Bank of America agrees to pay state $35.6 million

Posted: Friday, July 27, 2001

JUNEAU (AP) -- Bank of America will pay the State of Alaska $35.6 million for years of failing to turn over unclaimed money from municipal bond dividends under a settlement announced Thursday, the attorney general's office said.

The money will be split between the state and about 30 public corporations and municipal governments including Anchorage, Juneau, Valdez and the North Slope Borough, the state said.

Under the terms of the settlement, the bank does not admit wrongdoing.

''This settlement represents an effort by the state and affected municipalities to work together for a just settlement involving the return of money rightfully belonging to the public,'' Attorney General Bruce Botelho said in a statement.

Alaska authorities alleged the bank, which oversaw municipal bonds issued by state and local governments to fund projects, failed to turn over payments made to investors who could not be located.

State law requires banks to turn over unclaimed money to the state treasury so that it can be paid out at a later time if the legal owner emerges.

As part of the claim, the state alleges the bank charged excessive fees for services rendered and investment earnings lost on money in the bank's custody. It also alleged the bank kept inaccurate records.

For decades, the bank and other banks it acquired, such as SeaFirst Bank, Rainier Bank and Security Pacific, oversaw municipal bonds and charged fees for being its trustee and paying agent.

Baldwin said it was difficult to determine how much money went unclaimed and for how long. ''We went back as far as statehood,'' he said. Alaska became a state on Jan. 3, 1959.

Negotiations began in 1999 after the state of California reached a $188 million settlement for similar allegations, said James L. Baldwin, assistant attorney general.

Bank of America said the two sides reached a settlement July 12. The bank said in a statement issued Thursday the settlement releases it from liability and ''averts the enormous time and expense that would have been incurred in litigating this matter,''

Alaska will keep half of the money as unclaimed property after repaying legal fees and the remainder will be split between bond issuers, the state said.

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