Lost-Treasure Hunting

California this week holds its first major “unclaimed property” auction in three years, selling jewelry, coins and other items apparently abandoned by their owners.

The goods, mostly from bank safe deposit boxes, can be a treasure trove for seasoned bargain hunters.

But such auctions have been controversial in the past because of criticism that banks, and the state, haven’t worked hard enough to locate rightful owners of the property.

For collectors, jewelry dealers and others, the sales can offer up rare finds, some say.

Dale Kelley, a retired coin and jewelry dealer from the Midwest, was in town with his partner and had a particular interest in costume jewelry to be sold at the auction at the Hotel Sofitel in Los Angeles.

The sale is today and Friday, but items were available for preview on Tuesday and Wednesday.

“The appraisers do a good job, but you’re always looking for something they’ve missed,” Kelley said while shaking a heavy bag listed as “miscellaneous costume” with an estimated value of $30.

“There could easily be a gold ring in here that the appraiser didn’t see,” Kelley said. “Everybody’s looking for a treasure in the rough.”

A ballroom at the hotel had tables laden with items including commemorative badges and medals, baseball cards, pocket watches, old coins, flatware and statuettes.

Silver candlesticks and costume jewelry rested beside a single silver coin commemorating the founding of a church and monastery by St. Patrick in 444 A.D. The coin was affixed to an envelope addressed to Mrs. Marcia Ryan Cook -- missing owner #1397.

Generally, California law treats a bank account as abandoned if there has been no activity in three years. Safe deposit boxes are considered abandoned if the box fees haven’t been paid for that period of time.

The law requires banks to turn over the content of such accounts to the state if the owners can’t be found.

The state then holds assets in trust for the rightful owners or their heirs, should they eventually make a claim (there is no time limit). But the law allows the property to be converted to cash -- which is where the auction process comes in.

California now holds $3.4 billion in trust for some 5 million missing owners, according to state Controller Steve Westly’s office.

Previous state unclaimed-property auctions have raised some furor. Some rightful owners discovered their personal belongings up for bid only days before the auction gavel struck.

A 1999 investigation by The Times found that almost nothing had been done to contact property owners before auctions, and that 1 in 4 of those who had apparently abandoned their property were both easy to find and never notified.

Some things have changed since then. The state controller’s office now matches Social Security numbers on property that has been escheated -- turned over to the government -- with Franchise Tax Board records, said Laura Adleman, deputy communications director in the controller’s office.

When these records indicate that a property owner has moved, which is the case about one-quarter of the time, the state sends those individuals a postcard notifying them that they have escheated property. About 42% of those getting postcards claim their goods, Adleman said.

But three-quarters of the individuals are shown as living at the same address as on the accounts turned over by banks or other entities, she said. The state makes no attempt to contact those individuals.

By law, the companies that turn property over to the state -- including banks, telephone companies and landlords -- are charged with contacting the rightful owners before the items are turned over, Adleman said. The state doesn’t duplicate those efforts, nor does it generally check to ensure that an effort was made.

Although there are substantial penalties assessed on banks if they don’t promptly turn property over to the state, there is no penalty for negligently failing to notify property owners that their goods have been escheated, said Ted Kitada, vice president and general counsel with Wells Fargo Bank in San Francisco.

Kitada said Wells Fargo took great pains to find property owners, particularly when escheated personal property was from a safe deposit box. But he said he couldn’t comment for the industry as a whole.

In the past, some customers said their safe deposit boxes had been turned over because they hadn’t been charged fees -- for example, their banks had provided the boxes free because the customers had high balances or multiple account relationships at the bank.

This week’s auction includes 2,108 lots. Much of the property is jewelry, ranging from single rings and brooches to bags full of costume jewelry.

On Tuesday morning, about three dozen consumers and dealers were previewing the goods, shaking bags to get a better look and taking notes.

A husband-and-wife team from Florida examined gold and bejeweled necklaces, rings and brooches, asking security guards to pull specific items out of glass cases.

They said they were veterans of many such auctions but declined to give their names.

“It’s a security issue,” he said. “These things are easily transportable and I know people who have been robbed.”

Most of the items labeled for sale were laid out in plastic bags on white tablecloths during the auction preview, but items appraised at more than $500 were under lock and key, accessible only with the help of one of a dozen security or auction officials.

Kia Salek, an antique jewelry dealer with Nobel Gems in Santa Monica, said state auctions provided items that could be difficult to find elsewhere: authentic antiques.

Poring over a case of jewelry, Salek said he spotted dozens of 100-year-old rings, necklaces and bracelets.

An onyx ring with three pearls caught his attention.

“Look at that,” he said. “That’s from the 1850s. Those are sea pearls. Someone dived for those -- four dives for that one ring that will probably sell here for $100.”

Picking up another ring, he pointed to an ornate filigree.

“That was all done by hand, probably in sunlight because they didn’t even have electric lighting,” he said. “The workmanship was completely different.”

The state controller’s office provides an online preview of this week’s auction items on its website, at www.sco.ca.gov.

The controller also has an ongoing online auction that includes a relative handful of items.