Philadelphia Sheriff's Office transfers about $40 million to city and state

Without providing an explanation for its swollen bank accounts, the Philadelphia Sheriff's Office announced Thursday it was transferring about $40 million to the city and state treasuries.

About two-thirds of the money was described as unclaimed proceeds from more than 20,000 sheriff sales over the last 12 years, when properties were sold for larger amounts than their past-due mortgages, unpaid taxes, and utilities.

Instead of finding the former owners and returning the money to them, or sending the money to the state and city treasuries as unclaimed property, former Sheriff John D. Green allowed it to pile up in 13 bank accounts his office had set up.

As of Dec. 31, Green's final day on the job, the amount in the Sheriff's Office bank accounts totaled $55.9 million, according to a report Thursday from Green's successor and longtime deputy, acting Sheriff Barbara Deeley.

"While others will sort out responsibility for the accumulation of such sums in these accounts," Deeley said at a news conference, "my job is focused on accounting for $55,936,154.16 sitting in Sheriff Office accounts on the day I took office. While we have made substantial progress, this task is ongoing."

She said local, state, and federal law enforcement agencies were involved in investigating the department.

Asked why there was so much money in the accounts, Deeley said: "That's a question that the federal, state, and local agencies are now looking into. That is a question that they in time will have the answer to. Today is not the day to put blame with anyone. Today is the day to move the Sheriff's Office forward and that is what we are trying desperately to do."

Nihill & Riedley, an accounting firm Deeley hired to make sense of Green's records, reported that about $17.5 million in the Sheriff's Office accounts involved real estate transactions and other activity during calendar year 2010, appropriately under the sheriff's control.

About $7.2 million that involved unclaimed sheriff-sale balances from transactions between 2006 and 2009 will be turned over to the city government. The city will be responsible for potential distribution to former property owners, which the accounting firm was able to identify by name and by the address of the properties involved.

An additional $19.7 million in unclaimed balances was attributed to sheriff sales from 1999 through 2005. That money is being transferred to the state Treasury Department for possible distribution through its unclaimed-property unit.

But Ricardo J. Zayas, the certified public accountant who led Nihill & Riedley's analysis, said the firm was unable to find names and property addresses for unclaimed sheriff-sale proceeds between 1999 and mid-2001 worth an estimated $7.8 million. That money will eventually revert to the state unless former property owners come forward and manage to prove entitlement.

Asked to characterize the old sheriff-sale records, Zayas said, "Voluminous, generally recoverable. But the process was tedious. The computer system was old. When we first came in, it was not fully functional. There were two or three months working with city technology people to get it restored . . . to get it in a functional state. . . . They're there, tedious, voluminous, and basically everything needed to be looked at closely for accuracy."

The Sheriff's Office is the target of several lawsuits by people who say they lost properties in sheriff sales and have been unable to recover leftover proceeds after their mortgages and taxes were paid.

"This is not cleaning up anything when they're not giving money back to the homeowners," said Christy Adams, a lawyer trying to set up a class-action lawsuit on behalf of potentially thousands of people in similar situations. "I see it [the transfer of unclaimed funds to the city and state treasuries] as just a money grab by the government."