bank, said he would oppose the motion on grounds that the entire issue should be settled and the bank should not be required to make piecemeal payments.

"It is the bank's position that until there is a final finding by the trial court as to how much is owing that the bank is not obligated to pay anything," Montgomery said.

Apallas said no one knows how many depositors are involved. He said the $30.7 million was based on the bank's own calculations of what was owed in compliance with a 1981 order by Superior Court Judge A. Richard Backus of Sacramento. Apallas said his own figures put the sum at $34.4 million, but "for purposes of this motion only, I have conceded the correctness of the bank's various accountings."

Sought in immediate payment was about $18.5 million in court-imposed interest dating back to 1960 and about $12.2 million for service charges on various inactive checking and savings accounts, money orders and cashier's checks.

Under the state's unclaimed property law, banks and other financial institutions must turn over to the state controller the contents of accounts when there has been no contact with the owner for seven years.

Banks are required to make a thorough search for the owners, many of whom have died or forgotten about their bank accounts. The controller then must also attempt to locate the owners and make payment, or the money becomes part of the state general fund.

However, Cory has successfully argued that in years past banks routinely failed to credit such accounts with interest and routinely assessed service charges until the accounts were depleted before forwarding the owners' names to the state. The practice has been prohibited since 1976.

Lost Celebrities

Cory boasts that he has located such notables as Candace Bergen, Lucille Ball, Willie McCovey, former Gov. Edmund G. Brown Sr. and others when banks failed to do so.

The $30.7 million he wants paid immediately spans the period ranging from the early 1940s to 1981.

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