A Bonney Lake resident is one of many who is suing three banks for allegedly failing to honor bonds.
The complaint was submitted to the United States District Court, Western District on Feb. 28, 2019 by Eric Harrison of Attorney West Seattle against U.S. Bank, Bank of America, and Key Bank.
According to the complaint, 18 individuals recently attempted to return bonds purchased in the 1980s, but the banks claimed the bonds were worthless or that they were already redeemed.
One of those individuals was Mary Miotke of Bonney Lake, who in 1981 purchased a $500 bond from the Rainier National Bank of Washington’s Puyallup branch.
In 1987, Rainier National Bank was purchased by Security Pacific Corporation, which merged with Bank America in 1992 to create Bank of America, the complaint reads.
“As part of the merger, the U.S. Department of Justice required Bank of America to divest several of the Rainier Bank branches, including their deposits, to other banks,” it continues, adding the Puyallup branch was purchased by West One Bankcorp. “West One Bankcorps’ purchase included the obligations on bank bills, bonds, and time deposits issued by the Rainier Bank… Puyallup Branch.”
West One then merged with U.S. Bankcorp in 1995 to create U.S. Bank, meaning U.S. Bank now owns Moitke’s 1981 bond, the complaint alleges.
Other plaintiffs’ bonds went through similar exchanges as their banks — including Seattle-First national Bank and American Savings Bank of Tacoma — were bought or merged.
According to the complaint, each plaintiffs’ bond had an initial interest rate ranging from 7 percent to 14.25 percent. When Moitke attempted to redeem her bond, the expected value of the bond was around $2,500, Harrison said in an interview.
However, “defendants refused to redeem the bonds,” the complaint alleges. “Defendants told some plaintiffs that the bonds had either already been redeemed, or that the bonds’ funds has escheated (turned over) to the State of Washington.”
The state of Washington confirmed it received no funds connected to the plaintiffs from these banks. Additionally, each plaintiff had the physical bond certificate on hand when they attempted to redeem it, meaning it’s highly unlikely the bonds would have been redeemed at an earlier time without the bond certificate being given to the bank, the complaint reads.
But even if that were the case, “it would have been a simple and inexpensive matter for the bank to have retained records for any bond accounts for which the original bond certificates were not surrendered,” it continues. “The banks cannot use the banks’ own business decisions not to retain records as the basis for denying a valid consumer claim supported by the customers’ records that the bank pledged to rely upon. To do so is an unfair business practice.”
The complaint also alleges that the defendants did not provide any notice to the bond holders that their bonds had become dormant, would not be honored, or that the money was handed over to the state.
U.S. Bank, Bank of America, and Key Bank each declined to comment on the lawsuit.