Fight for Unclaimed Assets Urged : Panel Appointed by Davis Seeks Recovery of Millions

A panel of business and labor leaders appointed by state Controller Gray Davis on Wednesday urged him to file suit, if necessary, to recover millions of dollars in payments and property unclaimed by Californians.

Each year, the state of New York seizes $14 million to $18 million in unclaimed assets held in the name of Californians by Wall Street brokerage firms and other financial institutions headquartered in New York, according to the advisory group’s report. Similarly, the federal government retains millions of dollars in unclaimed income tax refunds.

In both cases, Davis, as the state’s chief bookkeeper, ought to consider joining suits that would release the funds to the California treasury for possible return to individuals.

The recommendations were included in a lengthy report prepared by the panel that Davis appointed in January to advise him on how to improve the performance of his newly assumed office.

The executive group also suggested that Davis use his position as a member of the Franchise Tax Board and the Board of Equalization to push for recovery of more than $1 billion in delinquent taxes. Among other things, the group suggested retaining collection agencies to recover delinquent taxes and other money due the state. If only 5% of delinquent accounts over the last six years could be recovered, it would mean an added $35 million in revenue, the panel concluded.

Davis said that he generally intends to follow the advice of the volunteer panel, which included a number of his political supporters and campaign contributors.

At a small gathering of panel members and reporters, Davis said that his acceptance of the group’s report would “send a message to Californians that I want to run a tight ship” and conduct this office in “a more businesslike way.”

Members of the advisory group donated several hundred hours of their time, reviewing the duties of the controller’s office as well as the 38 boards and commissions on which the state controller must serve, said the panel’s chairman, Sanford C. Sigoloff, who heads Wickes Companies Inc.

Davis said he began to consider asking government outsiders for advice shortly after he was elected to the statewide post in November. He said that he asked Sigoloff, “What do you do when you take over a new company?”

The controller is the state’s chief auditor, responsible for ensuring that all payments from the state treasury are legal and proper.

The panel noted that each year the controller’s staff discovers millions of dollars in excessive claims against the state by local governments and school districts. Since 1981, more than $150 million in excessive payments have been requested--most of the excess caught by auditors before a check is issued.

The advisory group recommended that the controller seek authority to impose penalties on those local agencies that have received more than they are entitled to in addition to requiring the return of the money.

The panel also urged Davis to use his position on the Public Employees Retirement System and the State Teachers Retirement System, with combined investments in excess of $50 billion, to pursue a limited “California first” investment policy.

The pension funds ought to give preference to financial institutions and consultants based in California, and ought to help finance new companies in the state.

Davis said he has already suggested that the teachers fund invest $200 million in venture capital--in new business enterprises--with California-based companies getting preference on half of the amount.