Motion seeks to prevent the State Controller from taking and selling unclaimed property
October 7, 2026
LOS ANGELES – Larson LLP, Palmer Law Group, and Shernoff Bidart Echeverria LLP filed a motion for preliminary injunction in federal court on behalf of a class of plaintiffs requesting that the court stop the California State Controller, Malia M. Cohen, from taking and selling private property under the Unclaimed Property Law (UPL). The case, captioned Paul R. Hashim, et al. v. Malia M. Cohen, et al. (C.D. Cal.), alleges that the Controller’s Office unconstitutionally seizes the property, fails to properly notify the owners, and sells it to the benefit of the State of California.
The funds from the sale of property seized under the UPL are the fifth-highest source of income for the state of California. The UPL requires that businesses and financial institutions transfer dormant financial assets or abandoned tangible property to the Controller’s Office after a specified period of inactivity, typically three years. The Controller is required to attempt to notify the property owner of the seized property before selling it and eventually adding the funds from the sale to California’s General Fund.
The lawsuit alleges the Controller’s Office provides insufficient notice, such as yearly newspaper advertisements, for seizing and selling unclaimed property even when the property owner’s identity can be found via public records, and refuses to provide notice for property that is deemed to be of “minimal value.”
If a property owner is able to successfully request the return of their property, they receive the net proceeds of the sale, without interest. The Controller often sells the property well below value, however, so property owners are not adequately compensated for the taking of their assets. Further, the lawsuit claims the Controller’s Office seizes property from foreign nationals and out-of-state citizens, who are outside the jurisdiction of the UPL, by modifying known addresses to appear as if they are California residents.
“The Controller’s Office continues to unconstitutionally seize private property, even when the courts and the prior Controller have decried these tactics,” said Larson LLP partner Stephen G. Larson. “An injunction is necessary to stop this exploitation of the Unclaimed Property Law and protect the rights of property owners.”
For violating the Fifth and Fourteenth Amendments to the United States Constitution, plaintiffs seek an injunction barring the Controller from seizing, selling, and destroying property under the authority of the UPL until the Controller provides appropriate notice, regardless of value. The plaintiffs’ initial class action lawsuit was filed in June this year.
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