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12/18/19 8:29 AM

AT&T Sues Delaware Stating Unclaimed Property Audit Is Unconstitutional

by Clive Cohen

delawareOn December 6, 2019, AT&T sued the state of Delaware alleging that Delaware’s Department of Finance is violating several clauses of the U.S. Constitution as part of an unclaimed property audit. 

The audit commenced in 2012 and was assigned to Kelmar Associates LLC.  In 2017, Delaware made significant changes to its unclaimed property statute, including the creation of an expedited audit process for existing audits.  AT&T entered the expedited audit process, hoping to finish the audit within the program’s two-year window.

However, just short of the two-year mark, Delaware terminated AT&T's participation in the expedited audit and issued a subpoena to request documents due last week.

In its suit, (AT&T Capital Services Inc. et al v. Richard Geisenberger et al, case number 1:19-cv-02238, in the U.S. District Court for the District of Delaware), AT&T claimed that Delaware has contravened the Fourth, Fifth and Fourteenth Amendments.

According to AT&T, the state has demanded AT&T provide records related to “approximately 60 million transactions reflecting almost $100 billion of spend”, and claims the overall audit process violates its rights against unreasonable searches and seizures as well as its due process rights.“Furthermore, should AT&T be required to comply with the Disbursement Request, it will be required to research and remediate the outcome of thousands of disbursements, which AT&T estimates would take 23.6 years to complete,” the company said.

AT&T is asking the court to block the audit and declare it unconstitutional.

We will continue to monitor this matter and advise of any developments. 

If you are currently under audit by Delaware or participating in the Delaware Voluntary Disclosure Agreement (VDA) Program, you should watch this case closely, as it may ultimately impact how your audit or VDA is handled and eventually resolved.Contact MarketSphere for expert guidance if you have any questions regarding notices received from Delaware or any escheat issues.

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Topics: Delaware, Audit, Voluntary Disclosure Agreements, U.P. Law