California Sued Over Unclaimed Property Seizures
A federal lawsuit alleges the state falsified investor addresses to seize and sell private stock holdings.
Updated on Oct. 9, 2026 in Public Companies
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Plaintiffs filed a lawsuit accusing the California Controller of changing overseas investor addresses to California designations to improperly seize and liquidate private assets. The suit claims state officials treat the $15 billion unclaimed property program as a revenue stream.
Why it matters
The litigation challenges the state's authority to manage abandoned financial assets, alleging that systemic address manipulation has deprived international investors of their property rights. Investors contend the state aggressively sells securities upon receipt to boost general funds.
The California unclaimed property program oversees $15 billion in assets across 84 million accounts. Plaintiffs allege the state specifically targeted overseas investors to facilitate the seizure and sale of private securities.
The players
Malia Cohen
She serves as the Controller of California and oversees the state's unclaimed property division.
George H. Wu
He is a U.S. District Judge presiding over the federal litigation in Los Angeles.
Kroll LLC
This firm is a contractor identified in the lawsuit as participating in the state's property seizure operations.
Kelmar Associates LLC
This company is a contractor accused in the legal filing of assisting in the management of unclaimed assets.
Edmilson César Martim Jr.
He is an investor from Brazil who alleges the state seized over $700,000 of his personal Google stock.
The details
The lawsuit names Controller Malia Cohen and contractors Kroll LLC and Kelmar Associates LLC as defendants in the alleged scheme. Plaintiffs assert that officials replaced foreign addresses with California indicators, such as CA 00000, to bypass jurisdictional limits and expedite the liquidation of stocks.
Timeline
February 2026: Labor Department watchdog warned about $192 million in transferred unemployment benefits.
October 2026: State auditor report identified $33,000 in office overpayment mishandling.
October 7, 2026: Plaintiffs filed the federal lawsuit.
January 21, 2027: Hearing scheduled before U.S. District Judge George H. Wu.
Market Landscape
This litigation highlights growing scrutiny over state management of financial assets under the California Unclaimed Property Law. The case threatens to disrupt the operational model used by the controller to collect and liquidate unclaimed securities for state use.
California residents and international investors with dormant accounts may face increased scrutiny regarding their account status and residency designations. The outcome could lead to stricter regulations or mandated transparency in how the state manages and sells seized financial assets.
The takeaway
This case underscores the need for investors to maintain accurate address records to prevent their holdings from being classified as abandoned property. It serves as a reminder for international stockholders to regularly verify the status of their accounts held in foreign jurisdictions.
What happens next
A hearing is scheduled for January 21, 2027, before U.S. District Judge George H. Wu regarding the plaintiffs' request to prohibit further property seizures.
Further reading
For more on state-level oversight and regulatory challenges, visit Public Companies.
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